Public Employee “Pay Transparency” Efforts Fall Short

Last week the California Public Policy Center released a compilation of public employee compensation databases. Apart from the CPPC’s own studies that disclose and evaluate compensation for city workers in San Jose, Anaheim, Costa Mesa, and Irvine, as of May 2013, they found nine additional sources of information on California’s state and local government employee compensation, incorporating eleven databases. Here they are:

State Controller, employees of all California Cities and Counties

Sacramento Bee, California State workers

University of California, UC employees

Bay Area News Group, Bay Area city/county employees and Southern California city/county employees

Santa Cruz Sentinel, City of Santa Cruz employees

Marin Independent Journal , Golden Gate Bridge District employees

Fresno Bee, employees of Cities and Counties in the central San Joaquin Valley

Los Angeles Daily News, Los Angeles Unified School District employees and Los Angeles city employees

Los Angeles Times, Los Angeles city employees

None of these sources of information provide complete information on what California’s state and local workers really make.

There is only one accurate way to compare public vs. private sector compensation, and that is to look at total compensation. That refers to everything an employer pays for that directly compensates an employee; their salary, but also all of their current and future benefits. Public employees, on average, receive employer-paid benefits that are far greater than what the average private sector worker earns. This cost must be included when considering their compensation.

Only four of these eleven databases offer more than just one number. In the other seven cases, you get “Total Pay,” or “Total Salary,” or “Salary,” or “Annual Pay,” or “Pay 2012.”

This is pretty much useless information.

Some databases are better. In particular, the Bay Area News Group made a concerted effort to compile total compensation data for every employee in two databases, one for cities and counties in the Bay Area, one for cities and counties in Southern California. This was a commendable effort. Their data offers eight columns of data, totaled in a ninth column “TCOE,” which means “Total Cost of Employment.”

The University of California’s database provides three columns of data, “Base Pay,” “Overtime,” and “Adjustments,” totaled in a fourth column entitled “Gross Pay.” They omit any costs for benefits, making their data worthless.

The state controller’s pay transparency website – which does include the costs for most benefits – has been critiqued here before, in the posts “California State Controller’s Employee Pay Tracker Grossly Understates Actual Compensation,” and “‘Work in Progress’ Government Employee Pay Tracker Still Grossly Inaccurate.” The primary point of those posts is that the “average wages” reported per employer included every part-time hire on the payroll of these cities or counties, and, of course, that “wages” are not the same as “wages plus benefits.” Adjusting for those two factors – only full time workers, and including benefits – these more accurate “averages” are invariably double or even triple what the State Controller reported.

There’s more.

The state controller’s website, and the Bay Area Newsgroup websites, even though they attempt to get at total compensation, still end up falling short. Because in those databases, significant elements of compensation are omitted, such as employer paid life insurance, disability insurance, the employer portion of medicare premiums, and various reimbursements such as tuition expenses.

Also omitted, because they aren’t reported anywhere, are the likely real costs to fund pensions and retirement health care. In the case of pensions, for every 1.0% pension fund returns drop, the annual contribution has to go up by 10% of payroll. In the case of retirement health insurance, in most cases, California’s cities and counties aren’t reserving any funds each year during a worker’s active employment, in order to have something set aside to make the promised payments for retirement health care. To say these additional costs are going to be significant would be an understatement.

It is incumbent upon journalists to do more to explain public compensation issues to the public. Here are some suggested guidelines:

(1) Total compensation is the only relevant measure of how much someone makes.

(2) “Average” total compensation calculations must only include full-time employees with benefits.

(3) Total compensation includes ALL employer paid benefits.

(4) Total compensation analysis should also explain the impact of lower pension fund returns on annual total compensation.

(5) Total compensation analysis should include the estimated annual cost to reserve for retirement health benefits.

(6) Any accurate analysis of total compensation must include a concerted effort to uncover hidden elements of compensation not provided on standard reports, including employer paid medicare, life insurance, disability insurance, and reimbursements for expenses such as tuition.

(7) No news article on wage and benefit negotiations between public employee unions and public officials should omit an accurate estimate of the current levels of average total compensation for members of the bargaining unit. Otherwise, quotes about percent increases or concessions, etc., have no context.

How much total compensation do they make? That FACT should be present in any article about public sector compensation. And databases that only report wages, instead of total compensation, can be very misleading.

*   *   *

UnionWatch is edited by Ed Ring, who can be reached at editor@unionwatch.org