If you haven’t already, you should download this spreadsheet linked in the first paragraph of this post and print out the “local output” and “state output” tables, before reading what I have written here. The data shows that according to public employment data from the Governments Division of the U.S. Census Bureau, there were 3,980 full time equivalent local government workers per 100,000 people in the United States in March 2010, about the same proportion as in March 2002. In 2010 local government employment was somewhat higher relative to population in New Jersey at 4,414, and substantially higher relative to population in New York City at 5,135, and in the rest of New York State at 5,084.
New York City’s higher local government employment is explained by the broad range of municipal services provided here, including public water, public sewer, public transit, professional fire protection, municipal garbage collection, and extensive public housing, hospitals and social services for the poor. The city’s local government employment, moreover, was slightly lower relative to population in 2010 than it had been in 2002. Extensive services are much less of an explanation for the high level of local government employment in the rest of New York State, since not all areas of the rest of New York State have all these services. Local government employment in the rest of the state, moreover, has been soaring for two decades, with increase from 4,683 per 100,000 residents to 5,084 just over the eight years in the table.
The high and rising local government employment in the portion of New York State outside New York City can be mostly explained by just one local government service: public elementary and secondary schools. The 5,084 local government employees per 100,000 people in the rest of the state in total is 1,104 higher than the U.S. average of 3,980. The Rest of New York State’s 3,101 public school employees per 100,000 people alone, meanwhile, is 881 higher than the U.S. average of 2,220. Moreover, the public schools explain all the increase in local government employment relative to population from 2002 to 2010. Total local government employment per 100,000 residents went up by 401 in the Rest of New York State; public school employment went up by 399.
The Rest of New York State has always had relatively high public school employment and pay compared with the rest of the country, a function of a greater commitment to quality education and state school funding formulas that favored the rest of the state at the expense of New York City. But local government really boomed in the rest of the state between 1990 and today, driven by two factors. First, the STAR program directed more state funding to whichever school districts spent the most, providing an incentive to spend more in the years before 2002.
Second, while overall private employment in the Rest of New York State has remained strong, many of the high wage manufacturing jobs located there have disappeared. For example, defense firms such as Grumman left Long Island in the early 1990s, the many corporate headquarters that left New York City for Westchester in the 1970s subsequently left Westchester, and upstate stalwarts such as IBM, General Electric, Kodak and Xerox downsized and relocated. Jobs remain available in the suburbs and upstate, but not necessarily high wage jobs with employer-funded health insurance and pensions. So residents of the Rest of New York State looked to government to provide what they could no longer earn in the private sector labor market, specifically the part of the government funded in part by money transferred via the State of New York. The public schools.
In addition to providing education, therefore, partially state funded local government has become a sort of high-end welfare program for the Rest of New York State.
New York City’s high level of local government employment, meanwhile, can be entirely explained by its large public transit system and its extensive social services, public hospital and public housing systems. In 2010, the city’s 5,135 local government workers per 100,000 residents in total was 1,155 higher than the U.S. average. Its 621 public transit workers per 100,000 was 544 above average, and its 939 public welfare, hospital and housing workers was 627 above average.
In the case of mass transit, for many city residents New York City’s network substitutes, entirely or in part, for private automobiles. In 2010, as shown in the private employment section at the end of the local government employment table, the city had just 444 private sector workers in auto-related industries such as motor vehicle sales, motor vehicle repairs, gasoline service stations, parking facilities, and motor vehicle parts wholesaling and retailing. The national average was 1,223. The Rest of New York State and New Jersey were also above average in public transit employment relative to population, but were just about average in private auto-related industries. Mass transit, it would appear, is something affluent suburbanites use to travel to Manhattan, not to substitute for one of more private automobiles.
It should be noted that my tabulation of auto-related employment does not include three of the largest related industries, motor vehicle and part manufacturing, oil production, and oil refining. These industries are concentrated rather than distributed in proportion to population as local businesses. One advantage of a transit system is that more of the money spent on transportation stays in a local area in local jobs. Or in the case of New York City, is located in the suburbs as jobs for suburbanites.
No such public-for-private employment substitution effect was observed for New York City’s extensive local government public welfare and public hospital employment. Instead, there is an additional huge government-funded private social service and health care infrastructure in the city, financed substantially by New York State’s expensive Medicaid program. Thus, while New York City’s public Health and Hospitals Corp had 494 workers per 100,000 city residents, well above the U.S. average of 187, its private hospitals had 1,788 employees per 100,000 residents, also above the U.S. average of 1,502. And while the city had 272 local government workers in the public welfare category per 100,000 residents compared with a U.S. average of 89, their primary job is to dispense funds to a private social assistance sector which employed 1,987 per 100,000 residents in New York City compared with a national average of 799.
Part of New York’s large private social assistance employment may be attributed to its relatively large population in poverty, and the greater services provided to them compared with the social services available in suburban and rural jurisdictions. But an examination of the state’s Medicaid spending by category shows that New York isn’t especially generous to the poor, it is especially generous to senior citizens whether poor or not, and this shows up in the employment data. While New York City’s private social assistance employment per 100,000 residents is 1,188 higher than the U.S. average, its employment in the “services for the elderly and disabled” industry, an industry that includes Medicaid funded “personal care aides” for seniors, was 793 above average, thus accounting for two-thirds if the city’s excess private social assistance employment relative to population when compared with the U.S.
Within the health care sector, moreover, New York City had 911 private “home health care” industry workers per 100,000 residents in 2010, more than 2 ½ times the U.S. average of 351 and more than double the 435 recorded just eight years earlier in 2002. All these home health care and personal care aides did leave the city’s “nursing & residential care facility” industry employment below the U.S. average relative to population in 2010, but only slightly at 866 per 100,000 residents compared with 1,010 per 100,000 residents for the U.S. Note that the Rest of New York State was far above average in nursing home employment at 1,480 per 1,000 residents, about average in home health care, and slightly above average in services for the elderly and disabled.
The vast majority of state government spending isn’t spent on state operations, which are relatively small (as shown in the state government employment table which will be described in another post). The big dollar items are aid to local school districts for education, and payments to private health care and social assistance providers under Medicaid. Although this is changing rapidly, in the past New York City accounted for a very large share of New York State’s Medicaid spending for seniors, and an unusually low share of state school aid. I’ve heard this described as a “deal.” Today Medicaid spending is rising so rapidly in the rest of the state that politicians from elsewhere have come out in favor of eliminating the local funding share of the program, which was designed to shift the burden of the state’s needy to New York City back when most of them lived there. And the discrimination against New York City’s poor children in the state school aid formula has become less egregious as the city has become relatively more affluent.
New York City has, in the past, had very low employment and very low pay in its public schools, but as of 2010 that had temporarily changed. After having been far lower than the U.S. average in the past, in 2002 the city’s 1,448 instructional employees per 100,000 residents was just modestly below the U.S. average of 1,520. That gap was more than offset by higher private school employment in the city, at 369 per 100,000 residents compared with 186 in the U.S.
As shown in the spreadsheet attached to this post, moreover, public education finance data shows an explosion of spending on the New York City public schools in general and instructional staff in particular during the tenure of Mayor Mike Bloomberg. But the number of instructional workers per 100,000 residents in its schools fell slightly from 2002 to 2010 while the number of non-instructional workers – which had always been low in New York City – fell to just 291 per 100,000 residents, compared with a U.S. average of 672 – and 966 in the rest of New York State. The data shows the increased spending went in small part to higher pay for teachers, and in large part to higher pensions and other benefits for retired teachers, a cost which has always been very high in New York City.
Mass Transit is part of a broader Infrastructure category, with New York City’s local government employment above the U.S. average relative to population in transit and solid waste management and below the U.S. average in most other categories. New York City had 121 solid waste management workers per 100,000 residents in 2010 according to Census Bureau data, far above the U.S. average of 35. Unlike in the case of mass transit, this was not balanced by lower employment in the private sector. New York City’s private “solid waste collection” industry had 24 workers per 100,000 residents, below the U.S. average of 39 by just 15 – whereas the city’s public employment was higher by 86. Somehow, solid wasted is picked up by far fewer people in the rest of the country, something to think about as the snow isn’t plowed. The Rest of New York State and New Jersey were also above average in public and private solid waste collection employment, but not to the same extent.
While local government employment in solid waste management is very high in New York City, local government employment in highway and street maintenance is very high in the Rest of New York State. Local government employment in this category totaled 196 per 100,000 residents in the Rest of the State in 2010, compared with a U.S. average of just 96. Like the public schools, local highway maintenance is partially funded by state aid, and as in the case of the public schools it is rising relative to population in the Rest of New York State despite having been high to begin with.
As is the case for health care and social assistance, a substantial share of the infrastructure is built or maintained by the private sector, even though it is paid for by the government. The construction and maintenance of infrastructure, as opposed to buildings, is classified in the “heavy construction” industry within the construction sector. New York City had 119 private sector heavy construction workers per 100,000 residents in 2010, well below the U.S. average of 263. It is likely that many heavy construction workers who actually work in New York City are shown in the data as being located in the suburban counties, where their firms are headquartered. But heavy construction employment per 100,000 residents is below the U.S. average in the Rest of New York State and New Jersey as well. Many believe that infrastructure investment is too low in the U.S. as a whole, but unless heavy construction workers are much more productive in New York and New Jersey than in the rest of the country, which is unlikely, it is even lower here.
It should be noted that an unusually large share of New York City’s capital spending is on buildings rather than infrastructure – repairing its deteriorated and inadequate schools, investing in publicly subsidized housing, and economic development projects. The employment thus generated is in the private “construction of buildings” and “special trade contractors” industries. In the case of mass transit, the purchase of subway cars and buses substitutes for what would be the purchase of private automobiles elsewhere, and falls outside of “construction” entirely.
One other major category in which New York City’s public employment is well above the U.S. average is public safety. The city had 984 public safety employees per 100,000 residents in 2010, down from 2002 but still more than double the U.S. average of 465. Much of the difference is accounted for the police, for which New York City has 631 employed per 100,000 residents, nearly 2 ½ times the U.S. average of 270. This should be considered as soaring pension costs reduce the number of police officers the city can afford, and the police brass and union officials claim that the police can do less to keep city residents safe as a result.
There is, however, a discrepancy in Police employment as reported to the Census Bureau, and statements made by Commissioner Ray Kelly on the TV show 60 Minutes. Kelly said he has 35,000 officers and 15,000 civilians. Possibly including the small MTA and Port Authority police departments, the Census Bureau counts 47,500 sworn police officers – those with the power of arrest – and just 4,000 civilians. The discrepancy may be a result of the Census Bureau’s definition of an officer – anyone with the power of arrest, regardless of their current assignment, including Ray Kelly himself.
There is one other trend in local government employment worth mentioning – an increase in New York City in parks, recreation and culture from 41 per 100,000 residents in 2002 to 63 in 2010. That is still below the U.S. average of 75, but by a smaller amount, and is equal to the average for the Rest of New York State. Mayor Bloomberg, like Mayor Koch and unlike Mayors Giuliani and Dinkins, seems to have an understanding that city dwellers give up many personal amenities like private backyards in exchange for shared amenities such as public parks, and the quality of city life is low without those share amenities. New York City’s private employment in the Museums, Zoos, Parks Etc. industry is also high at 140 per 100,000 residents, compared with a U.S. average of just 41, and is rising. Whether this trend will survive the recession – and soaring pension costs – remains to be seen.