Before moving on to a function-by-function analysis of the state and local government employment and payroll data from the Census of Governments, I’ve decided to post a brief overview to set the stage. The data I compiled is for three years two decades apart: 1992, 2002, and 2012. For the U.S. as a whole, the number of full time equivalent (full-time plus part timers converted to a smaller number of full timers based on hours worked) local government employees per 100,000 residents increased substantially from 1992 to 2002, from 3,327 to 4,022, before falling back to 3,827 in 2012 – still more than 1992.
Upstate New York, both the more urban counties and the rest, followed the national trend of an increase from 1992 to 2002 and a smaller decrease to 2012, as did the statewide figures for New Jersey. In the affluent Downstate Suburbs and Fairfield County local government employment continued to rise through 2012. In New York City local government employment has trended downward relative to population for 20 years, albeit from a high starting position of 5,650 full time equivalent local government workers per 100,000 workers. More after the break.
Despite 20 years of decreases, however, as of 2012 New York City’s full time equivalent local government employment per 100,000 residents was still high, not only relative to the national average but also relative to other large and densely populated urban counties around the country.
While Los Angeles County and Cook County contain suburban jurisdictions as well as the cities of Los Angeles and Chicago, the City of New York, which covers five counties, contains many suburb-like areas within its borders as well. These are the only two counties that are similar to New York City in the size of their total population. New York City had 4,899 full time equivalent local government workers per 100,000 residents in 2012, compared with 3,879 for Los Angeles County and 3,796 for Cook County. The local government employment ratio for Los Angeles and Cook was not only lower, than NYC but also lower than two major counties in Texas — Dallas County (Dallas) at 4,283 and Harris County (Houston) at 3,904 — despite what you might have believed.
In 2012, New York City (and the big Texas counties) also had more local government workers per 100,000 residents than Suffolk County (Boston) at 3,089, and Philadelphia County at 3,682. King County (Seattle) at 4,285 was similar to the big Texas counties but well below NYC. San Francisco County had fewer local government workers per 100,000 residents, at 4,687, than New York City, though more than the two big counties in Texas. Philadelphia and San Francisco counties are co-terminus with the densely populated cities of Philadelphia and San Francisco. Suffolk County includes only slightly more territory than the city of Boston.
The extent of local government services varies from place to place. Everyplace in the U.S. has public elementary and secondary schools and police, and these are the functions most comparable across the country. In fact, the public schools and the police accounted for 62.5% of all full time equivalent local government employment in 2012, according to the Census of Governments. But not everyplace has public mass transit, public hospitals, public housing, municipal trash collection, public libraries, professional (rather than volunteer) fire protection, or even public parks. This makes averages more difficult to compare – some counties may be low simply because some or all parts of them don’t provide the services. New York City, in contrast, has extensive employment in virtually all local government categories.
Despite high local government employment overall (and high spending per student on education as shown in this post),
in 2012 New York City had fewer elementary and secondary school workers relative to its overall population than the national average. New York City’s ratio of public school employment to population was somewhat below the U.S average in the “instructional” category (mostly teachers), at 1,386 per 100,000 residents for NYC and 1,484 per 100,000 residents for the U.S. It was far below average in the “non-instructional category” at 360 for NYC and 642 for the U.S. While some of this difference in public employment is due to NYC contracting out “non-instructional” work to private sector workers, data on per student spending shows that the city’s overall spending in non-instructional categories – including the contracts – is and always has been low, with the exceptions of custodians and school buses. More detail on public employment and payroll in education will be provided in the next post.
New York City had 563 full time equivalent police officers per 100,000 residents in 2012, 2.8 times the U.S. average of just 203 officers per 100,000 people. NYC’s relatively large number of local government workers overall can be attributed in part to its army in blue.
It may also be attributed in part to NYC employees in categories were most localities do not provide services. NYC had 1,176 local government workers per 100,000 residents in the public transit, public hospital, and housing and community development categories combined in 2012. The U.S. average was just 288 for these categories combined.
Unlike New York City, for other parts of New York State and New Jersey the 2012 ratio of local government employment to population was much closer to the U.S. average, or even below that average, in the police officer category, and for transit, public hospitals and public housing combined. Overall, however, each of these areas was well above the U.S. average in the total local government employment per 100,000 residents. Compared with the U.S ratio of 3,827, the overall ratio was 4,625 for the Downstate Suburbs (Nassau, Suffolk, Westchester, Rockland, Putnam), 4,276 for the Upstate Urban Counties (Albany, Broome, Dutchess, Erie, Monroe, Niagara, Oneida, Onondaga, Orange, Rensselaer, Saratoga, Schenectady), 4,817 for other, less dense counties in New York State, and 4,180 in New Jersey.
The reason for high local government in these areas overall, for the most part, was extremely high employment in the public schools. Compared with the national average of 1,484 elementary and secondary school “instructional” workers per 100,000 residents in the U.S., the ratios were 1,829 in the Downstate Suburbs, 1,734 in the Upstate Urban Counties, 1,931 in the Rest of New York State, 1,894 in New Jersey – and 1,859 in Fairfield County, Connecticut. For non-instructional employees, the number per 100,000 residents was 642 for the U.S., and about the same in New Jersey and lower in Fairfield County. But it was 762 in the Downstate Suburbs, 810 in the Upstate Urban Counties, and 880 in the Rest of New York State.
When one thinks about what local government workers are paid, on average, one needs to think relative. After all, those earning $10,000 per year in the early 1960s had made it big, whereas today that is a poverty wage. One relevant comparison is what the local government workers in one place earn relative to the U.S. average for local government workers, overall and in the same functional category.
A second is what local government workers earn relative to the private sector workers who pay taxes to support them. As it happens, Downstate New York, New Jersey, and Fairfield County, Connecticut all have a relatively high private sector payroll per worker, compared with the U.S average. Unfortunately, this above average payroll per worker goes along with an above average cost of living, particularly for housing. So you can’t expect to pay local government workers in Downstate New York and New Jersey the same average payroll per employee as the U.S. average and expect to attract and retain workers with the same level of ability and motivation as in lower wage, lower cost areas.
There is, however, a part of the Downstate New York (and Fairfield County) economy that is in a labor market unto itself, paid based on its power rather than based on what it earns – the financial sector. In any U.S. metro area there will be some sectors that have higher average pay than others, but it is extremely rate for the highest paid sector so be large and disproportionately paid as to affect the total private sector payroll per employee. But that is the case for Downstate New York and Fairfield County. For those areas, I have also provided private sector payroll per employee data without the overpaid financial sector – to compare local government workers with ordinary people.
The first chart on payroll shows how far above or below the U.S. average local government pay (based on Census of Governments data) and private sector pay (based on BLS employment and wages data) were in different places in 1992.
The New Jersey data shows what I know, after working with this data for all these years, to be the typical situation. Payroll per employee was 23.8% above the U.S. average for local government workers, and 23.8% above the U.S. average for private sector workers. Excluding finance, private sector payroll per employee was 24.8% above the U.S. average. Finance actually brought the overall average down in New Jersey.
In the Downstate Suburbs payroll per local government worker was 36.1% above the U.S. average. And excluding the overpaid finance sector, private sector payroll per employee for all of Downstate New York (which is really one labor market) was a similar 30.3% above the U.S. average. Local government workers had a slight edge in the Upstate Urban counties as well, with a payroll per employee that was 5.6% above average in local government compared with 1.7% below average for the private sector. But the two were not that far apart. In the Rest of New York State payroll per employee was 14.5% below the U.S. average for local government, and 12.7% below average for private sector workers. Back in 1992, local government payroll per employee was only 21.8% above the U.S. average in NYC, compared with 30.3% above the U.S average for private sector workers (excluding finance) in downstate NY.
NYC’s lower local government pay was balanced by higher pension costs, mostly due to the need to pay for the rich pension deals handed out by Mayor Lindsay in the 1960s. With the exception of police officers and firefighters, those actually working in 1992 didn’t get those over-rich pensions. Just the lower relative pay. At the time, I saw this situation as a very bad thing. New York City was overstaffed with local government workers whose qualifications and motivation were the worst in the metro area, based lower compensation in the one kind of pay most workers care about until late in their careers – paychecks. For some government functions in particular this situation would only get worse in the mid- to late-1990s, when the economy was hot and qualified workers – especially young new hires – were at premium.
So what was the situation in 2012?
Compared with the national average, and compared with most private sector workers, local government workers are now disproportionately highly paid in the New York area. By 2012 in New York City payroll per employee was up to 39.4% above the U.S. average for local government workers, and down to 28.1% above average for downstate private sector workers (excluding finance). With the same labor market situation for most private sector workers, local government pay per employee was 44.1% above the U.S. average for the Downstate Suburbs. In fact, the extent to which payroll per employee for Downstate New York local government workers exceeds the U.S. average is approaching the private pay per employee total, including the financial sector.
Which explains the situation budgets are in throughout the New York area, and for New York State. When the financial sector is booming, New York City and state are held to have “plenty of money” and local government workers are awarded higher pay and enriched pensions. But there are no reductions in pay and pensions when Wall Street pay and financial profits fall back toward normal. Instead, there are tax increases and service cuts for the ordinary people in the rest of the private sector. Less in services for more in taxes then becomes the “new normal” from which public employees demand even more in the next upturn. No one is talking about “retroactively” giving New Yorkers back all the extra taxes they paid as a result of tax increases during the Great Recession, or refunds for the services they lost, for example.
Thus the New York City and State budgets can only be balanced without ever more pain for most people when Wall Street is in a bubble and ripping off the world. As it is, temporarily, right now. Local government workers also got richer in cash pay, relative to private sector workers, in the Upstate Urban Counties (7.8% above the U.S. average vs. 12.8% below), the Rest of New York State (minus 5.4% below average vs. 10.6% below), New Jersey (26.0% above average vs. just 18.1% above average), and Fairfield County (31.7% above average vs. just 18.1% above with finance excluded). All of these ares are mired in ongoing fiscal difficulties.
The fact that local government workers have become richer relative to private sector workers in cash pay (shown by this phase of Census of Governments), let alone pensions, explains the decreases in local government employment. Given that average private sector pay per worker has been trending down for some time, except for (and then including) those at the top, private sector workers simply cannot afford as many richer local government workers. As long as Wall Street continues to pillage successfully, and for only that long, New York City will actually be better off in this regard than many parts of the country. (Or would have been, if its hit from soaring pension costs was not greater than in virtually all parts of the country).
Let’s look at public and private pay over the three selected years.
The chart shows the increase in the extent to which local government pay per employee exceeded the national average in purple. Unfortunately the data for 2002 is not representative, in total and for several government functions (police, fire, etc.), due to the huge amount of post 9/11-related overtime in March 2002 when the data was collected. But the trend from 1992 to 2012 is clear – up compared with the national average for local government workers. So is the trend for most private sector workers – those not in the overpaid financial sector, as shown in black. The extent to which those in downstate New York are paid more than the U.S. average has been falling. And, of course, the U.S. average has been falling relative to inflation as well. (Of course, New York’s local government pay per worker may be falling relative to the U.S. average because that U.S. average has falling as well).
Thanks to Wall Street, total average pay per employee in downstate New York has actually increased, as shown in green, from 1992 to 2002 to 2012 (though it fell during the Great Recession). Pay per employee in the financial sector alone continues to soar, as top executives cut dividends and company employment (and thus the ability to get financial work done) rather than financial pay. How long this can continue, I’m not sure. To see something more like reality, and understand why workers are flooding into NYC despite higher housing prices, check the trend in the Upstate Urban counties, which is similar to many parts of the U.S.
Private sector pay per worker has plunged relative to the (itself falling adjusted for inflation) U.S. average, as high-wage jobs have disappeared. Local government pay per employee, meanwhile, increased relative to the national average from 1992 to 2002, and then barely fell back in 2012. And remember, this is just cash pay, not including the retirement benefits which are even richer in NY compared with the U.S. average (or at least more likely to be actually paid for, for now) and have become richer still since 1992.
How does this add up? How is it paid for?
1) More and more state tax dollars collected in NYC are being shifted upstate.
2) The number of local government workers per 100,000 residents in the Upstate Urban counties fell from 4,607 in 2002 to 4,276 in 2012, a significant drop.
3) A higher and higher share of the falling income of the residents of the Upstate New York is going to state and, in particular, local taxes. (That’s true in the Downstate Suburbs as well, but not to the same extent).
Which explains why Andrew Cuomo’s property tax increase limit is so popular. And why representatives of the public employee unions, who liked the trend of other workers paying more and more for less in services, want it removed. So have I become a different person over 20 years? From someone in favor of better pay for local government workers, to someone who hates the middle class? No. My views are exactly the same, and as always I’m in favor of those with less power and less of a sense of entitlement who are getting a less good deal. As Keynes said, “When the facts change I change my mind. What do you do sir?” These are the broad brush trends for local government as a whole. As I can find the time, I’ll go sector by sector and see what the differences are.