NYC Less-Educated Workers Out-Earn Private Sector, Liu Says
New York City public workers without college degrees earn “significantly” more than they’d expect to get at private companies, even as municipal employees receive 17% less on average, a study for city Comptroller John Liu found.
City employees, including janitors, firefighters, teachers and accountants, who are eligible for partial pensions with less than 20 years on the job, also pay less for benefits than corporate workers who don’t get promised sums upon retirement, according to the study, released today and based on census and labor data.
“Our analysis indicates that less-educated, lower-paid city civilian workers are paid a premium over the wages they could be expected to earn in the private for-profit sector,” said the study by Frank Braconi, Liu’s chief economist. Conversely, the pay of those with more education tends to be “significantly” less than in the private sector, the study shows.
Liu, 44, a Democrat elected in 2009 after two terms in City Council, oversees five pension funds holding assets of more than $113 billion, with an enrollment of more than 700,000 current and retired workers.
‘Income Gap’
The study doesn’t signal that less-educated municipal employees are overpaid, Liu said.
“In recent years we have seen a divergence in the income gap here,” Liu said today at a news conference. “It is more fitting for city government to not have such a wide, disparate pay range.”
Mayor Michael Bloomberg, 69, last month presented a $65.6 billion preliminary budget for next fiscal year warning that pension costs would rise to about $8 billion in 2012 from $1.5 billion in 2002. To close a $2.4 billion deficit, he proposed reducing the city’s 75,000 teachers by 6,166, with plans to fire 4,666. He is founder and majority owner of Bloomberg News parent Bloomberg LP.
Wages, salaries, pensions and other fringe benefits totaled about $36.9 billion, or about 55 percent of the city budget this fiscal year, the study said.
National Debate
Liu said he released the report with the goal of providing research on what has become a contentious national debate over government workers’ compensation.
Sixty-three percent of Americans don’t think states should be able to break their promises to retirees, according to a Bloomberg National Poll conducted March 4-7.
Republican Governor Scott Walker’s proposal to curb collective bargaining power for most Wisconsin public employees sparked protests across the U.S.
Private employees get about 71 percent of their compensation in salary and 29 percent as fringe benefits, while state and local government workers receive about 66 percent as wages and 34 percent in retirement and health care, the report states, citing the U.S. Bureau of Labor Statistics National Compensation Survey.
New York, the 11th-largest U.S. employer with 306,000 workers, trails only California and Texas in the size of its public payroll, the report said.
Salary Range
From 2006 to 2008, janitors working for the city earned an average $32,143, compared with $26,357 in local private firms; security guards got $35,423 versus $26,571 at private companies; and bus drivers made about $48,000 on the public payroll compared with about $36,000 at for-profit firms, the study said.
Conversely, municipal workers with college and post- graduate degrees earn less than private-company workers, the study said.
City physicians and surgeons earned an average $120,086 compared with $137,183 in private practice. Lawyers for the city earned about $88,000, or 40 percent of their for-profit counterparts; and accountants and auditors got about half of their private-sector counterparts’ wages, according to the study.
The New York City Employees Retirement System, which covers 165,000 current and 122,000 retired city workers excluding police, firefighters, teachers, pays pensions equal to 1.67 percent of final salary multiplied by years of service for those with less than 20 years, and 2 percent for those with 20 to 30 years. Someone retiring at 62 after working 30 years would get 60 percent of their salary. In 2007 the annual benefit averaged $45,406 for those with 30 to 34.9 years of service, the report said.
To contact the reporter responsible for this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.
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