New York State Government Grows

Written By: E. J. McMahon and Kathryn McCall Published In: Budget & Tax News Publication Date: February 1, 2007 Publisher: The Heartland Institute

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Employment and wage trends in New York State since the beginning of this decade could be described as a tale of two sectors: public and private.

According to the latest available data:

• While private employment has yet to recover to its 2000 pre-recession peak, New York has more state and local government employees than ever. (Recent rates of change in both categories are shown in Figure 1.)

• In 51 of New York's 62 counties, the average salary for state and local government jobs is higher than the private-sector average.

• When comparisons are narrowed to hourly wages for similar occupations, government workers earn more than employees of private firms in most job categories in the state's largest regions.

Private-Sector Job Losses

Private-sector employment in New York hit a record 7.2 million in late 2000, then plummeted in the wake of a national economic recession, the World Trade Center attack, and a sharp downturn in the stock market.

After losing more than 300,000 private-sector jobs between 2000 and 2003, the state began a slow economic recovery that has trailed the national average.

As of July 2006, private payrolls in New York remained about one-half of a percentage point below their July 2000 levels--a difference of some 40,300 jobs.

Government Job Increases

Despite plunging tax revenues early in the same period, state and local government employment in most regions of New York was barely affected by the economic shocks of 2001-03.

On a year-to-year basis, the number of state and local government jobs in New York has risen by 37,600 since October 2000.

The latest preliminary Bureau of Labor Statistics employment estimate, as of October 2006, is the highest ever for that month, registering 1.38 million New York state and local government employees. The 1.36 million average for the first 10 months of 2006 (reflecting seasonal fluctuations) also indicates that government employment in New York may have reached a new record high in 2006.

As shown in Table 1, the most recent growth in state and local payrolls has occurred entirely outside New York City. Within the city, both private- and public-sector payrolls remain smaller than they were in 2000.

Job Losses Upstate

Private-sector employment increases in the Hudson Valley and Long Island have been offset by job losses upstate over the past six years, resulting in virtually no net change in private employment for regions outside New York City.

But state and local government employment in these same regions has grown by 7.9 percent since 2000. Even after subtracting Indian tribal payrolls--which the federal government reclassified as "local government" during this period--we estimate the net growth in state and local government jobs outside New York City has exceeded 6 percent since 2000.

State government employment has not increased significantly on a statewide basis, reflecting the impact of a 2002 early retirement incentive and a hiring freeze instituted the same year. The bulk of the public-sector increase has been concentrated in local governments.

New York's recent growth in public-sector jobs is consistent with national trends. State and local government employment across the country is up 7.4 percent over the past six years--nearly four times the 2 percent increase in private-sector jobs during the same period.

Higher Paying Government Jobs

Government jobs are not only virtually recession-proof; on average, in most New York communities, they pay more, too.

The latest estimated statewide average salary for all jobs in the state and local government sector was $45,956--only 87 percent of the private sector's $52,966 salary average. However, the private-sector figure is inflated by a large concentration of very highly paid jobs in Manhattan's financial sector.

When average salaries are broken down by place of work on a regional basis, a different picture emerges: in 51 of 62 New York counties, government workers collect higher average salaries than private-sector employees, as detailed in Table 2.

Public-Private Pay Comparisons

While government salaries average barely half the private level in Manhattan, government pay easily exceeds private-sector averages in the city's other four boroughs.

Aside from Manhattan, the 11 counties in which private-sector salaries exceed government salaries tend to be those with a large concentration of high-wage jobs in corporate management and the professions (Westchester), private colleges and universities (Tompkins), or manufacturing (Steuben) or some combination of all three (Monroe).

The Southern Tier is the only region other than New York City in which average private salaries are higher than government salaries. This reflects the relatively high wages paid by manufacturers in the region, such as Corning and Lockheed-Martin.

Higher Hourly Pay

A comparison of wages for similar occupations can be gleaned from the U.S. Bureau of Labor Statistics' National Compensation Survey, which includes data for private sector and government job titles. Figure 2 illustrates summary figures for "white collar" and "blue collar" workers in each of the New York regions covered by the national survey: New York-Northern New Jersey-Long Island, Rochester, and Buffalo-Niagara Falls.

In all three regions, hourly wages for white-collar occupations are higher in government than in the private sector.

The difference is smallest in the New York City region, where government workers earn $3.42 an hour more, but the government pay advantage for white-collar occupations widens to $6.02 in the Rochester region and a whopping $10.04 per hour in Buffalo-Niagara Falls.

The work week is also at least three hours shorter for white-collar employees of state and local government in all three regions.

Blue-Collar Similarities

The differences are smaller for blue-collar occupations. Government workers in blue-collar jobs earn $4.14 more per hour in New York-Northern New Jersey-Long Island, but the government edge narrows to 87 cents per hour in the five-county Rochester region.

In the Buffalo-Niagara Falls region, blue-collar workers in the private sector earn $1.10 per hour more than state and local government workers in similar occupations--a difference that stems in large part from relatively high private-sector wages in the region's "precision, production, craft and repair" jobs.

The work week is longer for private-sector blue-collar workers in all three regions, but the differences between the two sectors are small, ranging from a half hour less in Buffalo-Niagara Falls to 1.4 hours in Rochester.

Government Workers' Better Benefits

Wages and salaries are only part of the compensation story. Government employees also enjoy an edge in several other significant respects:

More time off. Most government workers in New York are entitled to 12 paid holidays--two more than the average allowed by private employers. Many government workers (for example, those employed by New York State and New York City) can qualify for four weeks of paid vacation (plus holidays) after as little as seven years; in the private sector, most workers need to put in 15 years before getting four weeks of vacation. For school district employees, of course, time off per year is measured in months rather than weeks.

Bigger retirement benefits. It has been well documented that pensions and health benefits for retired public-sector workers in New York are significantly more generous than those available to private-sector workers. On average, government workers can retire earlier and receive more from their former employers in retirement, including guaranteed pensions and health benefits, on top of federal Social Security and Medicare.

Greater job security. Union contracts and civil service guidelines provide most government workers with the equivalent of tenure. Layoffs are rare, even in severe economic downturns. More often than not, elected officials respond to budget shortfalls by raising taxes, freezing hiring, and offering experienced employees even more generous pensions as an incentive to retire early.

Unionization Trends

Although union membership is in a long-term decline across the country, New York remains the nation's most heavily unionized state by a large margin. More than 2 million New York State workers are union members, and fully half of them work in the public sector. One of every eight workers in the Empire State is a unionized government employee; in the rest of the country, the ratio is roughly one of every 19 workers. (See Figure 3.)

Between 1995 and 2005, union membership in New York's manufacturing sector dropped by 55 percent (roughly twice the overall rate of decline in the state's manufacturing employment base), yet total private-sector union membership in New York increased roughly 4 percent during the same period.

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E. J. McMahon is director and Kathryn McCall is research associate at the Empire Center for New York State Policy. (Both may be reached at info@empirecenter.org.) Originally published in Research Bulletin No. 1.1, September 1, 2006. Used by permission.