I was in Target the other day and noticed their motto: “Expect More, Pay Less.” That sure is a hell of a lot different from New Yorkers under the age of 60, and in particular under the age of 40, will be paying into and getting from the federal, state and city governments over the next 20 to 40 years. At the federal level because of four decades of future selling by Generation Greed that have left us with a massive national debt and underfunded old age benefits – underfunded despite later-born generations already being required to pay in more while being promised less. At the state level because New York City shares a tax base with Upstate cities and rural areas with extensive needs and dwindling resources, and suburban areas with more power and greater entitlement. And at the city level because one politician after another has cut deal after deal to cash in the future, to further benefit already-advantaged unionized public employees and contractors, who are cashing in and moving out.
The theft has occurred, the money is gone, and “Expect Less, Pay More” is inevitable. In fact a New York City in the 1970s-style institutional collapse is highly likely, and not just in New York City. So what will our “leaders,” still beholden to the same interests and generations and still promising to hand them even more, say about this? I want them to be forced to admit the truth. And let me tell you what I don’t want to hear.
A couple of years ago, I wrote a post based in part on Local Area Personal Income data from the Bureau of Economic Analysis, showing how the mean earnings per worker (adjusted for inflation) had changed for state and local government workers, financial sector workers, and other private sector workers from 1969 to 2016 – for Downstate New York, Upstate New York, New Jersey and the U.S. as a whole. I later added data for Connecticut.
The data shows that the total earnings of state and local government workers in New York City increased 22.7% from 2017 to 2018. While Manhattan was flat, the increase was 52.1% in the Bronx, 43.8% in Brooklyn, 39.3% in Queens and 47.8% in Staten Island. Clearly that did not actually happen.
In the past I would have dismissed this as an error, to be pointed out to the BEA and fixed next year. But more and more data and other factual information has been altered in more and more ways over the past three years, or disappeared completely, specifically for state and local government finances in New York. So I have begun to fear something worse. I looked into it. Here is what I found.
About a year ago I published an analysis based on U.S. Census Bureau government finances data, for all states and all available years from 1972 to 2016, that showed the extent to which each state’s future (with New York City and the rest of NY State analyzed separately, and the District of Columbia also included) has been sold out. Sold out by past decisions, non-decisions, deals and favors with regard to state and local government debt, past infrastructure investment, and under funded and/or retroactively increased public employee pensions. The analysis was well received, and best of all many people downloaded the spreadsheet with all the data for all 50 states, all the tables, and almost all of the charts. I always put up a post encouraging people to download the spreadsheets, look at the data themselves, and make up their own minds before reading my subsequent posts and getting my take on it. Generally people had downloaded charts, but not spreadsheets. Last year that changed.
What I had forgotten last year, however, but have since remembered, is the multi-step process needed to put readable tables, in JPEG format, into the posts on WordPress. So this year I added the tables to the posts I just completed on state and local government employment and payroll data from the 2017 Census of Governments, and I found that many people had downloaded them. I don’t know why some people might prefer pictures of numbers to actual numbers, but apparently some people do. So I plan to rectify last year’s omission of tables – except for people who downloaded the spreadsheet — from the Sold Out Futures posts with a brief reprise. The data shows that while the blame for our sold out future is widely shared, New York City’s past taxpayers are the most the most blameless in the entire United States. And New York City’s public employee unions and contractors have been the most unfair to other city residents. And nowhere else is even close.
This post will complete my series on different government functions based on employment and payroll data from the Census of Governments, for March 2017 and previous years. It includes data for the kind of general government and legal workers one might generally expect to find hanging around in city and town halls, and county seats and courthouses, reviewing applications, keeping records, handling cases and doing inspections, rather than providing services. At the local government level the functions included are, as delineated by the U.S. Census Bureau, Health, Financial Administration, Other Local Government Administration, Judicial and Legal, and Other and Unallocable. At the state level there are two additional functions: Social Insurance Administration, basically state Departments of Labor, and “Other Education,” which includes oversight agencies such as the New York State Department of Education and Board of Regents.
For decades I’ve been making the case that for public employment and expenditures alike there is not much to see here. New York State is about average when you add everything up, and no part of the state is really out of line. Today, however, things have changed enough in one part of the state that this time around I don’t feel that to be true anymore.
This post is about government functions I refer to as public amenities: parks, recreation, culture, and libraries. Just because they are amenities doesn’t mean they are unimportant, although they are often treated that way in a budget crisis. For the young and old, in fact, the availability of these shared, social spaces is one of the most important reasons to live in central cities. In modern suburbs people shuffle between detached homes and workplaces, and generally only interact with people they don’t already know in places that have significant admission fees. In New York City you can be with people, get entertained, and get exercise without spending much of anything.
Taxpaying workers who don’t have children in public schools, don’t commit crimes, and aren’t on Medicaid, are cash cows for the City and State of New York. These public amenities, along with streets, mass transit and garbage pick up, are really all they get for the taxes they pay, since the cost of water and sewer service is funded by charges. These are things that benefit everyone, but given the special interest-driven politics of state and local government here, the goal is always to take from everyone and give it to the “special people.” So benefitting everyone is the same as benefitting no one in particular who actually matters. Fortunately, Census of Governments employment and payroll data shows that as of March 2017 New York City’s agencies in these functions were not understaffed (unlike in the past for parks), and their workers were not underpaid. We’ll see what happens when the tax dollars aren’t gushing in from yet another Wall Street and real estate bubble, as they have been.
This series of posts based on Census of Governments state and local government employment and payroll data for March 2017 (and 2007 and 1997) continues with a post on infrastructure functions: highways and streets, mass transit, air transportation, water transportation, government-run electric and gas utilities, water supply, sewerage, and solid waste management. Along with related private sector activity. When I joined New York City Transit out of graduate school in 1986, I was told it was the largest industrial/blue collar employer in New York City. It probably still is, with the other functions described adding as many blue collar jobs, and jobs with contractors many more.
In the past 10 years or so, subway riders have experienced a drastic decrease in their quality of life despite rising fares, relative to the very low inflation of the period. This is something I have attributed to costs from the past – the big pension increase in 2000, with huge costs deferred until later, and decades of zero state and city funding for the MTA capital plan, with money borrowed instead. But after reviewing the data for these functions, I have begun to wonder if even worse is coming. And not just at the MTA. But we will have water!
Health care vies with elementary and secondary education as the largest destination for federal and state government spending. In fact, when I added it up in 2006 the federal, state and local governments were already paying for 75.0% to 80.0% of third party (insurance and public program) health care expenditures nationwide, which is to say expenditures other than co-payments and services people pay for themselves in cash (such as cosmetic surgery). Directly (Medicare, Medicaid, the VA Hospital system) or indirectly (health insurance purchased on behalf of civilian public employees and their families, the exclusion of employer funded health insurance from taxable income, other tax breaks).
Since then the population has aged, leading to more Medicare and Medicaid spending, Medicaid has been expanded to more working people, and Obamacare has added another form of indirect federal support for private health insurance. For all the discussion of “socialized medicine,” here in the U.S. the government share of third party health care expenditures is probably up to 85.0% or so, and as a percent of GDP it probably exceeds the cost of the entire health care system in developed countries.
Health care and social services, however, are provided by the government primarily through payments to private sector organizations, generally non-profits in New York City and throughout the Northeast. Therefore in this, the fifth post based on my tabulation of state and local government employment and payroll data from the 2017 Census of Governments, data on related private sector organizations from the Bureau of Labor Statistics will take center stage. And this analysis features the most shocking trend I have found so far.