Category Archives: Compensation

Striking it Richer: The Evolution of Top Incomes in the United States (Updated with 2009 and 2010 estimates)

Source: Emmanuel Saez, University of California, Department of Economics, March 2, 2012

During the Great Recession, from 2007 to 2009, average real income
per family declined dramatically by 17.4%, the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster (36.3 percent decline, Table 1), which lead to a decrease in the top percentile income share from 23.5 to 18.1 percent. Average real income for the bottom 99% also fell sharply by 11.6%, also by far the largest two year decline since the Great Depression. This drop of 11.6% more than erases the 6.8% income gain from 2002 to 2007 for the bottom 99%. …
…From 2009 to 2010, average real income per family grew by 2.3% but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery. Such an uneven recovery can possibly explain the recent public demonstrations against inequality…
See also:
Inequality Undermines Democracy
Source: Eduardo Porter, New York Times, March 20, 2012

Sounding the Alarm

Source: Pennsylvania State Education Association, March 2012

From the summary:
Pennsylvania’s public schools are in the midst of their toughest fiscal crisis since the 1930s. Following the nearly $860 million in cuts in 2011-12 and the proposal of $100 million more for next year, districts are being forced to make increasingly difficult decisions about how to meet the education needs of their students. Many of these decisions will result in cuts to programs necessary to provide the challenging, well-rounded, and comprehensive curriculum required for success in the 21st Century global economy. These cuts are not in the best interests of America’s students, therefore risking the future of our children.

Recent reports revealed that some school districts, such as Chester Upland and York City, had insufficient cash on hand to meet payroll. These are only the first instances of districts pushed to the breaking point. More will follow. If legislative action isn’t taken now, the financial viability of a significant number of school districts will be threatened by 2014. Pennsylvania could do a disservice to an entire generation of students who will not get a second chance.
See also:
Appendix A: Program Curtailment Requests
Appendix B: Impact of Funding Cuts
Appendix C: Chart on Salaries and Benefits
Appendix D: Solutions That Work
Press release

Economic Benefits to Local Communities from National Park Visitation and Payroll, 2010

Source: Daniel J. Stynes, National Park Service, Natural Resource Report NPS/NRSS/EQD/NRR–2011/481, December 2011

Visitors to the National Park System contributed more than $31 billion to local economies and supported 258,000 jobs in 2010, an increase of $689 million and 11,500 jobs over 2009, according to a report issued by the National Park Service today….The economic impact figures for the National Park System released today are based on $12 billion in direct spending by the 281 million visitors to parks in 2010 and are included in an annual, peer-reviewed, visitor spending analysis conducted by Dr. Daniel Stynes of Michigan State University.

This study provides updated estimates of NPS visitor spending for 2010 and extends the analysis to include impacts of the NPS payroll on local economies. Visitor spending and local impacts are estimated using the Money General Model version 2 (MGM2) based on 2010 park visits, spending averages from park visitor surveys, and local area economic multipliers. Impacts of the NPS payroll are estimated based on 2010 payroll data for each park….
See also:
Press release
Total Vistor Spending and Jobs by State and Park 2010

Are Public Employees Overpaid?

Source: Jeffrey Keefe, Labor Studies Journal, Vol. 37 no. 1, March 2012
(subscription required)

From the abstract:
The research reported in this article shows that public employees, both state and local government employees, are not overpaid and may be slightly undercompensated. Comparisons with the private-sector employees that control for education, experience, hours of work, organizational size, gender, race, ethnicity, and disability indicate that the public-employment compensation (wages and benefits) penalty is relatively small. On average there is a 3.7 percent penalty in total compensation for full-time state and local employees when compared to similar private-sector employees. The data analysis also reveals substantially different approaches to staffing and compensation between the private and public sectors. On average, state and local public-sector workers are more highly educated than the private-sector workforce; 54 percent of full-time state and local public-sector workers hold at least a four-year college degree compared to 35 percent of full-time private sector workers. For college-educated labor, state and local governments pay salaries on average over 25 percent less than private employers. The public sector appears to set a floor on compensation, particularly improving the compensation of workers with high-school educations, when compared to similarly educated workers in the private sector. Benefits are allocated differently between private- and public-sector full-time workers. State and local government employees receive a higher portion of their compensation in the form of employer-provided benefits. Public employers provide better health insurance and pension benefits. National polling data indicate that the public does not believe public employees are overpaid. They oppose pay and benefit cuts, but believe pay freezes and greater employee contributions to their health and pensions plans may be appropriate. Nevertheless, thirteen states revised their public-sector collective-bargaining laws, mainly weakening employee bargaining power or severely restricting or eliminating collective bargaining, while the majority of the public opposed those changes.

Living Wage Laws: Worth the Effort?

Source: Stephanie Luce, Labor Notes, February 27, 2012

Almost 20 years ago a “living wage” campaign by pastors and union organizers in Baltimore caught the attention of activists around the country. It looked like a way to address the fact that so many people were working but were still poor.

Living wage activists have accomplished a lot since then, winning more than 125 living wage ordinances in cities and counties, three city minimum wages, and state and federal minimum wage increases. Eight states have indexed their minimum wage to inflation because of activist pressure, and campaigns to raise and index state minimums are underway in 10 more states.

Housing Landscape 2012

Source: Laura Williams, Center for Housing Policy, February 2012

This report focuses on housing afford-ability for working households. For the purposes of this report, working households are those that worked at least 20 hours per week, on average, and had a household income of no more than 120 percent of the median income in their area.

Nearly one in four working households spends more than half of its income
on housing costs. Moreover, despite falling home values, housing affordability worsened significantly for working owners and renters between 2008 and 2010…. [I]ncomes declined even as rents increased over the two-year period, making housing substantially less affordable for working renters. For working owners, a modest decline in housing prices was outpaced by a larger decline in incomes, leading to higher cost burdens in
2010.
Related:
National Index Reveals Combined Housing and Transportation Affordability Has Declined Since 2000
Source: Center for Neighborhood Technology (CNT), February 2012

Compensation for State and Local Government Workers

Source: Maury Gittleman and Brooks Pierce, Journal of Economic Perspectives, Volume 26, Number 1, Winter 2012

From the abstract:
Are state and local government workers overcompensated? In this paper, we step back from the highly charged rhetoric and address this question with the two primary data sources for looking at compensation of state and local government workers: the Current Population Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics, and the Employer Costs for Employee Compensation microdata collected as part of the National Compensation Survey of the Bureau of Labor Statistics. In both data sets, the workers being hired in the public sector have higher skill levels than those in the private sector, so the challenge is to compare across sectors in a way that adjusts suitably for this difference. After controlling for skill differences and incorporating employer costs for benefits packages, we find that, on average, public sector workers in state government have compensation costs 3-10 percent greater than those for workers in the private sector, while in local government the gap is 10-19 percent. We caution that this finding is somewhat dependent on the chosen sample and specification, that averages can obscure broader differences in distributions, and that a host of worker and job attributes are not available to us in these data. Nonetheless, the data suggest that public sector workers, especially local government ones, on average, receive greater remuneration than observably similar private sector workers. Overturning this result would require, we think, strong arguments for particular model specifications, or different data.

Can Home Care Companies Manage Overtime Hours? Three Successful Models

Source: Dorie Seavey, Alexandra Olins, Paraprofessional Healthcare Institute (PHI), 2012

From the summary:
A new PHI report examines how three home care companies have successfully managed to control their overtime costs while maintaining their reputation for high-quality care.

The report, Can Home Care Companies Manage Overtime Hours? Three Successful Models, discredits home care industry claims that the Obama Administration’s proposal to revise the companionship exemption to extend minimum wage and overtime protections to home care workers would dramatically increase agencies’ overtime costs, since any overtime worked by aides would have to be compensated at time and half

Home Health Care Industry Growth in Indiana

Source: Srikant Devaraj, Michael J. Hicks and Rohit Ravula, Ball State University, Center for Business and Economic Research, January 2012

There are around 1.1 million employees working in 25,686 establishments in home health care services industry in the United States as of 2009. When compared to the year 2000, this sector experienced an increase of 40.5 percent in terms of number of jobs and 59.6 percent in establishments. Figure 2 shows the structure of the industry in the United States. In 2009, 36.6 percent of S-corporations in this industry have employed 36 percent of employees, followed by 30.3 percent corporations employing 33.3 percent employees.

This report provides the background economic information about health care and social assistance sector (NAICS 62) in Indiana and its counties, followed by information about ambulatory health care services (NAICS 621) and home health care industry (NAICS 6216). The industry/commodity
balance sheet, wages of health care occupations, and economic impact estimates are also discussed in this report.