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Statistical surprise: Civil servants overpaid

Over the last month, A Better Oakland has presented three different measurements of Oakland’s employee compensation, which is currently being negotiated with the unions by a professional team under the direction of the Interim City Administrator and the Council. These are excellent data to determine an appropriate level of city employee compensation. The data show that Oakland has the highest average payroll in the entire country, that most employee positions are paid far more than in regional municipalities, and that city employees have received cost of living raises totaling more than 10% over the CPI since 2002. To put that in perspective, 10% of the city’s payroll* is $59m, more than enough to pay for the LLAD deficit and the police service ballot measure.

To put both the number and pay of Oakland’s bureaucracy into perspective, V Smoothe shared a chart from the Census Bureau (PDF) listing the number, per-capita number, and average monthly payroll of every US city over 250,000 residents. While there are vast differences between the cities (for example, many cities perform duties assumed here by Alameda County and the OUSD), Oakland appeared to have a significantly above-average number of city employees per-capita. But more stunning is that Oakland has the highest average monthly payroll of all mid-sized and large American municipalities. How can cash-strapped Oakland have higher average employee pay than New York City, San Francisco, San Jose and Seattle?

The answer lies in a little-noticed city survey (PDF) unearthed at A Better Oakland today. Comparing Oakland’s city positions to those of other Bay Area cities, 67 of the 72 job classifications are paid more in Oakland. The unfortunate five underpaid positions include Neighborhood Services Coordinator, Recreation Supervisor, Plumber, and Gardener II. The salary figures were adjusted for a 40-hour workweek (Oakland city employees are only expected to work 37.5 hours, 6% less than standard) and include pension contributions. The average position enjoys a 14% compensation premium over the median compensation of a Bay Area colleague. In addition, the city’s cost-of-living raises have been a compounded 10.1% more than the actual inflation rate since 2002, meaning that the city employees have experienced a real income gain of over 10% in six years while the average American worker’s income has declined in real terms.

The factor that is not taken into account by these data is productivity. The figures above suggest that Oakland should be performing at 110%, 114%, or even better than any other city in the US. Oakland clearly is not doing a superior job delivering services. 10% from the payroll, the sum of overpaid inflation increases, is $59m, more than the LLAD deficit ($10m) and the police services proposal ($40m) put together. Are city employees performing well enough to justify tax hikes to cover their excessive pay? While I have had the pleasure of working with many excellent people from the city, as a whole it’s clear that the city employees’ productivity does not justify gross overpayment. There is no excuse for Oakland to have the highest average monthly payroll in the entire country. Face with a budget deficit of up to 8% of payroll, and two tax proposals this year totaling 8.5%, comparative data show that employee compensation is too much, not that tax receipts are too little. With salary negotiations ongoing, city leaders will have to make decisions now about how much compensation Oakland can actually afford.

* According to the City Auditor (PDF, p. 10), the payroll in 2006 – 2007 budget year was $589m, 56% of the total budget.

I have adjusted some figures since this was first posted.

Posted in budget, california, citycouncil, oakland, taxes.

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9 Responses

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  1. len raphael says

    can you tell if that 56 pct of the 1 Bill budget includes cops and fire? if it does,then we’d have to reduce the overpaid compensation.

    on the other hand, that city audit report, which judging by the oakland trib report only dealt with a few minor salary advances, is more damning than that salary survey. that report describes a bureaucracy that helps itself to aditional compensation like “management leave” and “executive bonuses” whenever it feels like it.

  2. Max Allstadt says

    DTO -

    Thanks for consolidating all this info. It’s been a little scattershot, but concerning nonetheless.

    Perhaps oakland needs a citizens group that shows up in force at city council meetings to advocate for sane pay for city employees, and greater performance standards.

  3. dto510 says

    Len – Yes, the total payroll does include police and fire but not non-monetary benefits (ie, health). The figures for overpayment come from multiple sources: the COLA adjustments over inflation, which match the negotiations with SEIU 1021, and the pay-per-position excesses compared to the region (that survey excludes public safety positions). Bonuses and management leave don’t come anywhere close to these more abstract, less discretionary overpayment data.

    Max – You’re welcome! It’s important to see the forest in the statistical trees. It’d be great to have a good-government group (besides the stick-in-the mud League of Women Voters), but the benefits from a well-run city are so diffuse that it’s hard to see that arising. Hopefully, a more-informed public perception of the bureaucratic situation will make it harder for certain Council members to give away the store without anyone noticing.

  4. Anonymous Coward says

    This link was broken on 8-21-08:

    http://www.abetteroakland.com/documents/salarysurvey.pdf

  5. dto510 says

    Fixed, thanks.

  6. Ellington says

    the link to the census report is broken: http://www.census.gov/compendia/statab/tables/08s0453.pdf

    anyone have a working link?

  7. dto510 says

    Link fixed. Here’s the new chart of city payrolls – Oakland’s still the highest.

    http://www.census.gov/compendia/statab/tables/09s0449.pdf

Continuing the Discussion

  1. Something is rotten in the state of… « FutureOakland linked to this post on October 1, 2008

    [...] tiny savings from eliminating such direct services are not the focus of this blog, and neither is the evidence that Oakland’s city workers are the highest-paid in the entire country and are signif…. This blog is not about the bad budget. It’s about the bad [...]

  2. Oakland city workers to vote on strike « FutureOakland linked to this post on October 7, 2008

    [...] To set the stage, a union organizer penned an op-ed for BeyondChron, asking for a “bailout for the needy of Oakland” – the coddled city workforce. The piece highlights the union’s strongest complaint, that librarians do not have adequate security, but largely focuses on outside vendors that city and Port workers blame for cost-cutting pressures. The MSM, which has totally ignored the labor strife that threatens to consume City Hall, is helping the unions by focusing on management travel perks that are small potatoes compared to the legions of city workers who are overpaid by many measures. [...]