Driven by the highest local government (cities, counties) pay in the United States and moderated by less lucrative state-level worker pay, Nevada overall ranks sixth-highest government worker pay in a new study by the Las Vegas Chamber of Commerce.
This Sunday, page 5B of the Review Journal was a full-page ad, paid for by a consortium of local government unions apparently stung by the growing public awareness of how they pillage taxpayers. Bear in mind – no actual government workers were involved in the ad, just the government unions.
The five highest-paid Chamber employees are compared with two high-paid (not highest) government employees and three average pay figures.
The ad pitches more money and benefits for government union members by suggesting members compare poorly with “the private sector.” The Las Vegas Chamber of Commerce, of course, is not a private sector organization. It is a 501(c) non-profit organization which, in addition to having membership revenue from private businesses, has a bunch of membership revenue from local government entities. The Chamber is partly government-funded.
Still, the Las Vegas Chamber of Commerce is subject to most of the same payroll taxes as a private entity. Combined with retirement benefit differences, these factors drive up government compensation well beyond the Chamber.
Let’s take the Jill Flores – Greg Gammon comparison as an illustrative example.
First, reduce Jill Flores’ pay by $6,572. That’s how much the Chamber takes out of Jill’s paycheck to send to Washington for social security. Greg’s paycheck is not reduced.
Next, reduce Jill Flores’ pay by another $2,500, because that’s how much Jill gets paid for the approximately four holidays every year that she has to work because her organization is open, while Greg gets them off (or, more likely, gets double pay for working them. Government gets more days off.
(By the way, this same phenomenon causes the teacher-private sector comparison to be way off – never mind the silly comparison between a teacher and a successful salesperson. The $49,000 per year in the union ad immediately goes to $62,400 per year because teachers have three months off each summer, in addition to many of the other adjustments outlined in this article).
As a career fireman, Greg has long enjoyed a work schedule that involves being on duty for 24-hours followed by two days off duty. It’s like a weekend every other day. And, like most firemen, Greg has probably spent his two weekends off per week starting and growing a thriving small business. Jill, on the other hand, has worked at least four ten-hour days per week as a Chamber executive. Sometimes five, and sometimes she works on her weekends, for no additional compensation. You can find such dedication in government, but it’s much rarer. And it doesn’t easily allow starting and growing a side business.
But those qualitative comparisons are tough to assign dollar value to. So let’s get back to the union’s compensation comparison. After the two adjustments to Jill’s compensation, she’s at $153,844, 2.6% higher than Greg’s $149,940.
Now let’s suppose that they’re both 50 years old, have 20 years each on the job, and they both retire next week.
Here’s where the big difference happens. Because Jill is 50, she won’t collect any social security for another 15 years – assuming Congress doesn’t raise the age in an attempt to cover its’ bankruptcy of the system. And she will have to find her own health insurance. Meanwhile, Greg will immediately start collecting a retirement income of $75,000 per year from his government retirement plan. He will be allowed to continue in the government health insurance program, and may be eligible for a premium subsidy as well.
When Jill reaches the age where she can get social security income, it’ll likely be around $25,000 per year, a third of Greg’s.
This disparity is because, during their working years, Jill’s employer paid much less money for her retirement than Greg’s employer. In their final year, Jill’s employer paid around $6,500 into social security on her behalf, while Greg’s employer paid around $30,000 into PERS on his behalf. If we factor those dollars into each of their respective compensations, now Jill is close to $160,000 and Greg is close to $180,000.
Let’s say in the year 2019, both Jill and Greg’s retirements are interrupted by an attack of angina, and each must have an artery stent installed to live a more comfortable life. Regardless of what insurance either of them have, Nevada state law says that any police or fire retiree has lifelong 100% coverage for all ailments of the heart or lung, so taxpayers will pay for Greg’s operation.
This difference in benefit is funded by taxpayers putting additional dollars into a long-term savings account – something the Chamber does not do for Jill. For purposes of our comparison, this increases Greg’s compensation even further.
The union’s ad in today’s paper is as deceptive as the union coalition has ever been – and that includes all the ads they funded saying state Senator Joe Heck wanted people to get cancer and state Senator Bob Beers wanted teachers to shoot children.
UNR professor Elliot Parker makes a six-figure income to teach and write. Lately, he’s been writing about how chintzy Nevadans are in funding their state and local governments (including his own salary).
Me, well, I’m now a volunteer. But a game volunteer.
Just to catch everyone up, Parker wrote a column for the Las Vegas Sun here, which I believe was deceptive by quoting some parts, but leaving out the most important parts, of studies by such esteemed sources as the US Census Bureau and the Tax Foundation, about Nevada’s taxing and spending. When all parts of the Census and Tax Foundation studies are considered, Nevada is revealed, contrary to Parker’s pained portrait, as a state with midline state and local government funding, though we spend those dollars ineffectively. Parker contends that Nevada’s state and local government is “the smallest.”
This weekend, Parker posted his counter-rebuttal on his own website: linked, and reproduced here, with my endnotes added:
A Reply to Former Senator Bob Beers About State Spending
I want to thank former Senator Beers for his reply to my column in the Las Vegas Sun, which was printed in the Las Vegas Review Journal recently. It is an important issue, and I appreciate him keeping it before the public so we can clear up apparent areas of confusion, even if he mistakenly thinks I was wrong or reporting selectively. I insist, emphatically, that I was telling it like it is.[A]
Senator Beers says I did not give details on my sources, but newspapers appreciate brevity. Had he asked me, I would have gladly shared my sources and calculations, and like any professor I appreciate people checking my facts. I am easy to find online for anyone with access to a search engine, especially if you spell my name correctly, and I have made the data available on my website.[B]
Senator Beers reports that state revenue was higher than the number I reported for expenditures.[C] We were near the peak of the housing bubble at the time, and revenues were unusually high. Rather than saving the surplus for a rainy day, Governor Guinn and the Legislature chose to give most Nevadans a pretty significant tax rebate. I said I was reporting expenditures, which were more representative of the actual state budget than revenues.[D]
Senator Beers also reports that the data he found did not exactly match what I reported. In the month between when I downloaded the data and the column was published, it seems a new Statistical Abstract came out. I have checked these new data, and include them, with updated calculations, on my website. [B] Nothing significant changed. As in prior years, Nevada still ranked 50th in the nation in the relative number of state employees, total state and local government employees, and employees in higher education, as well as 49th in the nation in K-12 employees.
While Senator Beers admitted that I might be right about the relative number of employees in state and its higher education system, he argues instead that we are overpaid. He reports that government employees make significantly more in Nevada than the national average, but the data he cites – Table 448, column M – only reports earnings for local government employees[E], which are three-quarters of the total. That is relevant for county commissions and city councils, not the state legislature[F]. For the quarter of employees working for the state, average earnings are equal to the national average even though Nevada’s cost of living is higher than average.[B]
Regarding how our state and university benefits compare to those of other states, I don’t yet have a consistent set of data on this, but I will look for one. If Senator Beers has one, I would appreciate him sharing it with me. I do know that we compete in a national marketplace, and our benefits are reasonably competitive but not any more than that[B]. You should not compare our benefits against those in casinos[G], but against other states and other universities.
On his web posting, Senator Beers said that I think we should “further expand government.” I don’t know how he reads that in what I wrote. I certainly doubt that my former economics students – there must be several thousand working in Nevada by now – would say that I advocate big government, and I am quite critical of excessive government. Instead, I wrote that we should not make the smallest state government[H] in the country even smaller, for it would damage the future of the universities and the state. These are not equivalent statements[I].
Finally, I apologize if I offended any Nevadans who earned their degrees online or at small private colleges when I said Nevada only had two universities.[J] I certainly support the desire of anyone to improve themselves through education, but I also assume anyone who has graduated from UNR, UNLV, or any other similar university knows that the institutions are not comparable. The fact that Senator Beers suggests that they are causes me some concern. Is that his objective for our state universities?
My notes to Dr. Parker’s post…
[A] Keynes was just as emphatic that it’s cool to foist irresponsible levels of government debt off on future generations. He was wrong, too. Your enthusiasm does not make you right – in fact, your undeniable self-interest makes you suspect.
[B] Then reference your work. I can understand not doing it in the Las Vegas Sun – it’s chronic on their opinion pages. But here, on your own webpage, it’s just too easy to link to your work. For you to not do so is telling.
[C] Actually, I don’t recall making that argument. Are you creating a paper tiger? I did lay out a series of calculations using Census Data, which you are apparently not disagreeing with in any detailed manner, that Nevada’s per-capita state-and-local government spending at about the middle of the 50 states.
[D] This seems like introducing a bushel of bananas into an argument sorting out apples and oranges. Worse, it sounds like you’re admitting to having included the 2005 tax rebate (where state government apologetically gave taxpayers back some of what they’d been overcharged) as an expenditure? The proper accounting treatment would be to not include those funds in either revenues or expenditures, but certainly never as an expenditure.
[E] Professor Parker is correct. My initial post was incorrect. Column M shows local government employee wages, where we rank sixth. Column J (here’s the data table) shows state government employees separately, where we rank sixteenth. Both rankings are above the national average. My original argument, that Nevada’s government employee benefits are much richer than average, which would lift our rankings compared to other states, remains subject to further study.
Remember, though, that Professor Parker’s original essay argued that Nevada’s low number of government employees per thousand citizens proved that Nevada’s citizens were chintzy in funding goverment. I argued that it was deceptive to “prove his case” with that tiny part of the Statistical Abstract of the United States, especially when the rest of it showed Nevada’s above-average government wages.
[F] Incorrect. This is absolutely the Legislature’s concern. NRS 288 (like all state laws, this exists soley by legislative authorization) allows government unions in Clark and Washoe Counties to prohibit city councils and county commissions from exercising common sense. State government wages are set directly by the Legislature. Both are clearly the Legislature’s doing, and their rehabilitation are clearly the Legislature’s responsibility.
[G] I wasn’t comparing them to those in casinos. I was comparing them to those throughout the private sector. Employment benefits in casinos are actually above average (though not up to government levels).
[H] This is how we got engaged in this debate in the first place. All evidence points to Nevada having a per-capita mid-sized state-and-local (or just state) government, unless you deceptively quote tiny parts of studies, as you did in your original Sun article. It’s not a very academic term, but around Nevada’s dinner tables, your case is what we call “bullshit”. I am floored that you are not ashamed to make it.
[I] Sorry, Dr. Parker. You cannot get away with saying that your opposition to making state-and-local government smaller (reflecting the economic shrinkage in our job market, incomes and Nevada at large) does not equate to further expanding government. It does. You sound like a politician, running for office. Campaign season is over.
[J] More incorrect. Remember, you said there are no private universities in Nevada. My point was not to try to compare them to you, it was to point out your very large factual error. But while we’re on the topic, Touro University’s medical school is larger than the University of Nevada. Not counting their medical students on campuses in other states. Is that what you mean by “small private college?”
Over at the Nevada Policy Research Institute, Geoffrey Lawrence has put together an article detailing two of the three routine kinds of pay raises enjoyed by government employees in Nevada.
The first are step increases, which are the subject of union bargaining and thus can vary from the 4.5% that Lawrence describes.
The second are COLAs, an acronym for Cost of Living Adjustment.
These two pay hike types, as Lawrence notes, are awarded regardless of job performance, and typically will cause starting pay to triple over the first ten years of a government employee’s term of employment.
The third pay type takes place anytime an employee’s duties or responsibilities are increased. Public employment is structured with a matrix that assigns higher “base” pay to more responsible jobs. Thus, by maturing within the organization, employees can increase their pay prior to the application of step and COLA increases.
Although the Nevada Legislature has met in special session to trim the budget twice so far this year, Nevada’s judges are still going to get a whopper of a raise next week.
Jacob Snow, the director of the Regional Transportation Authority, got a nice raise in 2008.
Government benefits cost for local government typically runs 30%. With benefits, Snow is costing taxpayers about $300,000 per year.