The State of Public Sector Finances

Related to a previous discussion forum post on public sector pensions is the general state of public sector finances.

Barron's (subscription required) Editor Thomas Donlan wrote a recent piece (click here to read) on the alarming state of state finances.

Donlan provided some enlightening statistics from Bureau of Labor Statistics on the average wages and benefits of state and local governments versus the private sector:

  • Average wages and benefits are $26.24 an hour in government versus $19.45 an hour in private employment.
  • Health benefits cost state and local government an average $4.43 an hour compared with $2.01 for private employers.
  • State and local governments award their workers an average $3.23 an hour for pensions and savings plans compared with 94 cents an hour in the private sector.


Key Phrases: 

According to the Wall Street Journal, 15,000 public employees in California have retired with annual pensions greater than $100,000.

The San Ramon Valley fire chief's annual pension is $284,000.

During the past decade, California public worker pension costs have increased to $3 billion from $150 million (a 2,000 percent increase). This occurred while state revenues increased only 24 percent.

$284,000 in annual pension payments for the San Ramon Fire Chief--how nice.

Assuming that this person lives another 30 years the present value of those pension payments is about $4.9 million.

How nice for that fire chief to have a $5 million net worth on the taxpayers' dime...

1 in 3 city workers in San Francisco make over $100,000 per year:

Average pay before benefits is $93,000.

Highest earner was $516,000.

Salaries--not including benefits--make up $2.5 billion of the $6.5 billion budget (for 800,000 or so residents).

$500 million budget deficit on a $6.5 billion budget--no wonder...