Firefighters, Police Officers, and the Cost of Government

Recently, the New York Times published a short article on the salaries of police officers and firefighters in California. The short summary of its argument is that public safety employees in CA routinely make big, six-figure salaries (often 3-5 times the median income of the area they live in) because cities and counties would rather pay a current employee overtime than hire a new one that would add long-term pension liabilities. The article suggests it is fairly routine for firefighters to earn more in overtime pay than their base salary. You can download the raw data, thanks to Transparent California.

I take issue with the NYT article because it short-changes complicated issues related to public safety, public sector unions, and the overall cost of government. A quick read of the article might lead someone to think “those overpaid fire fighters are bankrupting California” – as its title implies. So, in this post, I want to clarify a few things that I find misleading, and make the general point that there are a lot of explanations for why public safely workers – and in particular, fire fighters – would be highly paid in California.

What I argue below is based on a few simple facts about the data cited by the New York Times. To make these points, I’m going to be using salaries of public employees in LA County during 2015. There are over 10 million public employee salaries in the database, so it’s useful to use an example. Importantly, LA County (LACoFD) is one of the most active and largest departments in the country. First, a few things to note:

For LA County, it is actually closer to “rare” (not “routine”) that firemen make in excess of $300,000 – as the article claims. The distribution of 2015 total pay is in the figure below. About one in five LA County Fire-Fighters (high-ranking officials included) made more than $200,000 in 2015. Only six (total) made more than $300,000.

total

It is far more common for firemen (compared with other public employees) to make more in overtime than in base salary – but that, too, is not typical. To get a sense of this, it helps to look at base pay against overtime pay. The figures below do that – first, for fire fighters, then for the rest of LA County public employees. The figure for fire fighters also shows total pay. The lightest blue dots (each representing one fire fighter in 2015) are the six who made $300,000 a year or more. Dots above the red lines indicate an employee who made more in overtime than in base salary. All in all, about one out of every twelve fire fighters made more in overtime than their base salary.

fireothers

Citing pre-tax salaries in a state like California is very misleading. As of 2016, CA’s progressive income tax system has the top marginal tax rate (13.3%). The share of LA County firemen in the top income bracket above (>$300,000) can expect to have a little over a third of their total pay taxed (including Federal). This number will, of course, vary based on exemptions, martial status, deductions, etc. Of course, everyone must pay taxes, but “hefty paychecks” are particularly vulnerable in the Golden State.

Overtime pay does not increase pension liabilities. The author writes that police and fire pensions allow employees to “draw 70 percent or more of their peak pay as long as they live.” It is important to note that “peak pay” means “peak base pay” – not the most they’ve earned in a year including overtime. The use of the word “paycheck” in the article doesn’t help. Put differently, for those fire fighters making double their base pay by working lots of overtime, retirement means a 65% pay cut.

That said, the salaries themselves are quite high when compared to the median household income in LA County (about $42,000/year), so it is important to understand why. The standard explanation for why fire fighters ought to be highly paid is that their job involves both long hours away from home, danger, and the risk of death in the line of duty. Ultimately, the NYT article invites judgments about what that kind of work is worth. Personally, I am skeptical that many careers which provide similar (or better) earning power produce the same societal benefit. It does not bother me, for example, that a sizable proportion of LA County Fire Fighters earn more than professors in the University of California system. But we don’t have to make those kinds of judgements to understand why California fire fighters, in particular, tend to earn a lot.

First, it is expensive to live in California, so it is expensive to have a fire in California. Fire fighters and other public safety employees perform services that protect property values in California’s absurd real estate market. Second, and relatedly: wildfires. California has by far the most households at risk of wildfire damage of any state. This is not just a function of population, as more than one in six California households is at risk, whereas in Texas the figure is one in ten. California’s yearly property loss, predictably, exceeds all other states. During California’s severe drought, fire departments defend property from this threat.

Third, public sector unions are politically powerful. A lot has been written on this topic, but a short summary is that because public employees (like police officers and fire fighters) essentially vote for their bosses in government, they tend to ensure favorable policies (like high pay). The key difference in the case of fire fighters, at first glance, is that the policies enacted do not seem to damage their central purpose. Teachers unions, for example, often fight for policies that protect bad teachers from being fired (e.g. layoffs by seniority). In this case, the price tag for fire departments is high – but the public safety services in California are generally thought of as some of the best in the US. The overtime figures above, though, might pose a problem. If it can be demonstrated that overworking fire fighters with overtime results in worse performance, then there would be cause for concern. But even if that is true, local governments are partially to blame – for acquiring the pension liabilities and setting hiring priorities.

Finally, it is important to remember another implication: it is now extremely difficult to become a firefighter. People sometimes assume that becoming a police officer or firemen is relatively easy. In California, and especially in LACoFD, the barriers to entry are actually quite high. For LA County, hiring typically takes place in seasonal waves. Despite the rather cumbersome initial qualifications to be considered, there are routinely thousands of applicants for dozens of jobs. Thus, the barriers to entry for a career in California fire fighting are on par with similar paying jobs.

Getting a clearer picture of the cost of government is a good thing. My guess is that the salary figures in this post surprise some. They initially surprised me. But I think it is careless to lay out the salaries of public employees without context. It invites readers to attack them as “overpaid.” But the salary of a fire fighter or a police officer is driven by market forces beyond their immediate control. Many do what they do because they want to help others, and all put themselves at risk for their neighbors.

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