Monday, March 31, 2008

Oakland Public Employee Unions Break The Bank (again)

The latest list of Oakland public employees earning more than $100k per year is making the rounds on the blogs today. Several folks have taken aim at City Administrator Deborah Edgerly, who took down a cool $255k. But that's not where the real action is. The real fiscal nightmare for Oakland and other California cities is the outrageous sums being paid to police, fire and EMS employees.

The highest-paid person in Oakland for 2007 wasn't Edgerly, it was Fire Battalion Chief Michael Miller, who made over $270k. But actually the list of top-100 earners is littered with rank-and-file public employees.

Unfortunately, the reported numbers tell only half the story.

For starters, every one of these employees receives an abundant benefits package, typically including the ability to retire after 30 years of service at 100% of final-year pay. This means a fire fighter who joins the force at age 25 might retire at 55 and receive 30 years of retirement pay at a $120k annual rate. That's $3.6M, a hefty sum.

And that's not even counting their medical benefits and cost of living increases. The true cost of these employees at retirement is probably $5M each, or higher.

"Sure," the unions say. "But these are risky jobs, and many police and fire employees are injured during their service."

That's actually the next trick they have up their sleeves. Each time a city employee experiences any kind of injury remotely related to their job -- a pulled back or leg muscle, or maybe a broken bone -- that employee immediately heads to the doctor to determine the amount of disability associated with that injury.

Now, disability is cumulative. So, maybe a broken bone would render the employee 2 or 3% disabled. But across a 30 year career, many employees wind up essentially 100% disabled. This means they get even more disability pay on retirement, and it also means they don't have to serve out the full 30 years in order to get their pay.

The bottom line is that public employees are now compensated at an entirely different stratum from regular employees in the workforce. They often can make 5 or even 10 times as much money as they would have had they entered work in the private sector.

What a bizarre decision by our society to provide such outrageous compensation to a set of people who are, in the main, poorly educated. These are not nuclear physicists or olympic athletes, for whom the difficulty of finding a replacement would be difficult. These are ordinary folks, provided with absurd benefits essentially due to the luck of the draw.

Don't believe me? Take a look at this article about a recent scandal in Oakland's fire department. Never mind the scandal itself. Just notice that 2,000 people applied for 23 spots. Why would so many people apply for these jobs? And, returning to the scandal itself, why would people use con games to get their buddies and relatives spots in the program?

Simple. These public employees are compensated at completely diseconomic levels.

So, what can we do? Little. Public employees constantly compare their compensation levels to those of employees in neighboring cities and counties. Unless everyone bites the bullet at once, each city is beholden to the argument that lowering its compensation will drive applicants elsewhere.

In addition, pretty much every public official in the state of California is bought and paid for by the unions representing these employees. No big surprise there. If my union had successfully provided me with 10x the salary I would receive in the private sector, I'd do pretty much whatever it took to defend that.

Finally, the general public is endlessly gullible when it comes to this issue. No matter how much money police and fire make, they return every two or four years with signs and protests suggesting their pay is being cut. They use patriotic symbols from a bygone era to ensure that the broad sweep of the public supports whatever they want.

It's a clever con, really. Wish I'd thought of it and gotten on board. Stupid me for going to college and getting a real job.


  1. 1) The extreme amount of overtime pay is directly caused by the unions, who intentionaly limit the size of the workforce... forcing management to use overtime to meet manpower (personpower?) requirements. 2) Fire fighting can easily be contracted out to private sector providers... but police work has an inherent political aspect that requires government workers. Also: ever wonder why both an ambulance AND fire engine are scrambled to a medical emergency? Union rules. Perish the thought that only one first responder is deployed to the scene... it would only cost half as much. Those stingey tax payers... you'd think it was their money they were whining about.

  2. [...] that decisions such as hiring are ultimately zero-sum games. We all know that the city government pays well, so it should come as no suprise to see numerous applicants for any given opening. Needless to say, [...]