This morning the Bureau of Labor Statistics (BLS) released annual average employment data for 2013, along with rebenchmarked data for that year and the years preceding. I’ve downloaded some of the data to review trends in local government and other employment, from 1990 (the earliest year now available) to last year, for New York City and the Rest of New York State. The data show that local government employment was 23,400 (5.0%) lower in New York City in 2013 than it had been in 1990. In the rest of the state, in contrast, local government employment was 79,800 (14.6%) higher. With regard to the private sector workers that have to pay taxes to support public employees, on the other hand, if one excludes the Health Care and Social Assistance sector (which is substantially government funded) New York City had 226,100 more in 2013 than it had in 1990. The rest of New York State had 2,900 (0.1%) fewer private sector workers in 2013 than in 1990, the Health Care and Social Assistance sector aside.
While those are the changes from 1990 to 2013, however, there was a big break in the direction of things from 2009 to 2013, as compared with 1990 to 2009. The rest of the state, coming off the Great Recession lows, has been adding private sector jobs, while local government has been losing jobs. More commentary, the data and some charts may be found below.
The data may be found here. It was used to produce charts, and is not set up in an easy to read table, but some may want to see it.
The first chart shows year-by-year employment for Elementary and Secondary Schools and other local government employment for New York City and the Rest of New York State.
The data shows that New York City’s local government employment fell in the deep early 1990s recession, when the city faced a severe fiscal crisis. The State of New York’s tax base was affected by that recession as well, and it responded by slashing New York City’s share of state school aid, already below its share of the state’s public school children, even farther. Later in the decade the cut in the city’s share of state school aid would be reversed, and the city’s public school employment would increase to the level where it has remained, with minor variations, ever since.
For the rest of New York City local government, however, the cut in employment in the early 1990s was never made up. Instead, the level of local government employment outside the public schools has fluctuated around a new level that is typically about 40,000 lower than in 1990. It should be noted, however, that in the run-up to the 1989 Mayoral election the city’s local government employment had increased substantially, as Mayor Koch sought re-election. Mayor Dinkins was left to face the fallout and make the layoffs.
In the rest of the state local government employment soared with little interruption from 1990 to 2009. This in part was a response to the loss of corporate headquarters in the Lower Hudson Valley, manufacturing jobs in Upstate New York, and defense/aerospace jobs on Long Island. Politically-influential people who were used to relatively high-paid jobs with health and retirement benefits found them to be no longer available in the private sector. State and local government responded by creating more such jobs, despite limited population growth.
Moreover, school enrollment was increasing in the 1990s as the “Baby Boom Echo” generation – the children of the Baby Boomers – flooded in the schools. School systems that had become used to smaller class sizes and lots of out-of-classroom work opportunities when enrollment fell in the 1970s sought to persevere those conditions despite rising enrollment. This required even more employees. In New York City, on the other hand, the 1970s fiscal crisis and soaring pension costs had forced the schools to downsize as the baby boomers exited. The entire system was atrophied when the children of the Baby Boomers enrolled in the 1990s.
The second chart shows the change in the number of jobs in New York City and the Rest of New York State in four categories – Public Schools, Other Local Government, Health Care and Social Assistance, and other private sector. The chart highlights the break in the trend from 2009 on.
In the rest of New York State, from 1990 to the low point in the Great Recession the number of private sector jobs outside the Health and Social Assistance sector fell by 114,700 (3.5%), while the number of local government employees increased by 77,500 (26.8%) for the public schools and by 49,900 (19.4%) for other government functions. Given that the private jobs lost tended to be the highest-paid, and that local government workers were getting their pensions retroactively increased at the same time, the expansion of local government represented a rising burden on the remaining private sector workers. A burden placed not only on the Downstate Suburbs and Upstate New York but also on New York City.
From 2009 to 2013, however, we see a reversal. The number of private sector jobs in the Rest of New York State, not including the Health Care and Social Assistance sector, increased by 111,800 (3.5%). The rest of the state remains depressed. Private employment by this measure remains 58,600 (1.7%) lower than in 2007, before the Great Recession, and 106,800 (3.1%) lower than the historic high in 2000. Many parts of the U.S., particularly in the Northeast and Midwest, are in the same situation. But at least private sector employment in the rest of New York State has nearly gotten back to its 1990 level.
In New York City, meanwhile, private employment excluding the Health Care and Social Insurance sector is at its higher level since at least 1990.
In the Rest of New York State, meanwhile, local government employment fell by 47,600 (7.1%) from 2009 to 2013. This includes a decrease of 28,800 (7.9%) for the public schools, and 18,800 (6.1%) for other local government functions. While this does not come close to reversing the local government boom in the rest of the state from 1990 to 2009, it does represent a sharp reversal from a trend that had seemed inexorable. It is no longer everyone onto the payroll and into the pension system, at least for the moment.
The rest of the state is facing long-term decreases in its private sector tax base, the short-term decrease in private sector well being during the Great Recession, and soaring pension and other public employee retirement costs. With regard to pensions the Rest of New York State is far better off than most places, and far better off than New York City. But even so the consequences of the 2000 pension increase deal, and the cuts in taxpayer pension funding during the years before and after the 2000 stock market bubble peak, have come to haunt today’s taxpayers, public service recipients, and younger public employees in the rest of the state.
New York City has had even more retroactive pension increases, and has been hit even harder by soaring retirement costs. But thanks to its stronger economy it hasn’t had to cut local government employment nearly as much as the rest of the state recently, at least so far. The 2009 to 2013 decrease was 3,300 (2.2%) for the public schools, 9,600 (3.1%) for other local government functions, and 12,900 (2.8%) overall.
The third chart shows the percentage change in local government employment from 1990 to 2009, and from 2009 to 2013, in the larger New York State metro areas and components thereof outside New York City. Where did local government employment soar in the first period, only to plunge more recently?
The answer is everywhere. The jump in local government employment from 1990 to 2009 ranged from 11.1% in metro Syracuse and 12.9% in metro Buffalo-Niagara Falls to 35.9% in the mid-Hudson Valley area and 29.3% in Utica-Rome. The decreases in local government employment from 2009 to 2013 range from 3.1% in metro Rochester and 3.8% in metro Utica-Rome to a sharp 12.8% in metro Binghamton and 10.1% in the Lower Hudson Valley. None of the areas depicted had fewer local government workers in 2013 than they did in 1990, although metro Binghamton and metro Syracuse come close.
Floating on growing tide of government money, now more widely dispersed to the previously excluded in the wake of Obamacare, the Health Care and Social Assistance sector has continued to add jobs both in New York City and the rest of New York State. Recently, however, there are signs that this sector’s ever-rising share of GDP may be reaching the breaking point. For some parts of that sector, in some parts of the country, employment is stabilizing or even starting to fall, I have observed while crunching data for metropolitan areas around the country at my job.
These broad trends raise questions. For which specific government functions is local government employment in different parts of New York State and New Jersey above or below the U.S. average, and how as that changed over 20 years? How does the average payroll per employee in different parts of New York State and New Jersey compare with the U.S. average, and how is that related to difference in private sector payroll per worker and the overall cost of living? And what about employment trends in different components of the generally private sector but substantially government-funded Health Care and Social Assistance data?
I have thus far spent 40 hours compiling data from the 1992, 2002, and 2012 Census of Governments, along with related private sector data, to answer those questions. I hope to have spreadsheets ready to start loading on this site in another 10 days or so.