Strike by Santa Clara County Workers Averted

Everyone should breathe a sigh of relief. Or should they?

Santa Clara County’s nurses, librarians, janitors, dispatchers, and assorted other workers belonging to SEIU Local 521 will not be going on strike after all. At least not yet. Late night negotiations have produced a deal that’s being sent back to the members.

The exact terms of this latest deal are not clear. But according to sources at the San Jose Mercury, the level of pay and benefits was only one of the issues being negotiated. Another key issue was work conditions – in particular, excessive overtime and excessive workloads.

The issue of pay and benefits is directly connected to the issue of overtime and workload, of course, because when employees are paid more than the budget can accommodate, it is impossible to hire more employees. Here is a look at how much key members of this union are making:

Santa Clara County Public Employees
Average Total Compensation by Select Job Title, 2013

Unfortunately, this data, which comes from the California Office of the State Controller’s “Government Compensation in California” database, has not been updated yet for 2014, so it is possible that the situation has changed. But using these numbers, a few things are immediately apparent:

(1)  These workers are very well paid. The average nurse collects a compensation package worth $183,822 per year. The average janitor collects a compensation package worth $76,309 per year. By comparison, according to the U.S. Census Bureau, the median annual earnings for a full-time, year-round civilian employed worker in Santa Clara County in 2013 was $68,586, one of the highest in the nation.

(2)  These workers are not working extreme amounts of overtime. The 2nd to last row on the above table is calculated based on overtime pay, divided by 1.5x (some overtime is paid at 2.0x so this is, if anything, understated), divided by base pay (some overtime rates are calculated on base pay plus other pay, so this is also understated). The group that works the most overtime are the dispatchers, who, in a 40 hour week, on average are turning in an extra 6.0 hours of work. That equates to 72 extra minutes a day, i.e., zilch from the perspective of any start-up entrepreneur.

(3) The cost of pay and benefits are making it difficult to hire more workers. These workers are typically receiving a 2.5% at 55 pension, meaning, for example, if the average nurse retired after 30 years making $128,117 (it would be more than that since that figure represents the average, not the final – again, we’re understating), at age 55 they would get a starting pension of 2.5% times 30 times $128,117 = $96,088, with annual cost-of-living increases, for the rest of their lives. The employer’s health insurance payments, over $15,000 per year, are roughly the same across job categories regardless of average income. This means the benefits overhead for the relatively low paid employees, the janitors, is a staggering 58%. In the case of the nurses, who are the highest paid among these four groups, it is still 28%. For dispatchers, who have to work a measurable amount of overtime, benefits overhead is 42%.

Without having more detailed knowledge of the situation in Santa Clara County, it isn’t fair to indulge in excessive editorializing on this specific case. But the unions who represent Santa Clara county workers, and all government workers, have become accustomed to comparing their rates of pay to each other. In Santa Clara County, the unions representing miscellaneous workers see how much money is going to unionized public safety employees and they become resentful. The public safety unions continuously identify cases where, somewhere, a local government agency is paying their police and firefighters more than they’re making, and they foment resentment that leads to politicians granting pay increases to achieve parity. And the circle goes round and round. And pay goes up and up.

Meanwhile, in the real world of private sector work, the idea of an employer paying $15,000 per year or more to cover an employee’s health insurance plan is almost unheard of. In the world of salaried employment, the idea of working a mere 40 hour week (and accruing 4+ weeks a year of paid vacation) is almost unheard of. And the idea of retiring at age 55 with a pension (with cost-of-living adjustments) that starts at 75% of one’s final year’s earnings is preposterous.

California’s government workers, especially those in the Silicon Valley, point to the wealth being created by start-up companies who make it big, minting dozens if not hundreds of multi-millionaires, and somehow they think that’s the norm. But it isn’t the norm. The norm is a median private sector worker income of $68,586 per year; a median household income of $91,702 per year. The norm is an employer paid benefits overhead of around 15% (9.0% Social Security and Medicare, at most another 6% for health insurance and a contributory 401K). Not 28%. Not 41%. Not 42%. Not 58%.

California’s government workers deplore the excessive cost of living, especially in the Silicon Valley. But instead of fighting for more wages and benefits for themselves, they might find the vision, the courage, and the selflessness to identify and fight for policies that would lower the cost of living for everyone. Nobody can afford a home, because environmentalists have successfully declared all open space to be sacred. Ordinary workers struggle to pay for gasoline, electricity and water, because development of these resources has been excessively restricted for decades. Across almost every critical household expense, add education and healthcare to the list, ordinary workers pay far more than they would have to in a more competitive economy.

The aspirations of unionized government workers are understandable; the rhetoric of their union leadership is compelling. But these government union leaders don’t live in the real world, and worse, they don’t appear to even care about the real world. Because unlike private sector unions, government unions negotiate with bosses they elect, for a share of taxes that are taken from citizens, not precariously earned by a private company. And they use their unique power to exempt themselves from the economic challenges facing the rest of the citizens they are supposed to serve.

When that is fixed, we may truly breathe a sigh of relief.

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Ed Ring is the executive director of the California Policy Center.

City of Palo Alto Faces Strike – $139,907 Average Total Compensation Not Enough

“Although the city is recovering, we are and will continue to have difficulty attracting and retaining experienced and skilled employees if we don’t achieve a solution now.”
Palo Alto City Employee and SEIU Local 521 Chapter Chair, Palo Alto Online, January 14, 2014

This refrain has been heard for over 20 years. It plays out in every city and county in California, whereby unionized workforces claim that if their employers don’t pay as much as the neighboring city, all the good employees will leave, and nobody will want to work for them.

The problem with this, of course, is that as soon as one city raised their wages and benefits to make their jobs more attractive than the neighboring city, then the neighboring city had to endure the clamor from their unions to keep pace. The result? We have workers in Palo Alto, whose average pay and benefits were $139,907 during 2012, claiming they don’t make enough money, and so they’re considering going on strike (ref. “Palo Alto calls impasse in union talks,” January 14, 2014, Palo Alto Online).

One problem with media coverage of these strikes is that local newspapers rarely bother to report what the employees are actually making in total pay and employer-paid benefits. And if these reporters do take the time to report pay, they usually report averages from the State Controller’s “Government Compensation in California” website.

According to the State Controller, the “average wage” for a Palo Alto city worker in 2012 was $62,838, and the “average retirement and health cost [to employer]” was $23,729, equaling total pay and employer-paid benefits averaging $86,567. That’s not bad average pay, but it is WAY off the mark, because of the 1,561 employees working for the City of Palo Alto, only 846 of them work full time with benefits.

When you take out of these averages part-time custodians, community recreation leaders, swim instructors and lifeguards, theater arts aides, library pages, and the like – all of whom make very decent hourly wages but don’t work full time or collect benefits, a very different picture emerges.

The average full-time, permanent employee working for the City of Palo Alto actually makes an “average wage” of $99,038, and “average retirement and health cost” of $40,069, or total compensation of $139,907. That’s sixty-two percent higher than what the State Controller says on their “Palo Alto, Data at a Glance” page. Journalists, take note.

Of course, like all cities, public safety salaries skew the averages higher, and Palo Alto is no exception. The average police officer (including administrative personnel who work for the police dept.) earned total compensation of $166,392 during 2012, and the average firefighter (including admin), $179,099. But the average non-safety full-time employee in Palo Alto still averaged total compensation of $128,059.

Relative to other cities, that’s pretty good pay, but rather than compare themselves to other unionized public sector workers, why not compare themselves to workers in private industry?

Starting at the entry level, from the City of Palo Alto’s “Job Descriptions” section of their website, here’s the job description for a “Program Assistant I:”

“Provides coordination and administrative support for City programs and projects, overseeing daily operations, including the scheduling and coordination of programs, providing liaison with the public, community groups, and other City departments as directed, developing information materials for dissemination to the public and staff.  Reports to various reporting relationships.  May supervise temporary staff/volunteers depending on assignment.”

Put another way, this is someone who answers the phone and does basic secretarial work.

Here are the skills required:

“Sufficient education, training and/or work experience to demonstrate possession of the following knowledge, skills, and abilities which would typically be acquired through: Equivalent to graduation from high school and 3 years of progressively responsible administrative experience working with programs or projects. Completion of 2 years of college may substitute for 1 year of work experience.”

Translation: A high school diploma and a few years of entry level secretarial experience.

There were ten “Program Assistant I” employees working full-time for the City of Palo Alto during 2012. Their average pay was $63,819 and their average employer paid benefits were $23,945, making their total compensation average $87,764. But wait, there’s more…

A glance at the “Salaries and Benefits” page on the City of Palo Alto’s official website shows what else full-time employees can expect, including a fully paid employee and dependent Dental Plan, a 90% paid employee and dependent Medical Plan, a fully paid employee and dependent Vision Plan, a fully paid Life and AD&D insurance equal to annual salary, a Long Term Disability plan, 12 annual paid holidays, two to five weeks vacation annually depending on years of service, 96 hours annual sick leave, and Credit Union Services.

Based on a 2,080 hour work year, factor in 12 holidays and 20 days vacation, and a veteran “Program Assistant I” will earn $48 per hour in pay and employer-paid benefits.

And when “Program Assistant I” employees working for the City of Palo Alto turn 55, assuming they worked 30 years, they may retire with a pension of $51,693 per year (2.7% x 63,819 x  30). With no sleepless nights, wondering if their individual 401K investments will tank when the hedge funds take money off the table to pay their public employee pension fund investors.

Does anyone seriously think these employees are underpaid? Ask anyone with a high school education who sits at a desk and picks up the phone in the private sector if accepting a mere $48 per hour is demeaning work. While you’re at it, ask them how much empathy for genuine “working people” anyone who makes that much money must have – or not have – to consider paralyzing a city to go on strike for even more.

If every one of Palo Alto’s “Program Assistant I” employees were fired – say, for going on strike – the city would be inundated with resumes from extremely capable people who would love to take a job that good. The average annual pay and benefit package for a non-safety employee for the City of Palo Alto is, again, $128,059. Pretty good work if you can get it.

Some final thoughts – since people just love these statistics: During 2012, five City of Palo Alto employees made over $300,000 in total pay, another 89 people made over $200,000 and less than $300,000, another 204 made over $150,000 and less than $200,000, and another 379 made less than $150,000 and more than $100,000. Put another way, 677 of Palo Alto’s 846 full-time employees made over $100,000 during 2012. These are our unionized public servants. Anyone who uses Excel may verify all this data on this downloadable spreadsheet.

What needs to happen, if in fact the City of Palo Alto is underpaying their employees relative to neighboring cities, is that those neighboring cities need to lower their pay and benefit packages.

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Ed Ring is the executive director of the California Public Policy Center