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News from EPI Police layoffs in high-crime cities cost far more than they save, says EPI study

For Immediate Release: Tuesday, June 21, 2011
Contact: Phoebe Silag or Karen Conner, news@epi.org 202-775-8810

Police layoffs in high-crime cities cost far more than they save, says EPI study

Tight budgets are forcing cities to make cuts that may do more harm than good.  A cost-benefit analysis published today by the Economic Policy Institute shows there is more to cost-cutting than meets the eye.  Cuts to the police force of five high-crime cities in New Jersey actually cost 12.9 times more than the budgetary savings of eliminating the officers, when the cost of rising crime is factored into the equation. 

False Savings, by Rutgers University professor Dr. Jeffrey Keefe, measures the cost of crime and compares it to the budget savings of police layoffs and finds that in these five high-crime cities (Camden, Irvington, Trenton, Newark, and Paterson), cutting police officers is more costly than keeping them.

“While police layoffs are an understandable action for a city with limited fiscal options, from a social and economic perspective, the layoffs are irrational,” said Keefe.

To determine the costs and benefits, Keefe identifies the tangible and intangible costs of major crimes, the cost of police staffing (from governmental budgetary information) and even the cost impact of officer presence by crime type.  Tangible costs involve direct financial costs to individuals, businesses, or governments from out-of pocket expenditures or lost earnings.  Intangible costs involve diminished quality of life resulting from fear of crime, the psychological after-effects of being victimized and the declines in property valuations or business viability.

An added feature in the analysis of these five New Jersey cities, as in other high-crime cities around the nation, is the exceptionally low tax base, usually used to fund public services.  In these five cities, police staffing is subsidized by state and federal funds.  When an officer is laid off, not only is there a direct correlation to increased crime, the city loses the state and federal subsidies and recoups only about half of the total cost of an officer.

The hidden costs for these five cities are felt in both the pocketbook and in the quality of life on and around the street.  On one hand, these five cities combined will realize an annual budgetary savings of $28,250,000 from police layoffs, but the expected consequences will be 34 more murders, nine more forcible rapes, 527 more robberies, 290 more aggravated assaults, 549 more burglaries, 260 more larcenies, and 479 more motor vehicle thefts. Most of the costs from these additional, preventable crimes will be borne by the victims, not the cities. The estimated annual cost of those additional crimes is $364,448,096, for a net loss to these communities of $336,198,096.

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