I think the problem that the pension funds are run by B-school graduates that are susceptible to the glamor of VC Funds, Hedge Funds and Private Equity (which in this case had better be named "Public Equity/Private Profits"). And the pension funds likewise do not have sufficient rules and enforcement against risk-taking.
I've no doubt that at times a lot of it IS unproductive. But if we're paying people that haven't faced a criminal ( that wasn't already cuffed ) or a fire ( that was already put out ) $200K a year, how will we ever find out?
Again, I use the (1) form of Gov. employment I know and know well as the barometer. The Military. When I was in the Navy only about 12% of the guys stay from boot camp to retirement. The Marines are even worse, less than 7% stay. Now the Air "Farce" on the other hand was running north of 80% retention!
Why? Never had to go anywhere unless you wanted, once you got to a place you liked you could stay as long as you like, no deployments and basically a gov. job Mon- Fri. banker's hours. Yet they didn't pay any more than the other branches!
When 100% of the cops and fireman are staying then we need a little unproductivity?
It was kind of funny, one of the posters over at Ben's Blog went out on a limb and opined that she didn't feel a lot of these public employees will even collect on their opulent retirement plans.
At some point ( with or without the support of the taxpayers ) the market and the economy simply won't support these lofty packages. In short, they'll get reduced payouts just out of necessity.
Some were quick to point that ( while bankrupt ) Vallejo is -still- paying their cops etc. But I don't think that's saying the same thing? We can provide that for a time but at some point it won't just be The City of Vallejo that finds that unsustainable. So when you think about it, we've allowed ourselves to get worked up over nothing.
I get the feeling OR's teachers and your public retirees will look back on this as the Good Old Days.
Now the Air “Farce” on the other hand was running north of 80% retention!
Yep, the Air Force even had to do a couple of forced officer reductions (RiF and early retirements) in the early to mid 90s.
"Combat Deployment" (no fly enforcement over Croatia and Iraq) for me was living for a few months in a 5 star hotel in Antolya while flying only 3 days a week and spending the rest of the time as a tourist. Same situation (but with only 3 star hotels) in Marseilles and in Sicilly. Even got combat pay and per diem. I presume Army and Marine deployments are a bit different.
I have a lot of (secondhand) knowledge about the inner workings of cops/firefighters and their relationship to city halls. Nobody is going to be surprised when I say that the situations are incestuous, as much by necessity as by design. But the unions have a shocking amount of power over small cities, simply because they can bring so many more resources to their side of any debate. The true beauty is that you only need to find one crack in city hall long enough to get a vote through, and then that new benefit is effectively permanent (unless the bankrupt the city, of course, which is a possibility few unions are capable of understanding).
Yeah, a lot of the over generous retirement parameters for police and fire is going to come back and hurt many cities and municipalities. Especially when the pension fund is placing the cash with Hedge Funds lately.
Perhaps it would help if the cities banded together to form a "union of cities" on the other side of the bargaining table.
I don't think other countries have a per-city police and fire service. In Europe you never see a car that that says "London Police" or "Frankfurt Police" or anything like that. This whole idea that the police should be controlled by the mayor is a uniquely American idea, and we pay dearly for it.
Right, the other aspect is that so many of these unions provide for retirement as early as 50 years old. One thing we don't often discuss b/c most of us are younger, is when you look at say a Monte Carlo Projection, the earlier you retire, the more variables you introduce while you're 'in' retirement.
If you retired a 65 ( and God forbid died a year later ) well, other than lately, how much can really go wrong in a year! When you begin to stretch the variables out over a 20... 30... 40 year time frame, it's safe to say just about -anything- could and probably WILL happen! But we went ahead and relented to these people's pressure anyway?
Now, in the most uncertain of times, we're making more commitments and promises than ever before. The more uncertain the future looks, the more they press for guarantees!
> I have a lot of (secondhand) knowledge about the inner
> workings of cops/firefighters and their relationship to city
> halls. Nobody is going to be surprised when I say that the
> situations are incestuous, as much by necessity as by design.
> But the unions have a shocking amount of power over small
> cities, simply because they can bring so many more resources
> to their side of any debate.
I have a friend (in his late 40’s) that is a captain at a Bay Area fire department. We were fraternity brothers at Cal and his Uncle a fire chief helped him get a job after graduation by convincing him that he could still work in his family real estate business on the 20 days a month he had off so he joined the fire department after graduation. As one of the few guys on the force that understood politics (thanks to AS and IFC politics at Cal) he figured out that he could get almost anything he wanted by getting his (good looking clean cut) guys in uniform (on some of the 20 days off they all have every month) to sit in front of grocery stores and talk to housewives telling that any city council member that didn’t give them what they wanted was “putting their family at risk by cutting back on fire protection”. He is in better shape than I am and will probably live in to his 90’s with a starting retirement pay of OVER $300K per year when he retires at 50. This does not include the lifetime full medical for the entire family and two free pair of prescription sunglasses every year for every member of the family (you would not believe how many different styles of Oakley sunglasses that this family has) …
Oh goodness yes, musn't forget the prescription sunglasses?
Exactly, by saying, if you're going to be too old to fight fires ( and Lord only knows the city's "ablaze" 24/7 ? ) then by all means you can finish out your time on a riding mower to age 65.
Of course all your years at the FD won't have gone to waste as you'll have a better ret. than someone that spent all their time riding the John Deere. I can tell you from experience that having been a FF in the service is about as easy as it gets. We got 20 days off a month and there are a lot of lucrative things you can do w/ your off time.
We thought it was compensation enough. From coast to coast there needs to be a serious and sober discussion about this stuff. They need to be treated on a more rotational basis where basically ALL assignments are temp. in nature. I also happen to think it's another reason they've tried so hard to make this as much of a "science" as possible? All that "investment" in never ending training! We just can't afford these guys any more.
> No job should have a retirement age of 50 and full pay.
Most Firefighters and Cops in CA retire at MORE than full pay since (the details are different from county to county) you get "retirement" pay equal to 3% per year of service. If you start at 18 (this was common 30 years ago, but today most new hires are older) and retire at 50 you get 32 years x 3% = 96% of your highest year ever (including OT), the average of your highest three years (again including OT) or your last year (when friends knowing you are retiring will help you out to get tons of OT) so it is possible to more than double your base salary and retire with over a 1/4 million in your first year of "retirement". At my friend's department most of the older firefighters work the minimum of about 7 days (24 hour shifts) a month since they all own successful side business and since they max out sick days and workers comp days they give a lot of overtime to the younger guys (who need the OT to clear $100K) so the younger guys are happy to let them have as much OT as they can legally do in their last year on the job...
P.S. In the bay area some fire departments will have over 5,000 people for an open position. If I ever had 5,000 people apply for an open property manager job it would be a good sign that my pay was higher than it needed to be…
Very interesting discussion. I'm researching the question of public employees salaries and benefits in my home town.
We have had "Pension Obligation Bonds" issued by our city to cover a huge unfunded liability in health benefits (primarily) for our public work force. This has been done by other cities in San Mateo County and to me, it represents the sinking ship of public finance.
I support unions and think that decent wages and pensions are a prerequiste of such a job, but, what is the limit?
Where I am from in New Jersey it was not uncommon to catch firemen and EMTs deliberately causing fires and accidents to either drum up business or make themselves look like heroes. In one particularly bad case they were throwing cinderblocks onto a freeway from an overpass; so they could be 'first' when responding to the ensuing accidents.
In another, a firefighter would not only start fires, he would *deliberately* burn himself while fighting them. By the time they caught him he looked like Freddie Kruger.
So, my theory is that if we cut these services to their bare minimum (police too) that the problems they are supposedly solving will reduce as well.
Can't speak to Jersey but I will definitely address the gross over-dramatization. Used to be you could get hired on if you had an Assoc. in Fire Science. Or even if you were enrolled.
Most non-industrialized areas have no need for highly specialized people. If you have petro-chem or refineries it can be a different story. Typical "Alpha Class" house fires? Give me a break.
My brother was on a job site and a guy using a power washer ignited dry leaves and pine needles so my brother got everyone out of the old folks home and put the fire out with a garden hose. ( Real "technical" stuff ) When the Fire Chief arrived he told him that what he had done was foolish and he put a lot of people's lives in "jeopardy". Next time just make the 911 Call and we'll take it from there. True story.
* This summer, massive forest fires in Colorado and Arizona swallowed up thousands of acres of timber and every home that got in the way. Investigators say the fires were both started by firefighters.
* Weeks later in California, a 19-year old forest service firefighter was arrested for setting five fires near San Diego, destroying homes and paralyzing a community.
* In Pennsylvania, dozens of nighttime arsons terrorized the town of Kennett Square. The culprit was not only a volunteer firefighter, he was the son of the town’s assistant chief.
* In Missouri, a volunteer firefighter is awaiting trial for murder for setting a fire that led to the death of a fellow firefighter.
* In Tennessee three years ago, six volunteer firefighters were arrested for setting an abandoned home ablaze, accidentally killing another volunteer fireman. But he didn’t die fighting the fire; he died spreading gasoline in the attic, when the home burst into flames
To be clear, I'm not attacking the fire fighting profession itself. The majority of them are braver and harder working than I'll ever be.
It's simply an opinion of mine that if its gotten to the point that they are starting fires out of boredom that the industry is overdue for some downsizing. Doubly so if they are bankrupting municipalities.
I think the right model is to create a small team of carefully-screened professionals to deal with typical urban fires and leave the rest to the national guard and the private sector.
Again, after funding these opulent pensions year in and year out, especially in under performing markets, what am I more likely to die from?
Being burned beyond all recognition, or being taxed to a point where I can't even provide for my -own- basic needs in retirement? As FAB mentions, when you have like 5,000 people show up for (1) opening, what's that tell you?
Now that we've made major-freaking-strides in fire p-r-e-v-e-n-t-i-o-n and most structures are built w/ flame retardant materials... we're paying more then ever! This is why they "roll" on virtually -any- incident. Non-injury fender benders, old folks ambulance calls... you name it.
In our OR town of 10,000 we must have 3 siren response worthy "calls" a day, but when you get the paper... there's nothing!? There was a time when the guys that joined really enjoyed this stuff. Now w/ the comp. packages so huge, the LAST thing they want to do is jeopardize themselves ( unless it means a juicy, and early disability claim? )
I'm somewhat conflicted here. On one hand (particularly as an East Coaster), I have a bit of a soft spot for firemen. Especially after 9/11.
And on the east coast, firefighters are paid *much* less and many are volunteers. In fact, its the volunteers that usually turn out to be the firebugs, as its fairly trivial to become one and they tend to attract the 'mall ninja' stereotype.
But I agree about compensation our here; even in fire country. In fact I'm especially miffed here in San Diego, as they county does almost nothing to prevent future fires.
However, as has been mentioned above and recently by Mish, the problem is likely going to turn out to be self-correcting. County files bankruptcy; unions are forced by a judge to negotiate their contracts. That's that. You can't get blood from a turnip.
Going back to the OP, allowing businesses/banks/municipalities to fail (even big ones, like GM) is the optimal solution here. Its the only way to bust the union monopolies on labor and in the case of banks will force them to liquidate their assets (i.e. foreclosed homes) to satisfy their creditors.
That's why I'm so adamantly against any bailouts. True, we will take a big hit now as banks/businesses large and small go under around the country. But those factories and homes won't stay idle forever, as capital will rush in to snatch them up at bargain prices. Creative destruction is a beautiful and powerful thing!
Thanks for the site. Ed Ring is a writer I've read. I'm sorry things have gotten so far out-of-hand.
I have a hard time believing that firefighters set fires to employ themselves. Have we sunk that far, and is there good documentation/evidence of this???
It's also a great resource for tracking general pension issues. The problem in OR is that we've had tax activists in the past and the instant you align yourself in any way against the OEA ( OR Ed. Assoc. ) you're labeled an "extremist" that hates children and wants to bring back book burnings.
I sell Amish Furniture. (yes made in Ohio.) I am a Catholic who believes in the econoic theory of "Distributism". An awkward name for a very sane outlook on life. Yes, it is an awefull name, I would rather call it; "Ownership", for that is what it is. More Americans Owning = more Americans happy and strong in this great nation.