Does the average Orange County firefighter make $234,000 per year? No. And that's the bad news.

mikeledray / Shutterstock.com

Fire Fighters and emergency personal rush to control fires in Brea CA. Many homes in the area have been destroyed as a result of the wildfires.

Article Highlights

  • It's up to OC residents to decide what to pay public servants, but a good first step is to know what they're currently paying.

    Tweet This

  • UnionWatch.org reports that the average firefighter in OC pulls in total pay and benefits of $234,000 per year

    Tweet This

  • An average year an Orange County firefighter accrues future pension benefits worth over $118,000.

    Tweet This

UnionWatch.org reports that the average firefighter in Orange County, California pulls in total pay and benefits of $234,000 per year, making them among the best-paid public employees - and, for that matter, among the best-paid of any kind of employees - in the country. But is this true? No. But yes.

UnionWatch relies on compensation data provided by Orange County itself, which appears to buttress their claims. Average salaries for firefighters top $91,000, on top of which they typically receive another $65,000 in overtime and other supplementary pay. Firefighters then receive an employer pension employer contribution of around $61,000 and health insurance benefits of about $15,000, for a total of over $234,000.



So why is this not right? Because in Orange County and most other cities and states, much of the employer's pension contribution is to pay off unfunded liabilities from prior years, which is different from pension benefits earned by employees in the current year. Only the latter is truly compensation. The "normal cost" of Orange County Fire pension benefits accruing this year is about 23.49 percent of salaries, or around $37,685. So, average annual compensation would be around $23,000 less, so make that total compensation of about $211,000. Still not shabby, but less than the headline.

But here's the bad news: total compensation is actually a lot higher than $211,000, and even higher than UnionWatch's $234,000 figure. The reason is that Orange County calculates its pension contribution based on the assumption the plan's investments will 7.75% investment returns every year. Maybe they will, maybe they won't - but that's Orange County's problem: under California law, firefighters' benefits will be paid regardless. The way to account for this guarantee is by valuing benefits using a lower "discount rate." If we assume a 4% interest rate - something above the riskless Treasury yield, but lower than the pensions' own risky investment return - the normal cost of Orange County Fire pensions rises a lot - to about 75 percent of salaries. (Before you think I'm making this stuff up, note that the Congressional Budget Office applied the same risk-adjustment in valuing pensions for federal government employees.) In other words, in an average year an Orange County firefighter accrues future pension benefits worth over $118,000.

So total annual compensation for an average Orange County firefighter is somewhere in the neighborhood of $290,000 per year. It's a difficult and sometimes dangerous job, to be sure - but there are other difficult and dangerous jobs as well. It's up to Orange County residents to decide what to pay public servants, but a good first step is to know what they're currently paying.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Andrew G.
Biggs

What's new on AEI

Expanding opportunity in America
image Moving beyond fear: Addressing the threat of the Islamic state in Iraq and Syria
image Foreign policy is not a 'CSI' episode
image The Air Force’s vital role
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.