This post is another discussion of the spreadsheet of the U.S. Census Bureau’s state and local government employment and payroll data, which is linked from this post. The data can be downloaded by following the link. It shows that the average New York City local government employee earned 40.4% more than the average U.S. local government employee in March 2010. That is down from 44.6% above average in March 2002, when New York City’s police, fire and sanitation payroll was inflated by post-9/11 overtime.
For comparison, local government employees in New Jersey earned 27.1% more than the national average in March 2010 up from 23.9% above average in March 2002. And private sector workers in Downstate New York, including New York City, Long Island and the Lower Hudson Valley (which really functions as one big labor market), earned 56.0% more than private sector workers in the U.S. in 2010, according to Employment and Wages data from the U.S. Bureau of Labor Statistics. Excluding the massively paid Finance and Insurance sector, Downstate New York’s private sector workers earned 30.0% more than the U.S. average, the same as in 2002 and a figure that has varied only slightly – from 29.0% above average to 32.0% above average – over the past decade. A discussion follows.
First, is important to note what this data does not show you – how well local government workers are paid compared with private sector workers in general. Such a comparison would need to use the same data for the same time period for both public and private wages, not March payroll data per full time equivalent employment (with part time workers pro-rated into full time equivalents) for public sector workers, and annual payroll per employee (with part timers and full timers each counted as one employed person) for private sector workers. It would also have to include the soaring number of self-employed, freelance and contract workers in the private sector.
And it would have to include non-wage benefits such as pensions, health insurance, sick and vacation leave, which have increased for public sector workers in the past 15 years while being cut for private sector workers. The Bureau of Labor Statistics does collect some data on non-wage benefits, but it is only valid, at the national and broad regional (ie. Northeast) levels, with no local equivalents. Data for large firms, small firms, and state and local governments are collected in different years, and the self-employed are not included. Since the relative level of public and private compensation has become an issue, several entities have released reports with contradictory claims. Generally those issuing the reports have had a bias based on who is funding them, and slanted the inadequate information one way or the other.
Using the data available, I compare local government workers with other local government workers, New York City vs. the United States. The private sector vs. private sector comparison is included because above average private sector wages are evidence of, and a cause of, a higher local cost of living. The more local private sector workers earn, the more local government workers have to pay (or the less they have to accept) when they go shopping. So one can’t expect to pay local government workers at the national average in a place like New York City at the national average and expect them to be as well off as local government workers elsewhere, given that private sector workers (excluding Wall Street) earn 30 percent more. Of course the more local government workers earn, the more private sector workers have to pay in taxes or the less they will receive in public services.
Local government workers “vote” for private sector workers to receive lower pay and benefits every time they choose to do their shopping and patronize service providers who give them the best deal. Private sector workers do not have similar choices: the money is collected from them up front in taxes, on pain of imprisonment, whether they believe the resulting public services are worth it or not. In that sense the relationship between the public employee unions and the politicians they control is much like the relationship between corporate executives and boards of directors. In theory the politicians and boards of directors represent citizens and shareholders; in reality the unions and executives keep them in their jobs. With soaring executive compensation, particularly on Wall Street, and very little paid in dividends to shareholders, I haven’t been willing to invest much of our savings in stocks for the past 14 years or so. The government, as mentioned, provides fewer choices.
To the list of information this data does not provide, add an evaluation of local government pay levels in the rest of New York State. The relative cost of living needs to be considered in evaluating local government pay, but the cost of living in the Downstate Suburbs and Upstate New York is very different. The data for these two areas separately is only available every five years, when the Census Bureau conducts a Census of Governments. The last time was in 2007; you can find the data attached to this post.
In March 2010 NYC local government elementary and secondary education instructional employees (aka teachers) earned 25.8% more than similar workers across the nation. The NYC March figure may be suppressed slightly because the city’s teacher pay is spread over the entire year whereas in some other jurisdictions it is only paid during the school year. But by any measure, including the data on instructional pay and benefits available in this separate dataset, New York City’s cash pay for teachers was once low and has become much higher. Once, in fact, it was right around the U.S. average by this measure in an area where the cost of living is much higher. At the same time, NYC’s teachers have more expensive pensions, and contribute less to them, than teachers elsewhere, and thus higher benefit costs. That is the preference of the United Federation of Teachers, and a result of their power. This difference will be exacerbated by recent retroactive pension enhancements, leading to soaring pension costs, wage freezes, and fewer teachers.
The same pattern – lower pay, and richer pensions– has traditionally applied for New York City’s police officers. Although no separate data source is available to tabulate the cost of their benefits on the national level, it is difficult to imagine officers elsewhere getting a better deal than a state and local income tax-free pension after just 20 years of work, and unlimited health insurance with little employee contribution. Back in the 1990s Census Bureau data showed NYC police officers earning little more than the U.S. average in an area with a higher cost of living. Expensive retroactive pension enhancements in 2000 were followed by large wage cuts for new officers thereafter. In March 2010, however, the average NYC police officer earned 23.7% more than the average U.S. police officer, a figure approach the 30.0% above average for NYC’s private sector workers (excluding Wall Street) vs. the U.S. average. Aside from the overtime-influenced situation of 2002, this is more – relative to the U.S. average police officer – than in the past.
One recurring pattern is very high March payroll per employee in New York City, compared with the national average, in categories where there is very low employment compared with the national average. This implies that you are seeing the pay level of high managers, not rank and file employees, because work has been contracted out rather than done in house. Average pay levels have always been high for non-officer police workers in NYC, who are few in number, and soared for non-instructional workers in the NYC public schools from 2002 to 2010 as the number of such workers, already low, fell further. A result, one presumes, of an increase in services contracted out.
Another pattern is mean payroll per employee falling when employment is rising, and rising when employment is falling. The reason is that public employees earn more the longer they stay, and recent hires are laid off first. So when you have cutbacks, as in mass transit nationally, the average pay of the remaining workers goes up. That’s why NYC Transit workers appear to have falling pay relative to the national average, something that will revert back to normal once cutbacks in New York are also reflected in the data.
The only other data I find worth mentioning is that for the Department of Sanitation. As long as I have been compiling the data, NYC payroll per worker in that category has been far above the U.S. average – though not as high as in March 2002, when it was presumably inflated by 9/11-related overtime. March 2008 was more typical, with pay per employee for New York City Department of Sanitation workers 51.9% above the U.S. average and local government Sanitation employees in the Rest of New York State, calculated by subtraction from the state total, at 16.9% above average. The situation for 2010 is radically different, with the NYC figure falling to 25.6% above average.
Unfortunately, that was an error by me in transposing the data from one step to the next, and having it end up in the wrong cell. The actual figure for FY 2010 is 74.9% above average for NYC sanitation workers, in line with previous years. How it happened I don’t know, as the data around it is correct. Bottom line, it’s tough doing this work without someone else to double check.
I’ll discuss the state government data later.