IV. The Public Sector

The Best Kept Economic Secret

Local government is the prime supplier of vital transportation services such as MUNI; physical infrastructure such as sewers and roads; essential social services such as public health care; and affordable housing. Local governments also have significant latitude in determining local taxes, and can – in principle – use these powers to pursue more progressive funding. Equally critically, and often overlooked is the role of local government as a direct employer.

Ask most San Franciscans what the biggest economic sector in the City and they will answer: tourism. They are simply wrong. The biggest economic player in San Francisco is government, the public sector. At $6.6 billion, city government is the No. 1 industry, while tourism accounts for only $3 billion.

According to the Planning Department in 2008 over 15% (87,800) of the 570,000 jobs in San Francisco were in the public sector. The first and second largest employers in San Francisco are the City and County of San Francisco (29,000 jobs) and University of California, San Francisco (18,000). Of the top 10 employers in the City, 5 were in the public sector – the two already cited, plus the State of California, the San Francisco Unified School District (5,600), and the US Postal Service. San Francisco State University (3,600 employees) is the 12th largest, City College (3,500) the 14th, and the Veterans Administration Hospital (2,000) the 17th largest employer in the City. All of these public sector employers beat Safeway (18th), AT&T (19th), Marriott (23rd), the Hilton (24th) and Levi Strauss (25th) in employing workers in San Francisco.

At the end of last year, approximately 12% of California’s 16 million jobs were in the public sector, with a whopping 77% of those in local government. Like in San Francisco, the majority of these public sector jobs are in education with 56% of all local government jobs and 77% of all state jobs being in education. Health and human services make up the next largest group of public sector employees.

The great and long lasting economic tragedy of the current economic collapse is that local governments, hemmed in by Proposition 13 and other state mandated limits on local government revenue, must lay off workers and cut programs, the majority of which are in health, education and human services. The history of the Great Depression shows that it is exactly these lay-offs and service cuts that tend to move a Great Recession into a Great Depression. But even more devastating at a time of global change when the very fabric of the economy is being transformed, it is exactly these services in education, health care and human service that offer the greatest potential of economic transformation and employment opportunity.

While the administration looks elsewhere, it doesn’t acknowledge that the public sector is THE main economic driver, and must be key to a solution. Government investment can’t be off-shored. The questions are not just how do we focus on public sector jobs, which we discuss in this section, and how do we direct public sector investments into wider, permanent economic development that achieves the goals of local ownership, community control, and high wages for SF’s existing population.

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