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Homeland Security: Robbing Peter to Pay Paul
Subject Labor supply and demand; shortages
Topic Labor markets
Key Words Recruiting, raises, overtime, attrition
News Story

The Transportation Security Administration (TSA), the new agency created two months after the September 11, 2001 attacks with a budget of $4.8 billion, is seeking to hire an unspecified number of air marshals and up to 54,000 passenger and baggage screeners for airports. This is leading to a recruiting war among government agencies charged with security, including the Immigration and Naturalization Service, the Secret Service, the US Capitol Police, the US Park Police, and the FBI. The TSA is offering raises of $10,000 or more to many candidates. Experienced air marshals, with overtime, can earn $84,000.

The INS is particularly hard hit. It is trying to hire 570 agents to patrol the Canadian border, but has seen an increase in attrition from 9 percent last year to 17 percent this year as 566 Border Patrol agents, immigration officers, and others have defected to the TSA. The Capitol Police has lost veterans with special skills, such as SWAT team members. The defections have led Congress to approve a 5 percent pay raise for the Capitol Police in 2003. The Border Patrol would like to see a 20 percent pay increase.

(Updated October 10, 2002)

Questions
1.

Draw a supply and demand diagram of the labor market for air marshals in the federal government. Depict the initial equilibrium wage and employment level.
a) Explain why the demand for air marshals would increase following the establishment of the TSA. Refer to the determinants of the demand for labor and the news story.
b) Illustrate the effect of the higher demand for air marshals on their equilibrium wage and employment.

2. Now draw a labor supply and demand diagram for security workers in other government agencies before September 11, 2001. Assume a uniform wage and that the market was in equilibrium.
a) Show the effect of September 11 on the demand curve, and explain what you have drawn.
b) Show and explain the effect of Congress being slow to change the wage level.
c) Why did so many workers decide to leave these agencies? Refer to the determinants of labor supply and the news story.
d) Illustrate the effect of this on the supply curve and on the situation you identified in (b).
e) What will have to happen eventually if agencies other than the TSA are to be able to provide adequate security? Illustrate on your diagram.
Source Kevin Johnson, "Aviation security drains agencies," USA Today, July 12-14, 2002.

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