They Work in the City But Spend Out of Town (with Data App)
Hundreds of the best-paid SF public employees live elsewhere, depriving the city of the benefits of their high salaries
Morris Tabak, assistant chief of the San Francisco Police Department, is one of the highest-paid employees San Francisco has ever had.
Tabak earned $425,558 in 2009, according to city payroll records. After 32 years on the force, he announced his retirement this month. His annual payment from the city’s pension fund will be approximately $225,000. With that and San Francisco’s generous retiree health care package, compensation to Tabak will quickly climb into the seven figures.
But there is a hidden cost to the city beyond Tabak’s generous salary and pension benefits: Tabak owns a home, pays property taxes and, presumably, does most of his shopping in a residential community in San Mateo County, about 20 miles south of the city.
The net effect is that most of the economic activity generated by Tabak’s salary and benefits will take place outside San Francisco.
Tabak, who declined to be interviewed, is hardly alone. An analysis by The Bay Citizen of San Francisco’s payroll and employee-residency data shows that the city’s highest-paid employees tend to live outside the city limits, while the lowest-paid ones, on average, make their homes in San Francisco. According to the data, 56 percent of public employees — and three-quarters of the police officers — reside outside the city.
The data appear to contradict the common belief — asserted most recently by Mayor Gavin Newsom during a visit to The Bay Citizen newsroom — that few public employees can afford to live in notoriously expensive San Francisco.
By law, San Francisco’s public employees (though not the city’s elected officials) are free to live wherever they want. A section of the state’s Constitution bars local governments from requiring residency for public employees, though they can be required to live within a “reasonable distance.”
But the flight of so much capital — San Francisco will spend $2.6 billion this year on salaries, benefits and pension-fund contributions — adds another dimension to the city’s efforts to grapple with one of the worst budget crises in its history.
It has long been known that San Francisco’s public employees are well-paid, averaging $87,000 a year. But the data indicate that most of that income leaves the city with the evening commute. According to calculations, the net outflow this year will be $1.8 billion. Workers may buy lunch and lattes, or an occasional dinner or drinks, near the Civic Center, but the bulk of their income is spent near their homes.
“The main advantage of having employees reside within the city is that a good chunk of their personal and family spending would be localized,” said Sean Randolph, president of the nonpartisan Bay Area Council Economic Institute, a business-oriented public-policy group. A disadvantage to their living outside, Randolph said, is that those employees end up paying taxes to other communities.
The $1.8 billion outflow is certainly not the cause of the city’s budget shortfall, but it does not help. The cost of supporting these public employees is largely borne by San Francisco’s 700,000 adult residents. The $2.6 billion in employee costs does not include the city’s pension fund disbursements: $742 million to more than 23,000 beneficiaries in 2009. Nearly $500 million of that was sent to pensioners living in other cities.
Then there is another $4 billion in unfunded retiree health-care liabilities, which is “an immense number,” said Eric Hoffmann, a San Francisco-based senior vice president with Moody’s Investor Service. “San Francisco is very generous in its post-retirement benefits.”
Moody’s has a “negative outlook” on the city’s creditworthiness. If that rating is downgraded, San Francisco will pay higher interest on its debt payments, which are about $300 million this year.
The issue is not unique to San Francisco. Other municipal governments have tried over the years to devise ways to capture income from workers who do not live in the cities that employ them. These measures have taken the form of residency requirements, commuter taxes and higher payroll taxes. But these terms are not presently part of the political or economic vocabulary of the Bay Area.
“We are not hostile to people who do not live in the city,” says Tony Winnicker, spokesman for San Francisco Mayor Gavin Newsom. “Non-residents—including city workers—contribute billions to our city on an annual basis.”
That doesn’t mean that the city doesn’t see potential benefits in requiring other, private-sector employers to hire local. The mayor’s office has been working with Supervisor John Avalos, who is preparing legislation to require private contractors and developers working on city-financed construction projects in San Francisco to employ crews made up at least half by city residents.
“We are trying to make sure we are keeping money in San Francisco,” Avalos said. “When those jobs go to San Franciscans, we know the money stays in the local economy. There is a multiplier effect.”
Employees of the city and county of San Francisco earned more than the county average in all nine Bay Area counties in which they reside, the data show. In San Francisco, where the average 2008 income was $72,712, roughly 10,000 municipal employees residing within the city made an average of $83,000.
The average San Francisco city employee residing in Sonoma County made $118,000. That is about two-and-a-half times the county average per-capita income, according to 2008 United States Commerce Department data.
In Solano County, the 914 San Francisco city employees made an average of $87,000 — more than twice the county average. The nearly 5,300 San Francisco employees residing in San Mateo County earned $89,000 — 21 percent more than the county average.
As San Francisco’s budget woes mount, the city is embroiled in a fight over whether to force existing public employees, most of whom live outside the city, to make greater contributions to pay for their pensions and other benefits. (New hires already face higher contributions, thanks to a health care measure that was passed in 2008 and a pension measure passed in June 2010.)
Proposition B, the November ballot measure, would require greatly increased contributions. Its lead proponent, Jeff Adachi, the public defender, said it would save San Francisco $120 million to $170 million a year. Public-employee unions and most political leaders vehemently oppose Proposition B. No matter where they call home, city employees are upset about the toll the measure would have on their finances.
Lorraine Thiebaud, a 63-year-old trauma nurse for more than two decades at San Francisco General, personifies the complexity of the issue. She earned $128,000 last year — but she is the sole breadwinner for a family of four, and the high cost of living in the Bay Area drove her and her family far afield.
Raised in the Inner Sunset district, Thiebaud said she could not afford to live in San Francisco in the early 1980s, so she and her husband, a general contractor, settled in Berkeley. When the economy soured, Thiebaud’s husband was out of work, and they moved even farther from San Francisco to save money.
Thiebaud now commutes via Amtrak from Placer County, northeast of Sacramento, to work double night shifts at San Francisco General, while her husband stays home to look after their two school-aged daughters. Thiebaud estimates that if Proposition B passes in November, she will face $12,000 to $15,000 in increased pension and health-care contributions.
Thiebaud is working with her union to defeat Proposition B. But, in a phenomenon related to the fact that most city workers live outside San Francisco, the city’s public employees are a tiny voting bloc in San Francisco, at most 2 percent of registered voters.
So while Thiebaud’s fate is tied to the political wrangling of San Francisco, she will not vote against Proposition B. She is registered in Placer County, 125 miles away.
(Click here for The Bay Citizen's Data App on where city employees live and how much they earn.)
The Commish
This article hits the nail on the head. The City's general fund is being drained by people making high salaries and pensions who don't live here. It's amazing that the average City worker makes far more than the average San Francisco resident--and the residents' taxes pay for the compensation, benefits, and pensions of the City workers.
The article further reinforces the point that our politicians think they represent the City workforce, not the City residents.
CJ Flowers
..."The City's general fund is being drained..."
Now you can see why City employees don't want to contribute a nickel more for their benefits. They don't care if the general fund is being drained- they don't live here. If you live in Placer, San Mateo or Sonoma County, why do you care if San Francisco's street and parks are falling apart or that the general fund supports fewer police officers each successive year??
CJ Flowers
Yes, the dirty little secret that most City employees don't even live in the City and even more so the highest paid ones. Their average of $130,000 a year in wages and benefits in the 2010-2011 budget is 60 percent higher than the average of $75,000 of the private sector folks who actually live here.
Of course, our elected officials are bought and paid for by organized labor so when it comes to Prop B, our elected officials side with City employees over the residents of San Francisco.
Well I gather the voting residents of San Francisco will take into account the following facts when voting on Prop B: City employees are paid more; get far superior health and pension benefits; most don't live in San Francisco, critical City services are being cut to divert general fund monies to City employee benefits; taxes, fees and penalties are being raised on residents to subsidize City employee benefits, and City employee benefit costs are main driver of the City's $800 million structural deficit. I see a lot of YES votes on Prop B.
Jamie Whitaker
So this is what journalism looks like! Thank you! :) I'm so tired of a few other local news sources just regurgitating Public Relations professionals' press releases .. this is wonderfully refreshing to read some investigative journalism!!
I think the most interesting event this past week in regard to this topic is Jerry Brown coming out and saying that we're going to have to do some things that the labor unions will not like - such as asking for higher contributions to pensions so that the actuarials balance out for the state. Same thing has to happen at the local level ... too bad our Supervisors and Mayor in San Francisco insist on burying their collective heads in the sand and acting like this isn't a problem, while cutting more and more services to make the budget balance.
Armand Der-hacobian
Another excellent article by Elizabeth Lesly Steven. The editorial quality of Baycitizen.org in general is amazing.
What is at stake here whether we are talking about the cost of pensions or developers destroying our neighborhoods is the integrity of city government. We the People, taxpayers and residents of San Francisco are not properly represented by our city government. Our elected representatives have chosen to put special interests, unions and developers ahead of the welfare of taxpayers and residents. Big mistake.
Michael Strickland
Thanks for this. The article is simple and illuminating, and confirms what many San Franciscans have suspected for a while.
R T
I think it would have been interesting to see how the rate of SF employees living out of the City compares to other jurisdictions- i.e Oakland, San Jose, etc. Maybe even take it a bit further and look at other major cities like Chicago, LA, etc.
Alos, not quite sure what the big deal is. People make choices on where they live for a variety of reasons- family, housing, schools etc. Maybe we should look at this as a veto of the CIty from some of the pople that know it best- it's employees. The Public schools are a nightmare, housing is out of control in terms of home prices and rents, and in general the City is unfriendly to families.
John Smith
Again the use of "avergae salary" instead of median salary is used to skew the picture to make it look like City employees all make $87K or more. When calculating statisitcal values such as salaries using an average is not the best practice, the median value gives a much better result and a better picture of what the reality is. If the Bay Citizen reporters knew some basic statisics they would have taken this into account before producing this article.
For a lesson in basic statistics on the mean(average) and median Elizabeth Lesly Stevens can go here: http://cnx.org/content/m17104/latest/
It is also interesting that the fact that 10,000 city employee do work and live in San Francisco. Another fact that isn't mentioned is that the vast majority of the city employees work in the city and do spend money during the work day. The city get's payroll taxes, property taxes, etc from all those workers. Saying that $1.8 billion outflow is a gross exaggeration.
Elizabeth Lesly Stevens
Thanks for writing, John.
Our tech team has run the medians for the 23,000 employees in our sample. The medians tell the same story, namely, that the highest-paid public employees tend to live outside the city, and the lowest-paid tend to reside within San Francisco. The original story contains comparisons to per-capita county income data from the U.S. Department of Commerce. Those government data are averages, not medians.
Here are the data regarding medians:
+---------------+------------------+
| name | median_total_pay |
+---------------+------------------+
CCSF 81130.99
| Alameda | 81881.19 |
| Contra Costa | 84466.41 |
| Marin | 110880.825 |
| Napa | 82908.84 |
| San Francisco | 75351.85 |
| San Mateo | 82627.85 |
| Santa Clara | 91510.92 |
| Solano | 81117.635 |
| Sonoma | 117599.83 |
+---------------+------------------+
John Smith
"Why is median better than mean for a typical salary?
In a previous post, I commented that PayScale's Salary Survey preferentially reports typical salaries based on the median instead of the arithmetic mean (average).
Why is the median better than the mean for measuring "typical" values? The best way to understand what is wrong with the mean is to look at how both behave in answering a simple question: how well have Stephon Marbury's Lincoln High School basketball teammates done in their careers in the last 10 years?
I started thinking again about the difference between mean and median while listening to an NPR story about Stephon Marbury. For those who don't know, he is a 29 year-old from Coney Island, New York, who plays professional basketball for the New York Knicks.
Imagine Stephon Marbury went back last year to meet with 9 teammates on the 10th anniversary of their winning a high school basketball championship. You might ask, "Where are they now? Have they done well? Did they turn what they learned playing hoops into the start of a successful career?"
I haven't actually researched where Stephon Marbury's teammates are now, so let's just make up some wages that would be typical for people in their late twenties in New York. Remember, 50% of high school seniors do not go to college, so we could expect a pretty wide range of pay: a janitor ($13/hour), a delivery truck driver ($14/hour), a retail store assistant manager ($18/hour), automobile mechanic ($20/hour), fire fighter ($24/hour), a nurse ($25/hour), a department store buyer ($28/hour), an automobile salesman ($32/hour with commissions), and an IT project manager ($41/hour).
What is the mean (average) wage of these 9? It is easy to calculate: add up the wages and divide by 9:
13+14+18+20+24+25+28+32+41 = 215
mean wage = 215 / 9 = $23.90/hour
The median is $24/hour. The fire fighter earns the middle wage: 1/2 are lower, and 1/2 are higher. For this particular sample, the mean and median give a similar answer for what a "typical" person on that team now earns.
Now let's look at Stephon's hourly wage. Stephon played an average of 36.5 minutes over the course of 60 games last year. For this, Stephon earned about $20 million/year, or about $550,000/hour.
If we include Stephon's wage, his high school team's mean wage is $55,000/hour!
By contrast, the median wage is $24.50/hour, now half-way between the fire fighter and the nurse. The median is not significantly changed by this one "outlier", while the mean becomes a wage that no one earns: it is 2000X too high for 9 of the teammates, and 10X too low Stephon.
Like standard deviation, mean is very sensitive to the most abnormal of values, particularly very high values. Why would one use a measure for what people "typically" earn, that is so strongly affected by atypical salaries?
The answer is historical, and the subject of a future post.
Cheers,
Dr. Al Lee"
http://blogs.payscale.com/ask_dr_salary/2006/09/if_median_is_be.html
Ed M
Interesting analogy, but the citizens of NYC don't pay Mr. Marbury's story. The main point in the article is not median vs mean, but rather the total payroll that drives/commutes home to a different community every night. The citizens of San Francisco are paying these high salaries that are largely spent outside the City off-work hours (with the exception of lunches, coffees, etc). In addition, it is interesting that the higher-paid folks tend to live outside the SF while the lower-paid tend to live in the City- certainly counter to at least my intuition given the cost of living. So, while City residents enjoy the services provided by the City employees, for some reason the highest paid City employees are deciding they'd rather live somewhere else. Makes you wonder. The article is fantastic and the data app provides some nifty slicing and dicing fun. Keep up the great work Bay Citizen!
Gordon
Kinda funny when you consider all these folks living and VOTING out of the City, but making the tax paying voters pay for their "services"...
Vote YES on Prop. B
It is time for pension reform in SF.
Gordon
How come the number of City employees is much lower than the 27,000 we always hear, and also how about the SFUSD employees, or are they in a different system with the State?
Elizabeth Lesly Stevens
Gordon,
Please check out the great data app our tech folks created to accompany the story. The link is
http://www.baycitizen.org/local/counties/san-francisco-employees/
On the front page of the data app is our methodology in crunching the data. This explains why the 22,657 employees in our sample are not the entire payroll of the city. I have pasted the methodology info below:
The Bay Citizen submitted Sunshine Ordinance requests to the city Department of Human Resources and the Office of the Controller, asking for a correlation of public employees' total compensation and home zip code.
The Controller’s Office provided a list of names, titles, departments and total compensation for all employees of the city and county of San Francisco, and the DHR sent a database of employees’ home zip codes. Both were for the calendar year 2009, although the DHR’s zip code records are not real-time, since it is up to an employee to inform the city if he or she has moved. The city said it had no way to correlate the two documents.
The Bay Citizen used the following process to correlate the data:
The payroll file contained nearly 33,000 names. Nearly 1,500 of these reflected duplications (caused by either a single person drawing two salaries or, possibly, separate individuals with the same name). These entries were deleted from the sample. Additionally, nearly 9,700 names from the payroll list did not appear in the DHR's zip code database and were dropped from the sample. We further limited the sample to employees residing in the nine Bay Area counties. Finally, the city did not limit the payroll list to full-time workers — hundreds made less than $1,000. In an effort to capture full-time employees, The Bay Citizen restricted the sample to workers paid more than $20,000 in 2009.
The final sample used in The Bay Citizen’s calculations for this data application contained 22,657 city and county employees.
Gordon
One last comment, I hate to generalize on all city employees, and clearly there are some on the lower end of the pay scale, but what we really need to eventually focus on are the sheer numbers of employees on the payroll, and also the sheer numbers of highly compensated. Especially how high salaried employees are also able to collect overtime pay when they should be categorized as "exempt status" employees. There are so many loopholes in the city payroll/benefit systems that you can't compare it to anything else...
betsey culp
City employees aren't economic ciphers. They are people with lives -- and families -- of their own. And there are dozens of valid reasons why they might decide to trade in an easy cross-town commute for hours on the road.
They might want to live within an extended family, where children know their grandparents. They might want to sacrifice their own convenience for the sake of a spouse's career elsewhere. They might want to spend their weekends in a recreational activity that allows them to do their job better.
Until the Bay Citizen asks why city employees choose to move out of San Francisco, its statistics are meaningless. The recent pieces offer nothing to help the City alleviate its economic woes. They merely contribute to the present-day climate of bashing public servants.
Rachelle Axel
Regarding Proposition B, the Bay Citizen correctly captured the fact that while the public face of this legislation focuses on city workers contributing more to their pensions beginning January 2011, the underbelly of the proposition focuses on the increased cost of health care for dependents of city employees. For those employees and their dependents covered by one of the three choices of health care, the increased cost of coverage could be as much as upwards of 2000% percent. I don't know anyone who can afford that.
In January 2011, I will have worked for the city for 10 years. I make less than the average salary, I'm disappointed to learn, and my domestic partner has enjoyed for 3 years access to my health care. If Proposition B passes, that will no longer be an option for us. This has the potential to cost the city more in the event of a medical emergency.
Also, for a city that voted for universal heath coverage, where anyone, if they have the tenacity to navigate the system to get access to health care, this proposition seems counterintuitive. For those who would have to terminate their dependents' coverage, they may opt for the Healthy San Francisco program--still at a cost to the city.
Most importantly however, is to note that Proposition B is anti-union. The city's unions work with the Mayor's Office, the Board of Supervisors and the administration every year to make concessions that will help close the budget gap. It's called collective bargaining and it's an arduous process that takes months of back and forth. This year, SEIU employees voted to take a 6.25% pay cut to help the city balance its budget. We also conceded to pay into our pensions beginning July 2011...the same position that Jeff Adachi's measure proposes, as if it hasn't already been negotiated.
Proposition B would eclipse all these union negotiations, putting the public in charge of more than 20,000 employees' contracts for the first time. City employees pay union fees to ensure leadership has the means to represent us and our interests fairly. Proposition B would negate all those efforts.
I'm 45 and still renting in San Francisco. Maybe if San Francisco weren't so expensive to live in -- buying a house in the nearly 20 years I've lived here has only slipped further from my grasp -- the workers who dedicate their careers to be of service to the City and County wouldn't need to leave the city limits to ensure they have a home, food, clothing, good education, and health care for their families. Since when does that qualify as living high on the hog?
I hope that health care and savings for the future of 20,000 people don't become bargaining chips in one local ballot measure, or one man's political agenda.