How Much Does An Average State Of Michigan Employee Cost Us?
I must say even I was extremely surprised to find out what the average annual cost to us Michigan taxpayers is for each and every state of Michigan employee.
The Michigan Capitol Confidential is reporting that:
The average annual cost to taxpayers for each State of Michigan employee rose from $122,157 in 2018 to $122,959 in 2019, or 0.6%.
According to the article and Mackinac Center’s director of fiscal policy James Hohman, the average cost of compensation apart from their salary is made up of the following:
health care insurance, retirement, retiree health care, Social Security, Medicare, etc.
That number came to approximately $54,845 per employee in 2019.
The average salary of a state of Michigan employee is $68,114.
James Hohman stated that after adjusting for inflation, state workers’ pay has been relatively flat for two decades,
The average state benefits package to employees, on the other hand, is where the really big increases have come from. According to the article:
After inflation, the real pay of the average state worker increased by only about 3.7% between 2000 and 2019. In contrast, the average cost of employee benefits increased almost 130% over that period. In 2000, the average state benefit package cost the equivalent of $23,885 in current dollars, with average salaries pegged at $65,673.
A 130% increase in 19 years sure sounds like quite a bit to me.
What are the main drivers of this skyrocketing benefit costs to the taxpayers of Michigan? Well again according to the report they are in:
employee health insurance, contributions to a defined benefit pension system (which was closed to new hires in 1997), and payments for retiree health care coverage
Also according to a conversation I had with James Hohman our unfunded liability for Michigan’s defined benefit pension system, which again it is important to note was closed to new hires in 1997, went from zero to over $6.5 billion as of today.
How did that happen?
According to Mr. Hohmen:
the state contributed less to the system that was necessary to keep the pension system fully funded and overestimated investment returns
Now you know the facts and the real numbers that our state employees cost us Michigan taxpayers.