J. Scott Moody & Wendy Warcholik, Ph.D. | April 1, 2009
Where's the Fief?
J. Scott Moody & Wendy Warcholik, Ph.D.
As we pointed out in these pages in December ("Overcrowding on the Government Gravy Train"), data from the Bureau of Economic Analysis (BEA) indicate that Oklahoma's state and local government workforce is too big and is overpaid.
If Oklahoma's state and local government workforce (as a percent of the private-sector workforce) was at the national average, there would be 66,084 fewer government workers, saving taxpayers up to $2.8 billion.
Moreover, Oklahoma's state and local government (hereafter, simply "government") workforce compensation levels are above the national average. In 2007, the average Oklahoma government worker took home $43,417 (including wages and salaries and benefits), which is $1,098 more than the nationally adjusted figure of $42,319. This over-compensation cost taxpayers up to an additional $302 million.
The total price tag for this over-employment and over-compensation sums to a staggering $3.1 billion.
But where exactly are all these excess workers employed?
Policymakers need to know where to locate this over-employment, but details are difficult to uncover. The BEA data do not specify the job functions of state and local governments.
However, in an effort to pinpoint the excess government employment, we obtained from the U.S. Census Bureau data which break down employment into 32 different functions. These functions include police, firefighters, highways, public welfare, education, and many others.
What we discovered is that Oklahoma's educational establishment-including elementary, secondary, and higher education-is the main source of Oklahoma's over-employment problem. Indeed, these educational functions account for 76 percent of Oklahoma's government over-employment problem.
Let's look at this matter in more detail.
First, let's consider the employment ratio (Table 1). The employment ratio is calculated by dividing the number of government workers by the total number of private sector workers. Oklahoma's governments employ 19.55 workers for every 100 private sector workers. This exceeds the national average of 16.27 workers. Overall, Oklahoma has the 8th highest employment ratio in the country.
Among the 32 functions, Oklahoma's employment ratio is among the 10 highest in the country in the following areas:
- Police-Other. This includes all other policing activities without the power of arrests, such as school crossing guards.
- Health. This includes the provision of services for the conservation and improvement of public health, such as health-related inspections, air and water quality, and rabies and animal control.
- Housing and Community Development. This includes construction, operation, and support of housing and redevelopment projects and other activities to promote or aid public and private housing and community development.
- Water Supply. This includes the operation, maintenance, and construction of public water supply systems including production, acquisition, and distribution of water for residential, commercial, or industrial use.
- Elementary and Secondary Education-Other. This includes all non-instructional employees.
- Higher Education-Other. This includes all non-instructional employees at government higher education facilities.
Wages and Salaries Ratio
Second, let's look at the wages and salaries ratio (Table 2). This ratio is calculated by dividing the average government wages and salaries ($31,265) by the average private sector wages and salaries ($34,307), yielding a ratio of -8.9 percent. This is a tad lower than the national average of -7.8 percent. Overall, Oklahoma has the 29th highest wages and salaries ratio in the country. (Unfortunately, the Census data do not include any information on government benefits, which is actually the driver of Oklahoma's government over-compensation problem referenced at the beginning of this article.)
Among the 32 functions, Oklahoma's wages and salaries ratio is among the 10 highest in the country in the following areas:
- Water Transport and Terminals. This includes provision, construction, operation, maintenance, and support of public waterways, harbors, docks, wharves, and related marine terminal facilities. It also includes the regulation of the water transportation industry.
- Parks and Recreation. This includes the provision and support of recreational and cultural-scientific facilities maintained for the benefit of residents and visitors.
Overall, government over-employment in Oklahoma is a more serious problem than over-compensation. In particular, it is Oklahoma's educational establishment-including elementary, secondary, and higher education-which accounts for the vast majority of the over-employment problem. Although not all educational functions rank in the top 10, when combined they account for 76 percent of Oklahoma's state and local government over-employment. Clearly, this is an area policy-makers should focus on for employment cost savings.
The data used in this article are from the U.S. Department of Commerce's Census Bureau and are part of the bureau's Government Finance and Employment data series. The data can be found at http://www.census.gov/govs/www/apes.html. The wages and salaries data are based on one month's payroll, usually March. The yearly payroll data used in this article are based on multiplying this one month's payroll by 12. As a result, this may cause deviation from actual payroll due to overtime, unusual situations, or part-year workers (such as teachers). All data are adjusted and presented in fiscal years. For more on the government functions definitions, see http://www.census.gov/govs/www/06classificationmanual/chapter12.html. It is important to note that the Census Bureau data are supplemental to the BEA data, which offer the most accurate and broadest picture of overall employment and compensation. For example, the Census data do not include any information on government benefits, which is actually the driver of Oklahoma's state and local government over-compensation problem. As such, the dual-source numerical data presented in this analysis may not exactly match those from our BEA-centric analysis ("Overcrowding on the Government Gravy Train") published in the December 2008 issue of Perspective.
J. Scott Moody (M.A., George Mason University) and Wendy P. Warcholik (Ph.D., George Mason University) are OCPA research fellows.
J. Scott Moody
OCPA Research Fellow
OCPA research fellow J. Scott Moody (M.A., George Mason University) serves as chief executive officer of State Budget Solutions. Formerly a senior economist at the Tax Foundation and a senior economist at the Heritage Foundation, he has twice testified before the Ways and Means Committee of the U.S. House of Representatives. Moody is the co-creator of the Tax Foundation’s popular “State Business Tax Climate Index.” His work has appeared in Forbes, CNN Money, State Tax Notes, The Oklahoman, and several other publications. This article is an updated version of an analysis published in 2008.
Wendy Warcholik, Ph.D.
OCPA Research Fellow
Wendy P. Warcholik (Ph.D., George Mason University) is an OCPA research fellow. She formerly served as an economist at the U.S. Department of Commerce’s Bureau of Economic Analysis, and was the chief forecasting economist for the Commonwealth of Virginia’s Department of Medical Assistance Services. She is a co-creator (with J. Scott Moody) of the Tax Foundation’s popular “State Business Tax Climate Index.”