Substitution Effect Revisited: Balancing Sworn Officer and Private-Public Security Guards

Fiscal Reform, Policy — By on August 19, 2011 at 10:30 AM

Mark “Jay” Williams
Economics Fellow

Originally published by

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In an attempt to connect higher crime rates to budget cuts, some organizations and elected officials have used all-encompassing crime index figures as the bedrock of their argument. However, failing to breakdown these numbers further would mean New Jersey misses an opportunity to make better use of our limited resources to protect communities and serve taxpayers. Using public-private security guards to handle nonviolent crimes and administrative duties is practical, efficient, and overdue in New Jersey.

The Bureau of Justice reports that in 2008, New Jersey had 550 local law enforcement agencies, 43,569 total personnel, and 33,704 sworn officers (figures for 2009 unavailable). With 90% of police transactions involving nonviolent crime and traffic citations, it is time to utilize more taxpayer-friendly police budgeting opportunities, focusing sworn officers on violent crime and high-threat functions.

The Substitution Effect

In February, I presented a concept that has been actively discussed since the 1980s by government planners, academics and think tanks: the use of private security to augment public police agencies. The principal objective is to reduce public safety budgets while maintaining current service levels, but the research also identifies the improvement of customer service and higher visibility as very positive outcomes over current “reactive” police service.

The argument is that private security, or even competitive-priced administrative public employees, can replace or augment public police for many low-level safety functions, such as traffic control, robbery and accident investigation, front-desk and communications manning, and specialty crime (e.g. fraud, forgery, and embezzlement). This frees highly-trained police officers to do genuine police work, including a ‘show-of-force’ high-crime area patrol. The cost of a single $90,000 salaried retiring officer could be used to hire three private security officers. The intent is not to replace the higher-level security functions that require uniformed police, but to responsibly balance resources to increase levels of customer service at current or reduced costs.

New Jersey’s Police Salaries the Highest in Nation

The Star-Ledger (Sept. 19, 2010) identified New Jersey’s police salaries as the highest in nation, with median pay of $90,672 based on 2009 Pension data. Throw in another 28% average for pension and health benefits costs paid by government, and the long-term costs of lucrative retirement benefits (50% pay at 20 years; 65% pay with lifetime health at 25 years), and the average cost of a public police officer might be as high as twice their current salary.

As towns are forced to cut officer ranks due to budget caps and revenue declines, overtime costs for police are on the rise. In many towns, overtime costs for police are driving trade-offs for less services or reductions in non-police personnel (e.g. public outcry for loss of water department employees is much less, if at all). However, police salaries are a function of union negotiations that do not necessarily reflect a local demand for services, and arbitrarily include mandated annual raises. The Star-Ledger article states that in Edison Township, 164 of 186 officers made six figures in 2009, and Rochelle Park officers’ median pay was $134,000 for a one-square-mile community. The disparities in pay go much farther for poor communities, where the median was $90,000 in Newark, and only $79,000 in Camden.

Like teachers, when a police officer leaves their town to go to another town for salary or other reasons, the officer loses their seniority. As a result, a competitive market for police officers does not exist, and salary raises are not based upon a free-market economy.

Non-violent and violent crime was lower in 2008 than in 2000, and a strong argument can be made that increased police personnel is related to that drop. However, that does not mean resources cannot be used more efficiently than they are today. Moreover, proponents of substituting for police officers in certain cases are not questioning the important role that sworn officers have in protecting the community. We are only proposing that given a tightening of government budgets, elected and professional leaders must find more optimal ways to provide safety and security while increasing customer service.

The Next Steps

Several large cities are exploring the use of private security and lower-cost public employees to do the administrative work of police agencies. Much of the work is being done in Mesa (AZ), Oakland (CA), Portland (OR), New Orleans (LA), and Chicago (IL), and CSI-NJ will study the results in other parts of the country.

Here in New Jersey, regionalization efforts, such as Camden County’s current efforts to form a county police force, are likely to become more common. In those arrangements, the use of public-private partnerships for administrative functions should be integral to a consolidation model.

Temple University’s Center for Competitive Government has done extensive work on privatization of police administrative and low-threat functions, and interested policy activists should review their detailed work in this area.

About the Author

Mark ‘Jay’ Williams is an Economics Fellow at the Common Sense Institute of New Jersey, a non-profit organization dedicated to bringing free-market solutions to the public policy challenges facing New Jersey.

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