Similar situation to Calgary, Alberta. When the oil sector was booming the private sector was being paid the highest salaries in North America and public employees complained massively and received the highest public sector salaries in the country. Now, oil and gas has cratered and the salaries in the private sector have collapsed (and thousands of job losses) the public sector is refusing to have any salary reduction even though the province of Alberta is completely broke and heading towards fiscal collapse.
Saying the province is broke misses the point. Alberta has the lowest provincial tax rate in North America, has the lowest personal tax rate in Canada, and has no provincial sales tax. All of these because of a reliance on Oil and Gas royalties.
Calgary has a similar dynamic with over reliance on commercial real estate for major oil and gas companies.
Alberta is an outlier in how it finances public services.
These are structural problems which won't be solved by public sector taking 5, 10, or even 20% reduction.
Please take a look at the latest Alberta government 2020-2021 budget update [1], the resource revenue has collapsed to a mere $1.5 billion which is 2% of government expenditures. Also, the government is running a pre-Covid deficit of $8 Billion which has ballooned to $24 Billion due to Covid. The government must raise taxes or reduce expenditures or face more indebtedness than Quebec per capita.
Taking your linked budget update the three highest expenditures being Health (which is not just wages) $20B, Education $8B, and Advanced Education $5B amount to $33 Billion.
How much would you have to reduce public sector wages as a percentage (note not all those expenses are wages) to cover the $8 Billion pre-covid deficit. Now how much would you have to do to cover the $24 Billion deficit? The budget update mentioned there is only an additional $3 Billion in post-covid recovery spending but somehow an additional $21 Billion in deficit? Seems like the deficit is coming from revenue collapse.
There is no doubt they will have to increase taxation or reduce spending. My point is that there is perhaps there is no longer any 'Alberta Advantage' allowing for the special taxation status of the province.
So in Canada, unlike most or all us states, Alberta can run a budget deficit, they can just get loans? What if they declare bankruptcy or can't pay some bills?
Yes, in Canada the provinces can run deficits and all of them have quite large debt loads but eventually the debt loads become too large as the interest payments grow. In the 90s Canada had to cut government services due to an extremely high debt load [1].
Having worked on stories like these, I'd caution anyone to examine some of the overtime outliers before responding to them.
Often enough the highest visible overtimes on a city budget are social functions, like a sheriff who provides honorary protective detail to stadiums where they are later bizarrely reimbused through that mechanism.
Below that and down-to the median overtimes usually speak for themselves and draw a fair amount of criticism, but otherwise, the vast combined aggregate under the median points out that we don't pay people enough for the jobs they do, and we can't hire enough of them at that price.
It would be just some one-time outliers, except there are real problems where overtime is counted towards retirement, and workers actively inflate their last years just to bump up their pensions and retirement pay. And none of that kind of thing is protected against in the contracts. So the city and taxpayers are being screwed.
The last-three-years retirement bowling lanes you're describing need a US-wide overhaul, but it's definitely not an uncommon occurrence in public service admin anywhere in the states, on a City, State and Federal level.
But the overtime budget breakdown for SF (City and County) was roughly 65% transit, 28% maintenance, 5% enforcement. So admin is < 2% of it.
Those numbers in context are interesting. In FY2011/12 the departmental breakdown of employees exceeding set overtime limits were:
- Transportation: 634 employees
- Fire Department: 378 employees
- Public Health: 115 employees
- Sheriff: 85 employees.
Everyone else in the city - combined - came to just 63 employees. In other words, these are critical positions drawing nearly all of the overtime.
Also, the double and triple dipping where someone retires from one government job and then takes another one with a different agency. They collect a pension check and a pay check at the same time while also establishing a second pension account in a different system.
This is ... normal? You get a pension for working a duration at a job. If you want to 'supplement' your income after that point its a free country, isn't it?
In the private sector, with multiple employers, perhaps (though very few offer pensions any more). In the public sector, you would essentially be getting paid twice and multiple pensions by the same employer (the taxpayer).
The problem is CalPERS. If you are not retired, you should not be drawing from a pension. When a person goes to another government job and starts paying into CalPERS again, the pension needs to stop.
I don't know what needs to be done, I'm just an observer. But you would think there would be a state-wide "office of negotiation" to help cities avoid being put in a bidding war between each other, and to avoid the typical contract pitfalls that they sign unknowingly.
Publish a calculating spreadsheet that shows how people's pension benefits are calculated, and what line items (overtime, etc) will or will not be included, and what costs will be incurred to the city if they are/are not. And let people review and find out how it will be exploited.
I'm allergic to incompetence and inertia of this level that gradually ratchets up the cost for everyone.
Government jobs are not a charity to be milked into giving people benefits above and beyond. Government service is supposed to offer job security, not high pay for performance and risk (or at least that's what it generally has come to be). Why are we paying top dollar, along with job security and low performance?
This reads like a clickbait article with an agenda.
Also, who cares? SF is one of the most expensive cities in the world - it's probably fair to expect city employees to make a liveable wage in the city they serve.
Except that the city's negotiating abilities are so incompetent that these overtime $ costs (which in the past had guarantees like "required to ratchet up and remain the 2nd highest paid scale in the US") and expansion of employees numbers gets further baked into pension and debt costs far into the future.
Normally, as a city, you'd probably want your employees to live in the city that they service. If you don't live there, you're not going to care about hypodermic needles on the street as much. "Meh, it's San Francisco. Who cares?"
That's the thing - the livable wage is changing in San Francisco.
SF is seeing a steep reduction in cost-of-living, yet these extremely high salaries won't decrease accordingly.
Also, the herds of people moving out and companies shifting remote will mean lower revenue for the city, meaning these high salaries won't be fiscally sustainable.
The city will take on debt load like Vallejo and Orange County. They will try to win concessions, but most likely the unions won't budge. Worst case, SF files for Chapter 9 bankruptcy.
It's breathless pearl clutching targeted at Forbes readers who would be scandalized that their perceived inferiors are making what amounts to a moderately livable wage in one of the most expensive places on earth.
As a quick example, here we can see the author making an extremely weird argument that the guy running the agency that serves the homeless in the city is somehow doing a bad job because there are more homeless people now than there were in 2016.
> In 2016, the city added a new agency to serve its homeless residents. By 2019, the department had 148 employees, and 53 of them made more than $100,000.
> The director, Jeff Kosinsky, brought home up to $238,182 annually, but each year the city’s homeless population continued to grow.
This article fails to make the point as to why this is a problem. You might as well make an article "Why Google is in trouble - 60,000 employees earned $150k+".
Not really. Google isn’t saddled with retirement entitlements. Also Googles employees generate some of the highest revenues per staff in the industry.
SF gets its revenues from its citizens via taxes. The employees don’t produce revenues themselves. They are cost centers. Cities by their nature, use regulatory capture to extract revenues.
If googles revenues go down they cut staff. Cities rarely cut staff in line with budget decreases.
And it will get worse for cities trying to milk the system if more firms opt for remote work. They should pay a fair share but also cities should not see cos as their cash cow.
"Retirement entitlements"? You mean the pensions people have earned, with their labor?
It's not a surprise, to anyone who thinks about it for more than 20 seconds that RN or firefighter is not, in fact, a revenue generating position for the city. But they're generally agreed to be necessary, so why should they not be paid a living wage?
No issues with common sense retirements —but some of these are 90% of pre-retirement salaries where people “retire”
take their entitlements and work elsewhere after retirement making good money on top of their retirement.
I know a couple firefighters in the bay area and they definitely game this system.
They'll work a typical salaried position for ~30 years, and then in their last year (or last couple years) they'll stuff as much overtime as they possibly can in, sometimes more than triple their regular salary. Pension is based on wages over the last year or two, so their pension payments skyrocket upwards.
Managers know and are complicit in this, in solidarity with their coworkers. There's often peer pressure too; lower ranked staff are urged to not even request overtime so that it can all go to the near-retirees without a paper-trail of favoritism. It's not uncommon for >98% of overtime to go to the 2 or 3 people who are close to retirement.
I'm all for a living wage for people in critical or permanent roles, but this is not that, and it's not fair. This is the opposite, driving pay down for newer recruits (because they can't request overtime), driving retirement benefits up (far above what was earned during the career), and costing the public in the process.
Just because you are dissatisfied with the options your job gives you isn't a reason to remove the compensation of other workers. There's no reason private companies can't offer pensions - they used to! Organize and talk to your employer.
If private sector employees want public sector benefits and job protections, they can agitate for them. Talk to your coworkers about organizing and unionizing.
You don't need to drag down others to pull yourself up.
No. There are three problems with defined-benefit systems, especially as a form of civil servant benefit:
1) There is far too much risk involved. No one really knows how long a person will live beyond retirement 40 years from now;
2) The systems, as they are in place today, result in retirement income that far exceeds expected returns from investment or growth in GDP over the preceeding 30-40 years of work, and are unsustainable by taxpayers _by definition;
3) The taxpayer - who should be the adversary when negotiating pensions and salaries for public servants - gets no place at the table during negotiations. It is in the best interests of both the leadership of civil institutions and the employed civil servants to increase both salary, pensions, and benefits far beyond any rational economic analysis.
Eventually these policies result in places like Flint or Detroit. My expectation is that Illinois is likely to join them in about 10 years they are so far in the hole.
Companies who overcompensate can liquidate if they have to. Cities can’t easily dispose of their obligations no matter how foolhardy they were. Instead they raise taxes, deliver fewer services or incur further debt via bond issuance.
Actually, given how corrupt SF is, I don't want my tax dollars going to unsustainable pensions. The city has had budget issues for a long time and it's getting even worse this year.
Do we want city employees to live in the city ? Because unless your family bought a house in the 60s, you probably want to earn $150k to live in the city.
200k? I know people on 600k total comp who have been stuck in a one bedroom flat for 4 years because of how many strings the money comes attached with.
Putting those numbers into context, from the article there's about 40k employees earning on average 131k. That would be somewhat higher than the median wage in SF (~100k), and for all the employees be about ~5 billion in cost, which is slightly more than a third of the budget of 13.7 billion for the fiscal year 2020.
I haven't looked at what percentage of cost for other cities salaried employees are, but it does not seem exceedingly high. I guess you could justify shaving off 10-15% or so, but I wouldn't characterise this as being a major source of trouble.
The issue I perceive with this is that all of these wages seem to be extremely inflated compared to the job market for similar roles. Are private hospitals in SF paying RNs almost 300k a year? Are the FB shuttle shuttle drivers or delivery drivers in industry making 108k a year? I doubt it.
It's a common problem actually. Private shuttle companies complain they are unable to compete with all the benefits etc. Government monopolies are the absolute worst for this reason.
Until California overhauls their ridiculous Prop 13 artificially keeping property taxes low, these arguments blaming budget shortfalls on salaries will continue to be a moot point.
Yes, there can be rampant overtime abuse by government workers to get these inflated salaries, that's a large problem in NYC transit agencies.
However, the overt limiting of city revenue due to Prop 13 is a major cause of budget shortfalls that's looking them right in the face.
If someone is in serious debt while at the same time going out of their way to voluntarily take a lower salary, does it make sense to blame it on their expensive internet bill, or tackle the salary first?
