Government Employment & Payroll

Examining local government water supply & sewerage employment from 2005 to 2011

Local government is the premier provider of public water services (water supply and sewerage) in the U.S., investing more than $865 billion from 2001 to 2011—$115 billion in 2011 alone. Public water is a valuable resource, and is among the highest-costing essential services in many communities. Skilled and credentialed professionals are critical to service delivery operations, and the level of employment and payroll commands a significant portion of local water and sewer investments (annual expenditures). This article is intended to provide a characterization of employment and payroll in the public water sector, and provide some context by comparing this sector with total local government employment and payroll, as well as reviewing time series information from 2005 to 2011. The data are extracted from annual census reports. The information reviewed also is compared with the official recession period as determined by the National Bureau of Economic Research (NBER): December 2007 to June 2009; the research period 2005 to 2011 straddles the official recession period.

Total Local Government Employment

Total local government employment includes estimates of full- and part-time labor, and full-time equivalent (FTE) when combined. Full-time and FTE employees experienced similar trends of increase and decline over the 2005 to 2011 period (Figure 1). This similarity is expected, because full-time employees comprise a 70% or greater share of total local government employment (or FTE). Pre-recession levels of total local government employment steadily increased, leveled out during the recession and began to decline at the end of the official recession.

NBER describes a recession as a “period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.” When these factors reach their lowest point (the “trough”), it “marks the end of the declining phase and the start of the rising phase of the business cycle.” NBER identified the “trough” and the start of the recovery as June 2009. While measures of the national economy began to recover, local government employment, as reported in the census survey for 2009 and beyond, began to decline. Employment is only one metric used to characterize a recession, but in the case of local government employment, the recessionary impact lagged the official recession period.

Full-time workers actually increased by 296,078 between 2005 and 2011, but the 2011 levels at 10.8 million are below the 2009 peak of 11 million-plus. A National League of Cities (NLC) report suggests that the shake-out in local government jobs does not conform well to the official recession period designation. NLC estimates that as many as half a million local government workers could lose their jobs. The NLC reports that 60% of cities and 68% of counties surveyed indicated local job cuts in public works (including transportation infrastructure, water and sewer, and other categories). This information suggests that the full impact on local government employment will be realized after the time series examined in this research note.

The largest decline in total local government employment occurred in the number of part-time workers, dropping from 29% of FTEs in 2005, to 26.7% in 2011. Part-time employees declined by 233,800 workers.

Local Government Public Water Sector Employment

Public water employment (water supply and sewerage) levels were fairly stable over the 2005 to 2011 period (Figures 2 and 3). FTE employment in water supply maintained a 1.4% share of total local government employment, and sewerage employment exhibits a consistent 1.1% share (Table 1). Together, local water supply and sewerage employment accounts for roughly 2.5% of all local government employment.

Water supply FTEs grew from 164,234 in 2005 to nearly 172,000 in 2009, and declined slightly to 170,664 in 2011. An increase of 6,430 public water workers between 2005 and 2011 represents 2% of the gain in total local government employment over the same period.

Sewerage FTEs experienced a decline of 2,146 workers from 125,889 in 2005 to 122,001 in 2011, and a reduction of 2,841 workers from the peak year at 126,584 workers in 2007.

Variation in FTE levels may be largely explained by the declining level of part-time employees in the public water sector (Figure 4). Part-time employment in both water supply and sewerage began to decrease before the official recession began, then sharply increased in 2008 (roughly the middle of the recession), but then experienced a dramatic reduction toward the end of the recession and beyond. The reduction in part-time water supply workers, however, is offset by increases in full-time hires. This latter trend is less so for sewerage workers where a net decrease occurred compared with 2005 levels.

Local Government Payroll

Census survey data report local government payroll for the month of March; this research note relies on the assumption that March represents one-twelfth of annual payroll. Thus, total local government payroll increased from $504 billion in 2005 to a recent peak of $608 billion in 2010, and declined $2.6 billion to $606 billion in 2011. The peak in 2010 and decline in 2011 suggests that a recessionary impact on payroll for local government lagged the official recession period, but matches directly to employment levels and shifts from part-time to FTEs.

Total local government expenditures had a similar trend line. It was $1.3 trillion in 2005, then peaked at $1.67 trillion in 2011, and declined slightly to $1.66 trillion in 2011. Local government payroll, however, declined from 38.5% of total local government expenditures in 2005 to 36.4% from 2009, 2010 and 2011.

Local Government Water Supply & Sewerage Payroll

Local water supply payroll was slightly less than 1.5% of total local government payroll in 2005, and increased to slightly more than 1.5% in 2011 (Figure 5). Water supply payroll experienced a net increase during the official recession period. Sewerage payroll declined from about 1.15% of total local government payroll in 2005 to 1.1% in 2011 (Figure 5).

Total local government spending on water supply and sewerage steadily increased from 2001 to 2011. Payroll for water supply and sewerage as a percentage of total water and sewer expenditures, however, took divergent paths (Figure 6). The most dramatic change is the decline of sewerage payroll as a percent of overall sewerage expenditures: 16.5% in 2005, and 12.5% in 2011. Water supply payroll was 16.5% in 2005, and declined to 15% in 2011.

The local government public water sector is well established in the larger context of total local government, both in terms of 2.5% of overall employment, and in terms of payroll accounting for 2.6% of overall local government payroll.

Water supply employment is the sector leader in both employment level and payroll percentage. Some workforce shake-out occurred among part-time workers, but is compensated for by increases in FTE workers.

Sewerage employment and payroll has settled in, for now, at about 1.1% of each category. A larger share of part-time workers declined for sewerage than for water supply. Annual levels of spending on sewerage continue to increase, suggesting employment and payroll levels are sustainable.

If the recent recession has had a major impact on local ability to deliver public water services, it does not appear in the macro metrics of employment and payroll in the public water sector. The shake-out of part-time workers, however, has been substantial, and may have served to retain full-time workers when local layoffs occur. Local governments struggle with employee reductions under normal conditions; when forced to cut workers, cities must proceed in accordance with protocols established in negotiated union contracts and honor seniority policies.

The public water sector is established in U.S. society as an essential service delivery agent composed of trained and credentialed professionals with a broad range of skills and expertise. Human capital planning concerns about the aging expertise and an acceptable workforce replacement strategy is critical to future success.