Private and Public Sector Differences in Calculation

The intention of the City of Providence to hire 72 new firefighters would make an interesting case study for anybody learning about public administration:

When an hourly employee in the private sector quits, it is not unusual for the employer to put off hiring a replacement. Instead, the employer has another person pick up the slack on overtime pay. …
But that is not what the City of Providence is going to do in the Fire Department. …
According to [Administration Director Michael] D’Amico, the initial crop of new hires would cost the city $2,195,000 a year but overtime would be reduced by an estimated $1,872,000 in fiscal year 2013 and then by an estimated $3,744,000 annually. …
The second crop would not save on overtime costs because those hired would replace firefighters who are expected to retire. But the new group would be paid lower wages than the senior people they replace, so the city will save an estimated $270,000 in fiscal year 2016, according to D’Amico.

Two critical differences between the private and public sectors, changing the calculation for each, are that private-sector companies don’t necessarily hire at the bottom rung, because experience is critical. New hires in the fire department therefore stand to make much less than current employees, especially current employees on overtime.
The second difference is that private sector companies don’t tend to be bound in their quest for efficiencies by “minimum manning” requirements that force them to have a certain number of employees on the job. That’s a separate debate, but it does give companies more latitude to adjust to their changing workforces.
One big omission from the article, and perhaps the hiring decision itself, is the calculation of pensions and other retirement benefits (such as healthcare). In keeping with the discussion that we’ve been having about the use of pensions to hide the real cost of public labor. It may be cheaper right now to bring on new firefighters, but as we’re learning, the accumulation of retirees can create a substantial annual burden.

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michael
michael
10 years ago

You cannot bring on new firefighters “right now” because there is testing, both physical and written, psychological, agility and background checks, then six months training. One year at least to get the first pool of candidates on the trucks.
There is no on the job training in Providence. Every firefighter has a vital role in emergency operations, outlined in standard operational procedures that are stringently followed, and utilize each and every person assigned consistently and effectively thanks to minimum manning. There is no room for mistakes on the job, no measure twice, cut once. When you get on the apparatus, it’s time to go.

Tom Kenney
Tom Kenney
10 years ago

[[[[ In keeping with the discussion that we’ve been having about the use of pensions to hide the real cost of public labor. It may be cheaper right now to bring on new firefighters, but as we’re learning, the accumulation of retirees can create a substantial annual burden. ]]]]
So what are you suggesting? Hire new FF’s with no pension? Get rid of the fire department altgether? I think you’d be more likely to back Laffey’s proposition of giving all the firefighters their money back and let them invest it on their own via 401(k)’s and the like.
One thing you have to weigh in with these types of decissions is the necessity of the job itself. Many communities get by without trash collectors. Private contractors fill the void. You can’t do that for a fire department in an urban environment.
Also, with regards to disability pensions – the City is self-insured. They would be exempt from paying Workman’s Compensation insurance – picking up the costs of claims on their own. What makes you think there will be any savings in that?

Justin Katz
Justin Katz
10 years ago

Boy, Tom, are you defensive. I’m not “suggesting” anything with the passage that you quote. I’m merely noting my suspicion that the calculation of the cost of new hires versus overtime doesn’t adequately take into account the fact that new hires will one day be additional pensions and retiree healthcare expenses.
Can’t say I’m averse to Laffey’s solution, by the way.

Warrington Faust
Warrington Faust
10 years ago

“Private contractors fill the void. You can’t do that for a fire department in an urban environment.”
Why not? They could just hire retired firefighters, in the same way the “private contractors” in Afghanistan hire former special forces people.
BTW, I know lots of salaried people who work long hours with no OT. OT is for hourly workers.

michael
michael
10 years ago

The big difference between the public sector and the private sector is the most important. The public sector exists for service and the private sector exists for profit. Government exists to service the people, hence the public sector.

Patrick
Patrick
10 years ago

“Hire new FF’s with no pension? ”
YES! Now you’re talking! Give them a 401k plan.
” You can’t do that for a fire department in an urban environment.”
Like Warrington said, Why Not? Privatize it and put it out to bids. Let your union bid on it.
I also think that in many suburban communities, they should go back to a volunteer fire service. In a town like Cumberland, which currently has four separate and stand-alone fire districts, each averaging three fires a year, could probably do just fine with a volunteer fire service. And I’m talking about fire, not rescue. I’m fine with keeping a couple guys on 24/7 for rescue.

michael
michael
10 years ago

The privatization of our logistical support for the wars in Iraq and Afghanistan cost the US taxpayer a fortune, and some big corporations are making a killing. Privatizing fire departments might work, privatizing police departments might work, privatizing the Army, Navy Air Force and marines might work too.
Having the government run public safety and the armed services does work, albeit with problems, but The People still have some control through elections, and I don’t think it’s a very good idea to give that up.

Warrington Faust
Warrington Faust
10 years ago

Posted by michael
“Government exists to service the people, hence the public sector.”
That does not relieve them of a repsonsiblity to provide those services efficiently.
“Government shouldn’t do anything you can find in the Yellow Pages”.

michael
michael
10 years ago

I just looked up soldiers, police officers and firefighters in the yellow pages.
Thanks Warrington.

Tom Kenney
Tom Kenney
10 years ago

From Justin: “Boy, Tom, are you defensive.”
Well, 36 posts on labor’s ills and 1 post on entitlements over the last 3 months surely shows your priorities on garnering public support to battle unions.
The suggestions you and others make here are theoretical changes you believe would save tax revenue. These same changes would potentially cut my family’s income in half, yet you accuse me of being defensive…

Dan
Dan
10 years ago

Tom – Just so we’re clear, which is more important: your personal salary and benefits or the financial health of the state of Rhode Island?

EMT
EMT
10 years ago

I also think that in many suburban communities, they should go back to a volunteer fire service.

Tom Kenney
Tom Kenney
10 years ago

Dan:
[[[[ Tom – Just so we’re clear, which is more important: your personal salary and benefits or the financial health of the state of Rhode Island? ]]]]
The financial health of my family will always be my number 1 priority, but if RI or Providence fails, my personal financial picture would be drastically cut also.
So……..the answer to your question is BOTH.

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