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The Public Policy Institute of New York puts together a great deal of data on comparative economic statistics for New York. I enjoyed thinking about this one: the average salary for full-time government employees in New York State was over $57,000 in 2007. That is third highest in the nation, and it does not include gold-plated non-wage compensation (for example, the average annual pension benefit for these workers exceeds $25,000, while workers contribute roughly $500 per year to secure such benefits), and a virtual guarantee of job security in one of the most fiscally irresponsible states in the union.

It is hard to infer too much from looking at averages, so take the following with the appropriate grain of salt. There are about 1.25 million full-time equivalent state and local government workers here in New York and 7.23 million private sector workers. In 2007, state GDP was just under $1 trillion, with 8.5% contributed by the state and local government sector and the rest by the private sector (a little by federal work too).

A few things stand out:

  1. Average output per worker in New York is over $117,000!
  2. A rough comparison of private sector productivity and public sector productivity demonstrates that the government sector (average) is massively less productive than the private sector. The public sector contributed roughly $85 billion to GDP, so with 1.25 million workers this represents a public sector productivity of $68,000 per worker – not bad. But that is barely over half the productivity of the private sector in New York ($126,000) – and no this is not from the financial sector, it is a far smaller share of the economy in New York state than you would think.
  3. Another way to think about the data is that the public sector “produces” 8.5% of the output using almost 15% of the labor.

I’ll let the readers speculate as to why. Perhaps I will indulge in a future post.

One Response to “Government Pay and Productivity”

  1. Harry says:

    Mike, the definition of productivity is the ratio of input over output. Being a certified productivity specialist, I’ve chewed on that one for some time.

    One measure of productivity is unit cost, which is useful in business. For example, it makes no sense to evaluate the productivity of marshals at the Open, since their cost is negative, after they have bought their uniforms and paid for the gas to drive from Rochester.

    Then that gets us into merely measuring labor productivity, which the equal-pay-for-equal-work crowd is so upset about. They get into discussions over the input side, unit cost be damned. Labor productivity is output per man-hour.

    Go into any company that measures productivity against a standard, whatever it is, and you will find that the system is always screwed up. Always. Never seen anything reliable. Usually everybody is working at 100% productivity or more, even when the employees play basketball the last hour of the shift. All salaried employees are 120% productive, regardless of the hours they work; otherwise, they get fired before they are promoted.

    You are 100% correct in pointing out the lavish pay for public employees, when you add in all of the fringe. Big savings potential for a productivity specialist.

    What is Unseen is all of the rest of the mess this $100M employee creates. He asks for more people, more space, perhaps a new rug to replace the slightly faded one in the meeting hall. He never fires anyone, nor does he say he could do without his credenza so the fire marshal can put his useless files there. He installs a phone system that makes it impossible to contact him directly. I’m not making this up.

    May Wintercow and his herd have ten bales of clean straw to bed down in their comfort stalls and pens.

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