Los Angeles Lifeguards

  

For the past seven years my wife and I have spent a few weeks in California mainly to visit our daughter and her family. These visits never fail to provide material for The Weekly Bystander. 

 

On May 12,  I read an article in the Wall Street Journal on the incredible compensation of members of the lifeguard union in Los Angeles County. The article was apparently based on one that appeared in Forbes magazine in 2019 before the pandemic closed the beaches.

 

The base pay for lifeguards in LAC was $140000 per year but with overtime 82 made over $200000 in 2019. Thirty-one lifeguards took home between $50000 and $130000 in overtime. Seven had enough overtime  to make between $300000 and $392000. 

 

In 2019, one lifeguard captain enhanced his $140000 base pay with $130000 in overtime pay, $21760 in “other” pay, and a whopping $75000 worth of benefits. I suppose these benefits included contributions to his generous pension plan. 

 

At age 55 a lifeguard with 30 years of service can retire on 79% of his or her pay. It would not surprise me to find that the average pay used in pension calculations would include overtime. 79% of $300000 is a lot better than 79% of $140000.

 

I do not quibble with the base pay of these California beach lifeguards. They probably make much more than their counterparts in California pools because their work is more difficult and even potentially dangerous. The ocean guards have to be trained professionals with a variety of skills. But why do they get so much overtime?

 

It would appear that the Los Angeles County beaches have been under-staffed. I suspect that this understaffing benefits both the County and the union. The County does not have to hire additional employees and provide them with expensive benefits.

 

However, the union members must also like an arrangement that provides them with plenty of overtime, usually at double pay. In my experience many unions have deliberately restricted membership in order to keep existing members on the job and provide them with overtime.

 

For years unions have been in the forefront of the movement to reduce the work week. Rather than an altruistic plan to give workers relief from long hours, and back-breaking labor, the shorter work week is an effort to boost compensation with overtime pay. 

 

The LAC lifeguards are obviously not the down-trodden workers of 100 years ago. Like union members all over the country, they have become part of a new aristocracy with salaries, benefits, and pensions far exceeding the great majority of workers in the private sector. 

This is real but hidden income inequality. Who else can retire at age 55 on 79% of pay? Who else can double their income with overtime? Who else can get tax free benefits worth $75000 per year?

 

Nevertheless, despite 100 years of steady improvement in wages, benefits, and working conditions, union members are still portrayed in the movies and on TV as the wretched of the earth, oppressed by heartless, greedy capitalist bosses.

 

In many ways today’s Progressives are living in the past. The Communist revolutions of the past century have all failed but the propaganda they created has persisted throughout our culture. Our schools and media are full of it. Business is bad and public service is good. Profit making companies and enterprises are bad, but non-profits are good. Capitalism is bad but Socialism is good.

 

The Progressives have found a home in the Democratic party. Actually, Progressivism was a movement of 100 years ago. Most of the goals of that  earlier movement have been realized today. In particular the union movement has been successful to the point that union members now are a privileged class.

 

The Democratic party is in bed with these powerful unions, both in the private and public sector. Union political contributions are essential in any election campaign even though Democrats continually complain about the influence of money in elections.

 

Years ago, one of my clients was a union representative in a local school district. He told me that his goal in negotiations was not to increase salaries for his teachers but rather to increase their benefits. Salaries got reported in the newspapers, but benefits did not. Moreover, benefits were usually tax free. 

 

Today, instead of advising my grandchildren to go to college, I will seriously think of urging them to go West and become a Los Angeles county lifeguard. Of course, they will have to find a way to get into the union.

 

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California Pension Gold Rush

                                             

San Francisco’s police chief retired recently at age 53 after 30 years of service on a pension of $239,000 per year. San Francisco allows its employees to retire on 90% of their final average pay after 30 years of service. Let’s just try to calculate the value or cost of a pension of $239,000 per year. A pension actuary would use a present value calculation but to keep it simple, it would take about $6,000,000 earning 4% interest to provide $240,000 of income per year.

The chief is only the tip of the iceberg in San Francisco where 146 retired city workers and their survivors are knocking back $100,000 or more a year in pension money. If those 146 people receive only $100,000 per year, that’s a minimum of $14,600,000 a year in pension benefits. At 4% interest it would take $365 million to provide $14,600,000 per year.

CalPERs, the California pension system has over 4800 former employees with pensions over $100,000 per year. The former city manager of the town of Vernon receives a pension of $499,000 per year. Is it any wonder that California is on the verge of bankruptcy? None of the characters that Arnold Schwarzenegger portrayed in the movies would have had the nerve to go before Congress and ask for a bail-out while at the same time doing nothing to reform the most generous pension system in the whole country. The only other alternative proposed by his successor as Governor is to make drastic cuts in needed state services or increase taxation.

It is true that government employees are required to contribute to their defined benefit plans during their working years. However, the rate of contribution will never fund their generous retirement plans. If over her 30-year career the San Francisco police chief had contributed $15,000 per year into a 401k type plan, which managed to earn 5% each year, she would have accumulated a little over $1,000,000 in her retirement account. Using 5% interest the account would have provided an income of $50,000 per year. It is obvious that her retirement plan is almost five times better with absolutely no risk!

A call for pension reform does not imply criticism of government employees and their work. Like the rest of us most of them work hard at their jobs and deserve to be financially secure in retirement. Nevertheless, their defined benefit pension plans are dinosaurs that are crushing the rest of us under foot. They even prevent cities and states like California from hiring needed teachers, police, firefighters, and medical and social workers.