The Campaign Spot

The Horrific 2 to 4 Percent Cuts for Teachers, Firemen, and Police

So, here’s the argument from President Obama:

One of the biggest weaknesses has been state and local governments, which have laid off 450,000 Americans. These are teachers and cops and firefighters. Congress should pass a bill putting them back to work right now, giving help to the states so that those layoffs are not occurring.

So how bad have cuts to police, fire, and teachers been?

The most recent Bureau of Labor Statistics figure we have for employment in the categories come from 2011:

“Justice, public order, and safety activities”: 2,820,000

“Elementary and secondary schools”:  8,524,000

In 2009, the totals were:

“Justice, public order, and safety activities”: 2,880,000

“Elementary and secondary schools”:  8,884,000

So in two years, the category that would include firemen and police is down 2.1 percent, and the category that would include teachers is down 4.1 percent.

So, what’s gone on while these employment groups have declined slightly? Well, local government as a whole hasn’t shrunk much at all.

Right now, the Bureau of Labor Statistics lists the number of government employees, excluding education, as 6,246,000.

Ten years ago, the total was 6,065,000. The peak was 6,505,000 in July 2009 — right after the worst of the recession, ironically. (Perhaps this was driven by the stimulus-bill spending.) So we’re only down about 250,000 local employees from the peak; the current total is 96 percent of the peak employment.

But from 2005 to 2007 — economic boom years, compared to what we’ve endured in recent years — the total number of local-government employees surpassed 6.4 million only three of the 36 months. So local governments have about the same number of employees as they did before the recession hit.

In other words, Obama seems to think that the recent peak of local employment is the “normal” level, and that any drop from that is an economic problem to be solved. The notion that the very modest reduction represents localities adjusting their number of employees to a level they can sustain with their post-housing-boom tax base never seems to enter the picture.

(Oh, and these workers have seen compensation increase during the recession years: “Compensation costs for state and local government workers increased 1.5 percent for the 12-month period ending March 2012. In March 2011, the increase for the 12-month period was 1.8 percent.”)

Meanwhile, the pension costs for retired local government workers have exploded. Josh Barro explains at Bloomberg:

This is partly because revenue has risen only modestly, with general fund receipts rising 19 percent in a decade. But the main reason is that costs for a full-time equivalent employee are astronomical and skyrocketing. San Jose spends $142,000 per FTE on wages and benefits, up 85 percent from 10 years ago. As a result, the city shed 28 percent of its workforce over that period, even as its population was rising.

A lot of that increase is due to rising required pension payments, as the assets in the city’s pension funds have lost value. But much also had to do with what Mayor Chuck Reed, a Democrat, describes as “irresponsible policy actions” over the last 15 years. Here’s his list:

1. Giving out raises faster than revenues were growing.

2. Giving out raises and increasing benefits when revenues were falling.

3. Giving out raises and benefits retroactively.

4. Allowing employees to cash out unlimited amounts of sick leave when they retire.

5. Providing lifetime health care for retirees.

He also notes that “the City Council and outside arbitrators also significantly enhanced retirement benefits. The maximum benefit for public safety employees grew from 75 percent of final salary to 90 percent, and a guaranteed 3 percent cost-of-living adjustment was awarded to all employees.”

In other words, the city made a lot of promises that it could barely afford when times were good, and now that times are bad, it really can’t afford them.

In other words, if localities want to hire more police, fire, or teaching personnel, there are several tools to do that beyond begging Washington to borrow more money to distribute to localities. The first is to cut other areas of local government — the less beloved categories of administrative staff, make-work patronage jobs, etc. The second is to reform their pension systems.


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