Sticky and very high

July 14, 2010

The following is a guest post by Russ Roberts taken from his co-authored blog, Cafe Hayek. The opinions expressed are his own.

Both Arnold Kling and I (and probably a few million other people) have wondered why it was necessary for Federal money to be given to the states and cities to prevent job losses. For states that have been irresponsible or unlucky and find themselves short of revenue, why not reduce salaries some, say 10% and save that money?

One answer is that state and city employees are under union contracts that are not easily adjusted on short notice.

Oakland is grappling with this problem. The city wants to lay off 80 officers from a force of 776 and it is negotiating with the union.

With Oakland desperate to cut its public safety costs to balance its budget, the police union has agreed to two key city proposals – that officers contribute part of their salaries toward their pensions and that the retirement age be pushed back for future hires.

However, the two sides were at an impasse over a police union proposal that the City Council ensure that no officers will be laid off for three years. Council members say that even worse budget problems loom for Oakland beyond 2010 and that they can’t afford to make any such promises.

Having officers contribute to their pension fund seems reasonable. Of course it would depend on how much their salary is, right?

The council voted last month to lay off more than 10 percent of the police force to cope with what officials describe as an unprecedented financial crisis. The $407 million general fund budget for the fiscal year that began July 1 represents a decline of $69 million since 2005, and public safety now accounts for three-fourths of discretionary spending.

With the average officer’s salary and benefits totaling $188,000 a year, City Councilman Ignacio De La Fuente, a union leader himself, has described the situation as “unsustainable.”

$188,000?!?!?!? That is one expensive police officer. That’s the average. I wonder what the veterans get.


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well, we,ll likely find out what happens when the municipalities hit the wall..guys like the author of this will find out..what to do ? there is the Detroit model which actually has some merit..blame ? it’s too late for that..this is slow motion agony for my country..Republicrats/Democans, thanks for nothing..

Posted by gramps | Report as abusive

And gramps, thank you for nothing. It has been said that “people get the government they deserve.” YOU and I are the “people,” and we’re getting what we deserve. It’s time for US (that includes YOU) to take responsibility and get our beloved country on the right path. STOP the blame game!

Posted by marye65 | Report as abusive

Well, Mary, if your idea of the right path is for municipalities to enter boldly into contracts they have no serious intention of fulfilling, then a bit of blame is likely to hit you on the way out, too.

Posted by HBC | Report as abusive