Employees talked about mortgage payments they couldn’t make, medications they couldn’t afford and their children’s college savings they were dipping into.
The U.S. median income is $61,000. Roughly a third of federal workers make less than that, and 16 percent make less than $50,000, according to Governing calculations based on data from the Office of Personnel Management.
For state and local government workers, the numbers are worse.
Nearly half -- 47 percent -- of people working for cities and counties earn $50,000 or less, according to the Center for State and Local Government Excellence’s estimates based on data from the Bureau of Labor Statistics. And about 15 percent of local government workers earn $30,000 or less. State government workers tend to be somewhat higher paid than local workers but still lag behind federal ones: 42 percent have incomes of $50,000 or less; 4 percent earn $30,000 or less.
Of course, state and local government employees’ pay wasn’t affected by the shutdown, but it highlighted the financial sacrifices that they make. Most can take home more money on a monthly basis if they had a similar job in the private sector.
“When you see things happen to others, the natural question is ‘Can this happen to me?’ ‘Am I vulnerable as well?’” says Cris Zamora, the employee assistance and resource coordinator for Milwaukee.
Stagnant Pay and Benefit Cuts
There are reasons to believe that state and local workers are under more financial stress than they were a decade ago.Many of their wages are stagnant. After the recession, a lot of governments froze wages and salaries. And while the pension and health-care benefits are a selling point for choosing the public sector, they have become less generous as governments have required employees to contribute more toward them.
These trends are most exemplified in education. In 2017, teachers in America made less on average, after salaries were adjusted for inflation, than they did in 1990, according to NPR.
Last year, teachers across the country went on strike and walked out of classrooms in protest of their low pay and underfunded schools. The strikes extended statewide in Arizona, Oklahoma and West Virginia. They also hit parts of Colorado, Kentucky and North Carolina. This year, a strike in Los Angeles lasted more than a week, and there is potential for more in other parts of the country.
Of course, the range of jobs and pay in state and local government is wide. Of the approximately 14 million people who work for local government, about 5 percent make $100,000 or more. That's true for 7 percent of the 4.4 million state government workers.
For city employees in Madison, Wis., “financial stresses are coming up a lot,” says Tresa Martinez, the city’s employee assistance manager. “More and more people are living paycheck to paycheck.”
Case in point: In Las Cruces, N.M., which is part of Dona Ana County, 20 percent of the municipal employees had taken out payday loans that were charging interest rates as high as 400 percent, according to a 2016 survey. (The state has since enacted a new law that caps payday loan interest rates at 175 percent.)
Financial Aid
To protect its employees from getting trapped in a cycle of debt, Dona Ana County contracted with a private corporation to offer workers $1,000 to $3,000 loans with interest capped at 24.9 percent.Nearly 30 percent of the county’s employees took advantage of the program in the first 10 months, according to Ona Porter, president and CEO of Prosperity Works, a nonprofit that facilitated the loan program for Dona Ana County and helps employees improve their finances.
The success of Dona Ana’s program has inspired about half of New Mexico’s counties -- and all three of its largest cities -- to offer the same benefit. Since early 2017, $2.4 million in loans have gone to public employees with annual salaries that ranged from $19,000 to $109,000.
Given the condition of state and local employment, it will come as no surprise that 26 percent of local governments now have financial literacy programs to help their workers manage their money, according to a first-of-its-kind study by the Center for State and Local Government Excellence.
Joshua Franzel, director of the Center, says “this is gaining in importance as primary benefits are being reduced.”
“There’s more responsibility,” he says, “being placed on state and local workers to save more for retirement and pay more for their health-care costs. There’s a lot more need to understand how to save and how to budget.”
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