City Employee Pay Is Outpacing Private Sector, Report Says

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 on Thursday. 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.

The group said those benefits have remained “exceptionally generous” under Mr. Bloomberg.

And 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.”

Mr. Bloomberg has long defended giving healthy raises to the city’s workforce of 281,000 to attract the best people and make city jobs competitive with those in the suburbs. Some critics contend that recent contracts he has negotiated with teachers and police officers, among others, are too generous, and have been driven by Mr. Bloomberg’s political aims as he seeks warm relations with powerful unions.

Critics also say that Mr. Bloomberg has not been forceful enough addressing soaring health and pension benefit costs. Those costs have jumped by 182 percent since 2000, according to the Citizens Budget Commission, in contrast to a 52 percent increase for other state and local governments, and a 40 percent increase for private industry.

Part of the reason that health benefits have jumped so much, the report said, is the city’s longstanding practice, unchanged by Mr. 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.

Still, Charles M. Brecher, the commission’s research director, said: “His record is mixed. On the pay side, he started out doing a terrific job, based on productivity, but his performance has slipped. On fringe benefits I don’t think he’s been aggressive enough to tackle the problems.”

Mr. Bloomberg has had some success, however, battling the Legislature’s seemingly endless desire to sweeten pension benefits. Last month, Mr. Bloomberg developed the local component of an ambitious plan unveiled by Gov. David A. Paterson seeking to reduce benefits for newly hired state and local workers by creating a new pension category, which would require employees to work longer and retire later to receive pension benefits, a move long opposed by the unions.

Indeed, the Citizens Budget Commission praises that proposal, and urges the State Legislature to pass it. “I think the report is very clear,” said Marc LaVorgna, a Bloomberg spokesman. “It lays the blame at the foot of pension costs. Costs for employees are always going to go up. That’s not irregular. But we have been extraordinarily burdened by a pension system that we have no control over.”

The report recommends that the city do more to restructure health insurance costs by negotiating with the Municipal Labor Committee. The administration hopes to save $200 million; the commission says “larger savings should be pursued on a more urgent basis.”

Asked about spiraling health care costs, Mr. LaVorgna said: “Rapidly rising costs are not unique to New York City government. That’s a national problem and there’s really not a local solution to what’s a national health care problem.”

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.