Are City Workers Paid Too Much?
Thursday, July 23, 2009
Does the city of San Diego pay its workers too much, given the current fiscal crisis? Are city workers and their unions responsible for the financial trouble the city finds itself in? Vlad Kogan of VoiceofSanDiego.org discusses his study of the pay (including salaries, fees, wages, commissions and bonuses) of San Diego's public sector workers.
MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days on KPBS. The City of San Diego faces a tighter budget as the state decides how much more money it will siphon off from local communities. That means more cuts to city services may be coming. City worker pay is always a big target during lean times in San Diego. Some elected officials, eager to reduce the city payroll, claim San Diego city workers are making a lot more money than they should be in wages, in fringe benefits, and in overtime pay. Such claims are not a hard sell among workers in the private sector as they face layoffs, pay cuts, and no benefits. But are the claims true? That is precisely the question researched in a commentary on the Voice of San Diego website this week. The article "Are San Diego City Workers Paid More?" was written by my guest Vladimir Kogan, a doctoral student at UCSD's Department of Political Science. He’s also the co-author of a forthcoming book about San Diego politics and its pension crisis. Welcome, Vlad.
VLADIMIR KOGAN (Author): Thanks for having me on.
CAVANAUGH: And we want to invite our listeners to join the conversation. A lot is said about how much money and perks San Diego city workers make. Do you think they make too much? Should the City strike a hard bargain with city unions to get pay concessions? Or are city workers being paid adequately for the work they do? Give us a call. The number is 1-888-895-5727, that’s 1-888-895-KPBS. Vlad, in your commentary, you say there’s a lot of political mileage made out of city employees’ salaries but no one addresses the key issue of comparing those salaries to city employees in other communities. Now why is doing that important?
KOGAN: Well, the City, when we look to hire new employees, we compete primarily with other cities. And so it’s important to see sort of what the labor market is for city employees to make sure that we don’t cut wages to such a low level that we can’t attract high quality employees and so that the city services don’t suffer and the quality of city services doesn’t suffer.
CAVANAUGH: And how did you go about making the comparisons that you’ve made in this article?
KOGAN: Well, you know, I’ve been involved in this debate, you know, for a few months now and the key question seems to be of finding the right – the right thing to compare San Diego to. And so I decided to look at payroll of all major cities in California, and there is this great set of data that the Census Bureau collects which tracks just this. So I decided to access this data set and just run some analysis to see how we compare to about 900 large cities across the country.
CAVANAUGH: And you broke it down in a very interesting way. You broke down the salary per 100,000 people in the population. Explain why you did that.
KOGAN: Well, one important reason for why salaries differ across the – across cities is that cities have different needs and different priorities and different demands. And one of the biggest determinants of those demands is how many residents there are. Obviously, when you have twice as many residents, you may need, you know, more streets, you may need more parks, and you may need other city services. So it’s important to sort of hold – to control for that and hold that constant when we’re making comparisons across cities.
CAVANAUGH: That’s – You know, the results are really quite extensive and they’re complicated but I’m going to ask you for some easy ways to understand the results. What did you find out about San Diego city workers’ salaries in comparison with other cities?
KOGAN: It – You know, first let me just make the point that…
KOGAN: …I looked only at salaries.
KOGAN: And a lot of the debate has concerned – has focused on salaries and on other non-salary benefits like pensions. And my interest was in salaries because salaries is really the thing that the city council and the city can control year to year. A lot of those other benefits like pensions are what’s called vested benefits and they can’t be changed.
CAVANAUGH: What goes into the concept of salary?
KOGAN: The data that I used includes all salaries, all wages, all fees, all bonuses, so any – Basically, the amount that’s on the paycheck that the city workers get then…
CAVANAUGH: Overtime pay as well?
KOGAN: Overtime payment as well.
KOGAN: And what I found was that, you know, despite claims that we have these exorbitant wages, that city employees, you know, here are extremely overpaid, the data shows that we’re not that far off from the rest of the country. And, in fact, we’re probably on the lower end. So we – our salaries and our payroll expenses are generally lower than the average for the countries – for the country as a whole. And they’re actually less than the median for the country, so we’re in the bottom half of cities.
CAVANAUGH: That’s interesting. Now, you broke it down into various types of city workers as well. Who are the highest paid city workers, who are the lowest, and how do they compare with their brethren in other cities?
KOGAN: So we don’t have data on individual workers but we do have…
KOGAN: …sort of aggregate payroll.
CAVANAUGH: Yes, right.
KOGAN: And so when you look on average, the highest paid employees are public safety employees, so like firefighters and police officers. And when you look at individual employees, you see that employees here are paid more than in other places. But when you look at our total payroll expenses for fire and our total payroll expenses for police, we’re actually doing better than other cities. We’re spending less. And so the mystery is, well, how can we have both? How can we spend more on employees and yet spend less overall.
KOGAN: And one answer may be that, you know, we have fewer employees that we have work overtime and that, in the long run, saves us money compared to having more employees who get paid less.
CAVANAUGH: How does San Diego compare specifically with other cities in California?
KOGAN: When you look at the top 25 cities, you know, the numbers look even more dramatic. So our payroll expenses are in, you know, in the bottom 30%. And when you look at the average salaries for employees, we’re doing, in some categories like police protection, like fire, like streets, we’re doing even worse so we’re in the fourth percentile so that means 96% of the cities in California spend more on firefighters on average than we do.
CAVANAUGH: That – I think that comes as a surprise. Were you surprised by that?
KOGAN: I, you know, I was very surprised. You know, there’s definitely a sense that San Diego was being more careful with its expenditures but I was surprised by the size of the difference.
CAVANAUGH: I am speaking with Vladimir Kogan. He has compiled a list of city workers’ pay. The article is called “Are San Diego City Workers Paid More?” And we are taking your calls on that topic, 1-888-895-5727, that’s 1-888-895-KPBS. Vlad, you mentioned before the idea that it could be that the fact that there’s this discrepancy between some very high paid city workers and the overall city budget because of the size of the city workforce in San Diego. Talk to us a little bit about that in comparison with similar size cities.
KOGAN: Yeah, that’s a great question. So one of the things that I looked at was not just expenditures but how many employees do we have? And so when we look at employees compared to our population, we have fewer employees than most other cities of similar size across most categories, so for fire, for police, for streets. And so we have fewer employees doing more work and these employees are compensated at a higher rate than in other cities.
CAVANAUGH: And why is that important to take into consideration when you’re comparing salaries?
KOGAN: You know, because so far in this debate, you know, people have really focused on individuals. You know, the Union-Tribune had a very controversial series and they highlighted people that make more than $100,000.00 a year in the city. And, you know, to a lot of people, this was very controversial because, you know, government employees making $100,000.00 while, you know, private sector employees are struggling, facing unemployment, that was a big deal. And I wanted to put that in perspective and see, you know, looking beyond individual employees, how much do we spend total as a city? And is that total expenditure really, you know, on the high end? Is it about average? Is it on the low end?
CAVANAUGH: Now you’re not disputing the specific things that the Union-Tribune article was saying.
KOGAN: Oh, no, absolutely not. I’m just trying to put it in sort of comparative perspective so we can see, you know, is this – you know, how big of a deal is this? And how much – how concerned should we be? And in particular, as we tried to sort of deal with this very massive budget crisis that we have, part of it is because of the recession but part of it really preceded the recession. I’m trying to answer the question of, you know, what is the problem? What is the root cause? Is it employee salaries? Or is it something else?
CAVANAUGH: And it seems that whenever there’s a discussion about city worker pay, there’s always a discussion about bonuses and overtime pay that adds up to really boost public employees’ salaries and I’m wondering do municipal workers get that in other cities as well?
KOGAN: You know, that’s a fair question. I don’t know the answer. I do know that, you know, for specific categories like our fire department tends to rely on overtime more than other places because we have fewer firefighters. And we, as a city, have decided that that’s a better deal for us to have fewer firefighters and just have them work longer periods of time than to hire more firefighters. And, you know, the fire department thinks that – I’m sorry, the Firefighters Union thinks that that saves us money.
CAVANAUGH: And so basically a lot of your results indicate that there’s a tradeoff here in San Diego, that we have fewer workers, some of whom are making more than their counterparts, but overall that’s what we’ve decided to do here and our payroll is not, in any case, a lot higher than other cities around California and the country.
KOGAN: That’s exactly right. From the data, it looks like we’re getting a pretty good deal for our buck.
CAVANAUGH: Okay, and I’m wondering, in reading your article, it seems that what you’re saying, and I said it in my opening, that city workers, government workers in general, seem to be an easy target when it comes to trying to make budgets, trying to cut budgets. And I’m wondering if this is something that we can expect in the future, do you think?
KOGAN: You know, I think as, you know, as our budget situation gets tighter and tighter and as we look to cut more and more critical services -- You know, we have no choice. We have to cut something. You know, it is really going to be a tradeoff of are we going to close libraries? Are we going to close parks? Or are we going to, you know, ask the employees to make concessions? And, you know, there’s tradeoffs to both decisions. On one hand, you lose very vital city services. On the other hand, you might lose very valuable staff that are needed to run those vital city services. And so I just wanted to – I wanted to sort of highlight that tradeoff and make sure that we understand that, you know, there is no free lunch in this.
CAVANAUGH: My guest is Vladimir Kogan and his article on the Voice of San Diego website is “Are San Diego City Workers Paid More?” We’re taking your calls at 1-888-895-5727. And on the line, Gina is calling from San Diego. Good morning, Gina. Welcome to These Days.
GINA (Caller, San Diego): Good morning.
GINA: I wanted to just – I just wanted to make a comment about the study that your guest speaker did. We – I’m actually a county employee and I just wanted to say that we – I did a similar study because we were trying to get our pay raised equivalent to the neighboring counties. And out of that we found that basically out of the – out of all the other neighboring counties, that we made on average 20-30% less as well. And so when people, you know, chime in and they say, oh, you know, city workers are overpaid, county workers are overpaid, I think that San Diego County in general is paid less than any other neighboring county and it’s just pretty sad that people think that and they don’t really have all the facts to really understand that we – that the people living here in San Diego County really are paid less and yet our cost of living is higher. That’s my comment.
CAVANAUGH: Thank you very much for that, Gina. That is – She brings up an important point, the cost of living in San Diego is considerably higher than in many other cities across the country. Did you factor that into your…
KOGAN: You know, I tried to look at that and so what I did was, I constructed sort of a set of cities that are similar to us and I didn’t have data on cost of living but I did have data on average salaries for both government and private sector employees in those cities. And so I tried to look at cities that were most similar to us in that respect and some other demographic things like the size of the city, things like that. And when you look at those cities again, San Diego comes out on the lower end of the spectrum, that, you know, we’re not paying – definitely not paying more and it looks like in some categories of services we are spending less than those cities.
CAVANAUGH: And, you know, your article sort of ends on a cautionary note, that if San Diego focuses too much on cutting compensation for city workers, we could run into trouble.
KOGAN: If we focused much on cutting salaries, right.
KOGAN: There’s other aspects of compensation that, you know, that may need cutting that may, you know – but that is definitely something that we have to think about, that, you know, at some point, you know, if we’re not competitive, if we’re not offering compensation that is competitive in the marketplace, we’re going to lose some of these qualified city employees, you know, city engineers, city architects, city planners, and that’s not going to serve the city, you know, in the long run.
CAVANAUGH: You know, a lot of people say who cares what people are doing across the country. I mean, who cares what they’re doing in other cities. We’re San Diego, we do it perhaps a different way, and we want – we want to make sure that people are not being paid more – so much more in comparison to what people in the private sector make.
KOGAN: You know, that’s a very fair point and, unfortunately, there’s not a lot of data available to look at private to public sector compensation. Now the city has previously done the study and what they found was that lower skilled city employees are overpaid compared to what they would get in the private sector but high skilled city employees are actually underpaid. And so, you know, one thing I would add to that debate is, you know, it’s important to look at the private sector but it is also important to look at where we get our employees. And, you know, for the most part, when we’re competing for high skilled employees, we’re competing with other cities, you know, because we – because city employees need very specialized skills and so that’s sort of where our competition is. That’s the labor market that we’re pulling from.
CAVANAUGH: Let’s take another call and J.P. is calling from La Jolla. Good morning, J.P., welcome to These Days.
J.P. (Caller, San Diego): Good morning. But I’ve been on the road, I’m now downtown.
CAVANAUGH: Okay. Can you still talk to us?
J.P.: Yes. Yes, please. Just – I just want to say that, you know, the entire package is super important. It’s not – I think a lot of people in industry and the private sector, when the economy turns down, you fire half the people. You know, you have to because you just don’t have the income. The city has half as many or a quarter as many or an eighth as many housing starts to deal with and they don’t get rid of half of their planning department. And so I think a big part of the issue that you’re not considering is that the private sector is sort of a lot more flexible and has a, you know, a lot rougher time when the economy goes downhill. The city, it seems like the people keep working no matter what. They always have their jobs. A lot of them get more than their average salary at pension. No one in the private sector gets that. And I think – so when you see the high paid people are getting less money, that’s because their pension benefits are so much greater than they are – and the stability is so much greater than it is in the private sector. You know, you go out there in the private sector, you kill what you eat and in the public sector you try to amass as many resources as you can and get, you know, sort of union help.
CAVANAUGH: Well, thank you for those comments, J.P. Vlad?
KOGAN: You know, I think the caller made an excellent point and something that we should always keep in mind, that when we look at wages, we have to keep in mind that it’s part of a larger compensation package. And so he’s absolutely right that I focus on, you know, a very small part of what employees make but we have to do that, you know, we have to address this question piece by piece to really zero in on the problem and to make sure that the thing that we’re cutting is the thing that needs to be cut. And, you know, one other thing I wanted to say is, you know, the reason why the city is in the situation that it’s in, it’s part, you know, part of the reason is, in fact, the slowing economy but that’s not the whole story. And, in fact, before, you know, when the economy was doing great in 2007, we were still cutting. We were still laying off workers and so, you know, in some ways, our city, you know, right now is leaner than it, you know, than it’s ever been because of this decade-long fiscal crisis that we’ve faced that really predates this current financial crisis in the markets.
CAVANAUGH: Let’s take another call. LeBron is calling from Coronado. Good morning, LeBron.
LEBRON (Caller, Coronado): Good morning. How are you?
CAVANAUGH: Just great.
LEBRON: Good. I’d like to make a comment. I don’t think the city employees get paid enough for what they do and what is demanded of them. And I think you’re looking at the wrong place. If you look at these – look at these city councilmen and your higher echelon of the city government and the mayor, those salaries should be cut, you know, because the city workers, we really depend on them. And the city council and the mayor, they’re getting raises and they don’t ask anybody about the raises so that’s just my personal opinion.
CAVANAUGH: Well, I thank you. Thank you for the comments. You know, there’s the idea that salaries, when the city negotiates with city unions, they have to get very tough, they haven’t been tough enough. And what, when it comes to these negotiations if you were able to put in your two cents, Vlad, what would you say?
KOGAN: That’s, you know, that’s a tough question. I think I would say that – You know, and other people have made this point, that to really address the city’s problems, we have to sit down and we have to look at both the expenditure side of the equation, which is salaries, which is pensions, which is other forms of expenditures, but we also have to look at the revenue side. And I think the city’s problems are both. And, you know, my concern is that the rhetoric that we’ve been hearing has really focused on how much can we cut without really addressing the question of do we have enough money in the first place to fund the things that we want to fund. And – go ahead.
CAVANAUGH: Yeah, no, well, I was just – We’re getting close to having to leave our conversation and I don’t want to leave it without addressing something that you said in your previous answer. You were talking about how San Diego’s fiscal problems started earlier than the deep recession that we’re in now and you’re actually working on a book to talk about how San Diego arrived in the place it is in now. Some people call it a mess. And you’re working on that book with UCSD Professor Steve Erie. I think the title of – is it “Paradise Plundered?”
KOGAN: That’s right.
CAVANAUGH: The working title at least.
KOGAN: That’s right.
CAVANAUGH: Well, tell us just a little bit of what it is about.
KOGAN: Well, you know, it’s almost like a mystery novel, and the question is was paradise plundered? And if so, who did it? And so we look at, you know, the prime suspects as people are thrown out. We look at the labor unions, we look at developers, and we look at sort of the history of San Diego to try to identify, you know, what were the decisions that we made, the public policy decisions that got us to the place that we are today.
CAVANAUGH: Did you find any of the main suspects, since it’s a mystery?
KOGAN: You know, I don’t want to give away the ending but it wasn’t Mr. Mustard with the candlestick in the library.
CAVANAUGH: Okay, well, we’ll have to wait for the book named “Paradise Plundered,” and the co-author is my guest, Vladimir Kogan. He’s a doctoral student at UCSD’s Department of Political Science. And I want to thank – And author of the article on Voice of San Diego website right now, “Are San Diego City Workers Paid More?” I want to thank you so much for talking with us.
KOGAN: Well, thanks for having me on.
CAVANAUGH: And stay with us. When we continue, we’ll get a live update of how things are going down at Comic-Con. You’re listening to These Days on KPBS.