How Does Minnesota Government Employment Compare?

The 2022 legislative session exposed the strong political disagreements that exist on what government’s spending priorities need to be.  But it also revealed an undercurrent of frustration and doubt about how efficiently spending programs are being managed and administered.  Aside from the merits of the spending proposals themselves, legislators frequently questioned the administrative appropriations accompanying them, questioning the justification of the need for more personnel to – for example – administer incrementally larger amounts of grants or take on additional tasks.

These comments prompted us to take another look at what the latest data tells us about how Minnesota state and local government employment levels and compensation compare to the rest of the country.  We examined preliminary estimates from the 2021 Annual Survey of Public Employment & Payroll (ASPEP) released in May.  The ASPEP measures the number of state and local civilian government employees and their gross monthly payroll in March of each year by government function.  Federal agencies, state and local governments, and educational and research organizations use the data for a wide variety of purposes, including comparative studies of state and local government employment and wage and salary negotiations by state and local governments.

We examined full time equivalent (FTE) employee counts per capita and payroll per FTE in several functional areas of government (see table).  As we prefer to do with our annual total spending publication How Does Minnesota Compare (HDMC), this table reports combined state and local government totals, since states can differ significantly on how responsibilities for service delivery are allocated between the state and local levels – making “apple to apples” comparisons problematic.  Unlike our HDMC publication, no adjustments were made to payroll to account for cost-of-living differences among the states.

Comparison of 2021 Minnesota Total State and Local Government Employment Levels and Compensation by Selected Function*

Historical comparisons of total state and local government employment levels have long found that Minnesota tends to run somewhat “leaner” than other states but with higher levels of compensation.  Although from a macro perspective that may continue to hold true, comparisons across specific functional areas of government offer some notable variances.  Some are readily understandable, for example our higher levels of employment in natural resources and highways certainly reflect, at least in part, Minnesota’s larger management and service responsibilities in these areas compared to other states.  The significantly higher relative levels of employment in government administration are likely influenced by the fact that Minnesota ranks 9th in the nation in the number of general purpose local units of government per capita.  Recent developments and Minneapolis’ police staffing shortfalls notwithstanding, below average levels of state and local employment in the area of police protection spending goes back several years.

The data itself is not sufficient to draw any conclusions on what the appropriate size of government workforce in these functional areas can or should be.  Each state’s demographics, geography, policy decisions, and residents’ preferences for public services will have an impact on the demand for and composition of government employment across specific functional areas.  However, such benchmarking can flag curiosities and relationships deserving of further investigation.

For example, Minnesota has long been among the national leaders in public welfare spending,¹ so a larger workforce than the average state in this area might be expected.  However, Massachusetts ranks right behind Minnesota in total public welfare spending in national rankings, is also a high-income state, and serves a population about 1.2 million larger than Minnesota.  Yet according to Census data, Massachusetts employs about one-third fewer employees across state and local governments in the delivery of these services.  Assuming this is not a survey response coding/categorization difference or a data anomaly (which doesn’t seem to be the case as previous survey findings show similar results), this begs for a closer benchmarking examination of how the delivery of these services are organized across governments, designed, administered, and staffed.

Yet this is precisely the type of understanding that is seemingly never at hand when such questions are asked, even when resources are available to truly consider system improvements.  Without this understanding, we have seen how budget battles evolve: proposals for large indiscriminate cuts to base agency operations in an unfocused attempt to drive efficiencies into the system, and proposals for large spending increases based on an assumption that existing agency systems and programs are already organized and operating on their efficiency frontiers.  Neither approach do taxpayers any favors.

Footnotes

¹ “Employees engaged in all public welfare activities, including those involved in administration of public assistance programs as well as those providing direct assistance. Includes: Administration of medical and cash assistance, general relief, vendor, and other welfare programs. Maintenance of nursing homes or other institutions for the benefit of veterans or needy persons (contingent upon their financial or medical need). Provision of veterans services, senior citizen and handicapped transportation, services to the homeless, and child services (such as foster care, adoption, day care, nonresidential shelters, and the like). Social workers. Regulation of private welfare institutions and activities. For local governments, vocational rehabilitation for blind and other handicapped, in the form of commercial activity, is reported here rather than at Education.” 

           U.S. Bureau of the Census Government Finance and Employment Classification Manual