“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.

*   *   *

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

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

    1. A_CRITIC says:

      Ed,

      Have you ever considered doing an article on the things that the government is doing right in regards to salary & pensions. You know, to encourage good behavior and all.

      You see, due to you and people like Crane, GreenNut & others, the people of California will never know just how much has been ‘reformed’ by the current administration. People will never know that Governor Brown cut the 3% @ 50 factor to 2.5 @ 57 (actuarial basis savings of over 50%). Or that Brown has gotten rid of entire departments, got rid of unnecessary cellphones paid for by the state, or reduced the amount of vehicles that the state keeps on inventory, or stopped borrowing against the future via bonds (like you Republican hero Swarzfailure), or that Brown has put the state into a position to pay off all those bonds as a result of the failures of the previous administration (not to mention what Bush did to the country as a whole). Could go on, but you get the point….after all their is the great prison fiasco that Schwazfailure made…and oh how is that costing us.

      But no – rather than focusing on all the positives that are happening, you wish to b-itch & moan about things that haven’t been accomplished YET.

      I have an idea!! Since you (along with Crane & GreenNut) have all the answers, why don’t you show us what you can do and run for office? Or take a state job and move up and fix some of these problems….? Wait!!!, Crane was in office and was part of the worst administration this state has ever seen, with the most bond borrowing – not to mention trying to line their own pockets with privatization of various state services. Driving up prison costs due to the inability to articulate compliance with constitutional standards….and so on.

      Hey – Keep up the good work! You are all we expect from a right wing ‘think’ tank. LOL

    2. Tough Love says:

      ALL of these jobs should be outsourced.

      Public Sector Unions should be outlawed. They are a CANCER inflicted upon Society.

    3. Ed Ring says:

      A_CRITIC: Welcome back. Your tone, verified by your IP address, identifies you as a veteran of these forums. As usual, you make some good points, so here goes.

      First of all, David Crane is a Democrat, Steven Greenhut is a Libertarian, and I am an Independent, so using us as examples certainly doesn’t support your subsequent suggestion that all these ideas are exclusive to “right-wing think tanks.” The problems we’re having with pensions are alarming to anyone who understands the underlying financial issues, including you.

      After all, you start by pointing out that the government is doing things to reform pensions. And they are. But even as Gov. Brown said, SB 340 was just a small step forward. What Brown originally wanted was to create the so-called “three legged stool” of retirement security: a modest pension, a contributory 401K, and participation in Social Security. That is a great idea.

      Brown also wanted his reforms to have more impact on current workers. The problem with the reform as it is, as you know, is that it has minimal impact except on new employees, meaning that most of the savings that accrue to SB 340 won’t be realized for 20-30 years. And that’s too late.

      One of the worst things about SB 340 is that while it phases in a “50% contribution by employees to their pension costs,” that 50% ONLY applies to the “normal contribution,” and not to the unfunded contribution. This creates yet another incentive to use optimistic investment return projections, because the higher the projection, the lower the normal contribution. But then when those projections are not met, the unfunded contribution gets even larger, and the taxpayer is on the hook for 100% of that.

      You have a hyperbolic style, but our dialogue goes back far enough that I know you understand these issues quite well and are ultimately – hopefully this is accurate – a fair minded individual. So why don’t YOU consider what sort of solution we should be looking at, if and when those pension funds fail to deliver 10%+ every year for the next 20 years. Because that’s what it’s going to take to avert disaster.

      And by the way – don’t assume we are giving a pass to the Republicans who thought borrowing was better than taxing. You know better. Borrowing is deferred taxation, with a nice cut added for the bankers. Nothing more.

    4. A_CRITIC says:

      “You have a hyperbolic style” – interesting that you have never called Justin Dubious Bishop or Tough Love ‘hyperbolic’, but they do agree with you…

      My solution – let Brown keep fixing this mess. The phase in on employees covering 1/2 of pension costs starts…this year? Maybe next year. That will be a load off the taxpayer, and is basically a pay cut for the employees. Of course there are cities that are raising employees pay to ‘cover’ the cost of the added pension contribution – but that is on those cities. The governor is showing responsibility, so why get in his way. It seems you could turn you’re articles from the constant drumbeat of negativity (that was most assuredly deserved during the times of Gray Davis and Swarzfailure) to something more positive at this time.

      Calling Greenhut a Libertarian is an insult to us Libertarians. That would be akin to calling myself master of the universe, when I am merely master of these forums.

    5. Ed Ring says:

      A_CRITIC: Actually I have asked Tough Love to tone it down at times. But his financial reasoning is almost always sound and the points he makes are not always obvious, which makes him a valuable participant on these forums. I’m not familiar with Justin Bishop but we try to keep things reasonably civil and focused on the issues.

      We have NOT been critical Brown’s pension reform, although we have been critical of the relentless attempts by union funded litigators to undermine Brown’s pension reform. And we agree with the Governor that what he has implemented to-date is just a first step. Do you?

      Your solution – apart from its lack of much detail – is just fine, if the public sector unions would let Governor Brown implement adequate reforms. As stated, Brown’s “three legged stool” of reform, in principle, is a great idea – return everyone to a modest pension, a contributory 401K, and participation in Social Security.

      The problem, and where we disagree, is you apparently remain convinced the investment market is going to deliver adequate returns to keep public employee pension funds solvent without downward adjustments to current employee and retiree benefits, and we don’t. Developing prudent contingencies to maintain solvency would be in the best interests of anyone who believes, as I do, that defined benefit plans should not be scrapped in exclusive favor of defined contribution plans.

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