NCPA - National Center for Policy Analysis


January 12, 2009

Bolstered in part by Mayor Michael R. Bloomberg's spending, the average New York City employee cost the city $107,000 a year in wages, health insurance, pension and other benefits in the 2008 fiscal year, an increase of 63 percent since 2000, according to a new report.

City worker compensation grew twice as fast as that of employees in the private sector and elsewhere in the public sector during the same period, the Citizens Budget Commission said in the report, which was released last week.  The increase was driven by contractual raises that outpaced the inflation rate, and by the rising cost of health insurance and pension benefits, said the commission, a business-backed research group.

Other findings:

  • Over all, the report found that city employee pay rose to an average of $69,000 annually as of last June 30, up from $52,000 in 2000, an annual increase of 3.6 percent, while inflation rose an average of 3.2 percent during the same period.
  • Average benefits now cost almost $38,000 a year, up from $13,000 a year.
  • Thanks to overtime and other supplemental payments, firefighters have an average annual compensation package totaling $186,000, the highest among city employees.
  • Department of Education employees cost the city almost $99,000 annually.

With the city staring at a projected $7 billion deficit by 2011, fiscal watchdogs are intensifying their calls for the Bloomberg administration to act more aggressively to control employee costs.

"These skyrocketing costs are stunning," said Carol Kellermann, president of the Citizens Budget Commission, "and they impose an enormous, and growing, burden on increasingly strained taxpayers. Corrective action is essential and can no longer be delayed."

Part of the reason that health benefits have jumped so much, the report said, is the city's longstanding practice, unchanged by Bloomberg, to pay 100 percent of health insurance premiums for employees and their families, as well as for retirees and their spouses.  The report noted that "Most other employers require their workers to pay some share of the premium."

Other factors are beyond the mayor's control, according to the report, such as actuarial recalculations and lower investment returns, as evidenced recently by the impact of the recession.

Source: David Chen, "City Employee Pay Is Outpacing Private Sector, Report Says," New York Times, January 9, 2009.

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