Nevada’s state, local government workforce the least productive in U.S. says report

The Clark County Government Center in Downtown Las Vegas, Clark County, Nevada.

By Kyle Gibson / Watchdog.org

Nevada’s public employees are the least productive in the U.S., according to an analysis of the number of state and local government workers in each state and their level of total compensation.

The analysis by Key Policy Data found that Nevada’s state and local governments employed 11.7 people per every 100 employees in the private sector, which actually is 26 percent below the national average of 15.7. The total also is the lowest ratio in the country.

But these public employees earn 54 percent more than their counterparts in the private sector, which is 295 percent higher than the national average of 14 percent.

J. Scott Moody, a public policy economist who wrote the Key Policy Data analysis based on 2016 information, said Nevada’s compensation ratio for public employees has been increasing as well. Between 1969 and 2016, the ratio increased from 6 percent to that 54 percent.

Public employee benefits for things such as health insurance and pensions contribute to the state’s compensation ratio as well, Moody’s analysis said. Nevadans in public positions earn 286 percent more in benefits than those in the private sector. That total is the highest of any state and 125 percent higher than the national average of 127.

Moody said public employee compensation is unfair for private sector workers, because they are the ones paying for the benefits and the pay distorts the labor market.

“It is unfair to private sector workers because they are ultimately footing the bill for these very generous benefits,” Moody said. “Additionally, it hurts the private sector overall because it distorts the labor market as workers are enticed into the public sector. The private sector has to raise compensation to compete for labor, but that can make Nevada’s businesses uncompetitive in the national or international marketplace.”

Moody said the growth in public sector benefits was driving the trend of the increased ratio between public and private sector pay in Nevada.

“With retirement benefits in particular, it is very easy for politicians to ‘kick the can down the road’ by increasing benefits today knowing that the bill won’t come due for years, even decades,” Moody said. “Unfortunately for today’s taxpayers, the bill is now needing to be paid.”

Nevada’s high state and local compensation ratio, including salaries and benefits, is the primary reason for the state having the worst productivity index by its metrics according to the analysis.

Key Policy Data is a joint venture between Public Choice Analytics and Visigov, and uses publicly available data to analyze how public policy decisions impact taxpayers and business climates.

Moody said he was most surprised by Nevada having the lowest ratio of government employees in the U.S., while also having the highest government compensation ratio. He said economists would point out similarities to a cartel, with restricted access that boosts the return for those involved.

Additionally, five local governments in Nevada had compensation ratios more than 45 percent above of the private sector. The government units were Carson City (258 percent), Clark County (61 percent), Washoe County (55 percent) and Douglas and Lincoln counties (46 percent, respectively).

Michael Schaus, the communications director for the Nevada Policy Research Institute, said local governments in Nevada are a big reason why the ratio between public and private sector pay has been increasing in the state since1969. Schaus said local labor unions also play a large part.

“A big part of it is on the local level,” Schaus said. “The local governments in Nevada tend to have very, very strong unions and as a result, every year they seem to get a little bit more pay, a little bit more benefits and, of course, that all comes out of the taxpayer pocket. State level employees, I don’t believe that they’ve actually increased quite as fast and that’s largely because they are not unionized.”

Moody said Nevada could change by “right-sizing” its public benefits to the national average. He said one way to achieve this would be to move the system away from a defined benefits pension system to a defined contributions system, similar to 401(k) funds in the private sector.

“The money saved should then be returned to the private sector, which would allow the private sector to grow and compensation to increase,” Moody said. “This dual combination would lead Nevada on a path back to the national average.”

Transparent Nevada, a website detailing pay and benefits for public employees in the state, showed 20 public employees who earned more than $500,000 in base pay and benefits. Of those 20, 14 were employed in health care positions.

Transparent Nevada said the highest paid public employee in the state in 2016 was Dr. Kayvan T. Khiabani, a professor of surgery at the University of Nevada – Reno with benefits and pay totaling slightly more than $1 million.

Dr. Michael Scheidler, an associate surgery professor at the University of Nevada – Reno, was the second highest paid, also at slightly more than $1 million in benefits and pay.

Donald Burnette, the former County Manager of Clark County, was the third highest paid employee on the 2016 list and highest paid employee outside the medical field, making about $816,000 in benefits and pay.

Key Policy Data’s analysis can be read here.

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