Wednesday, May 27, 2009

California State Worker Salaries

Now that the perpetual California budget crisis is reaching crescendo, the salaries of state government workers are the outrage du jour. Aside from the inexplicable outliers (yes, there is a non-PERS state employee that made over $500,000 last year!), precious little data informs the debate. Well, I'm fresh from having analyzed a state payroll database, and here's a little data for the debate fire:

Total Number of State Workers: 264,933
Total Cumulative Salary For 2008: $17,538,131,186
Average Salary: $66,198
Median Salary: $62,296
Median Statewide Household Income in 2007: $59,948



With the recent 10% salary cuts, the median state worker salary is now lower than the state median household income for 2007. All-in-all, I think state workers are well-compensated, but not overly so. The problems come not from the salaries themselves, but the number of workers.

20 comments :

patient renter said...

But we're still comparing household income to individual State worker income, and it's a fair bet that the household income being compared is privy to much less retirement benefits than the State worker.

smf said...

Plus the benefits afforded to State workers are far bettter than those in the private sector.

Couple high salaries with an excess of workers, and you see where part of the problem lies.

Max said...

Couple high salaries with an excess of workers, and you see where part of the problem lies.Yeah, and sadly the pension problem has been treated as a "kick the can down the road" issue since the Pete Wilson era.

I wish the budget crisis could be solved by firing a few state workers, but there's no way to do it without a lot of pain (higher taxes or cuts in services).

Wadin' In said...

Max, PR makes a good point in that you are comparing median household income to individual state workers. If both spouses work for the state, does that mean their median HH income is $124,592 or 208% of the typical CA household?

Max said...

Max, PR makes a good point in that you are comparing median household income to individual state workers.I realize this is nearly an apples and oranges comparison, so better data would help. Is there any data on wage earners per household in California? (Median income isn't enough because they include teens working at SBUX in the data.)

Rich said...

Did you include all the data on the SacBee site? Some of the data there is still 2007. Not that it has probably changed much since 2007.

Max said...

Not that it has probably changed much since 2007.All the 2007 data is for the UCs, which I filtered out. This data is for all state employees (general fund and special fund), minus UC employees, for 2008.

RV6Flyer said...
This comment has been removed by the author.
Buying Time said...

Interesting stats Max. Thanks.

Even I (a bleeding heart) believe the time has come for the state employee system to fall under some scrutiny.

At the very least we should have some sort of pay for performance. Taxpayers should not have to support underperforming workers (from what I understand, its virtualy impossible to fire someone, so they get transfered instead). I also don't believe state or any goverment workers should be allowed to unionize.

Given the entire compensation packgage, many holidays, cushy retirement, and other benefits, state employment pay is out of line with the private sector.

I went to business school hoping I could eventually bring private sector productivity and practices to the public sector. Unfortunately, California seems like a lost cause.

Max said...

I also don't believe state or any goverment workers should be allowed to unionize. Many state workers I talk to are unhappy about the membership requirements. Anyone in a "represented position" in state employ must pay union dues, whether they like it or not. Some union dues are over $100/month!

RV6Flyer said...

Buying Time

Interesting. The London Times had an article last week illustrating exactly what you are saying.

An independent audit firm did a study to compare two university grads twenty years ago. One went to the private banking sector and the other into public service. The private sector employee had three job losses during major financial downturns while also having much higher salary during times of employment. The private sector employee also saved his retirement in some broad market average.
The public servant had a steady income and defined retirement. In the end, the tortoise was able to retire 7 years earlier and with a better pension and more wealth to pass on to the next generation.

Buying Time said...

Slight caveat to my earlier rant....we can't complain about goverment failure, if we set government up to fail (sub-par employees and bureacracy etc). The government needs capable individuals, and should pay reasonably well to atract them. Unfortunatly, idealistic public service minded folks like me often get frustrated by the system and leave.

Just getting rid of some of the dead weight (that I constantly hear people complain about) would be very helpful for the state's finances...unfortunately, due to union rules, it is usually the last hired and least expensive employees that get let go.

Max said...

Just getting rid of some of the dead weight (that I constantly hear people complain about) would be very helpful for the state's finances.I've posted about state worker age demographics before, and these problems are going to get worse with the 50% 401K haircuts and the hiring freezes.

I really believe a "golden parachute" type plan would go a long way toward shrinking the state workforce, although the strain on the 'PERS' would be high. (Maybe a cap on medical cost increases at the same time could mitigate the immediate costs somewhat.) Until then, we're stuck with an expensive, aging workforce.

Anonymous said...

Hey guys, why don't we all go process a document at DMV for a day then have this conversation again.

Sippn

Anonymous said...

Gee, why did the secret word look like "rest stop"


Also when you factor in the average pay vs private sector, the state health benefit has got to be worth at least $6K more that a private sector "full health benefit"

When my wife considers state jobs vs her current, we look at anything 5-10K lower as an even trade, but better with the short 40 hour work weeks, generous holidays and vacation time, transportation incentives, etc.

The average is high when you consider the large pool of state clerical employees.

Oh I see you filtered out the UC employees.... WOW, this is really high.


The number needs to be compared to private sector ave. salaries, not ave income.


Sippn

Max said...

Also, I did not distinguish between special fund and general fund employees.

Oh I see you filtered out the UC employees.... WOW, this is really high.You're right, I think it's overly simplistic to compare average salaries for state workers with averages (household or individual) in the private sector. For agencies like Caltrans, BAR, or EPA that hire specialists, of course the salaries appear high. When you do peer comparisons, you get the opposite result, but those who do such comparisons (like the unions) don't factor in time spent unemployed. It becomes an argument over semantics.

PeonInChief said...

Unfortunately, and this is difficult, you have to pull from the median income stats the private sector jobs that don't exist in the public sector--or don't exist to the same extent. For instance, tourism industry workers and retail clerks, which are notoriously low-paid jobs, don't exist in the public sector.

Also California has one of the lowest worker-to-resident ratios in the country, in part because we have the economies of scale made possible by being a large state. (In Wyoming you need a certain base of workers for, for instance, local DMV offices, even though the offices serve only a few thousand people.)

Anonymous said...

Those numbers clearly don't include the UCs. The spreads between the worker bee wages and senior faculty and administrators is pretty large. Any way to show that?

Max said...

No reason why not. I'll try and do a workup later today.

Anonymous said...

I can't believe the ignorance on this blog. All proffessional jobs provide thier employees some form of medical and retirement benefits.

If your job doesn't its becuase you work for Burger King or 7-eleven.

I have worked for the private sector as a consultant, a non-profit and the state: all provided some sort of medical and retirement benefit.

The state pension you are so jealous of is only a good retirement if you've been with the state 25+ years. The formula for most employees is 2% of your income at age 55, so if you worked for the state for 25 years and retired at 55 you would get 50% of your income when you retired.

You need to work at least 5 years to become vested in the system.

That sounds good to you, but if your highest income was 50K you would get 25K, which you still have to pay Federal and State taxes, social security till your 65, medicare, just like any other income.

The sterotypical lazy state employees rarely make it up the ladder and thus never really attain all that high an income. And yes people do get fired, we have performance evaluations every year. You can be discharged or denied merit raises if your supervisor is unhappy with your performance.

A lot of state jobs are awful, like the DMV example - the pension is the only thing keeping these people going.

You use the roads, you want fires put out, you want prisoners in prison: you just don't want to pay for it, and it doesn't matter to you that these people risk thier lives everyday for you.

California has over 36 million people, more than the entire country of Canada. Chew on that for a few minutes.

We have the most elaborate system of levees and reservoirs in the world, the most bio-diversity of any state in the union.

As a state employee I expect I will never own a house, I drive a used car and will likely have to retire outside of California because my projected retirement will not be enough to remain here.