[Editor’s note: The data in this article have been superseded by the updated information here.]

It takes 18 Oklahomans in the private sector to fund one Oklahoma state government job.

In total, for 2009, there were 86,822 state government workers in Oklahoma. These workers earned $4,231,080,000, or an average of $48,733 on a per-job basis. As a result, it would take a total of 1,521,498 private-sector jobs to fund Oklahoma’s state bureaucracy—slightly more people than were employed in the private sector in 2009 (1,236,078).

This may appear confusing at first glance. But keep in mind that this counts only taxes that are directly paid by individuals. It does not include taxes paid by businesses, taxes paid by people with higher-than-average incomes, revenue from matching federal funds (such as Medicaid), or taxes paid by non-residents or retirees. This exercise is meant to illustrate the simple concept that all money spent by government must first come from the private sector and that government employees really are “servants of the people.”

It takes 30 Oklahomans in the private sector to fund one Oklahoma local government job.

In total, for 2009, there were 204,762 local government workers in Oklahoma. These workers earned $9,548,615,000, or an average of $46,633 on a per-job basis. As a result, it would take a total of 6,094,378 private-sector jobs to fund Oklahoma’s local bureaucracy—or 4.9 times the people that were employed by Oklahoma’s private sector in 2009.

Oklahoma’s state and local government employees earn $13,779,695,000, making this the largest industry classification in the state. State and local government payrolls are larger than in other industry classifications, such as manufacturing ($10,864,813,000), health care and social assistance ($9,324,923,000), retail and wholesale trade combined (9,536,787,000), professional and technical service ($5,286,110,000), and even the United States government civilian/military ($7,491,785,000).

Moreover, Oklahoma’s 291,584 state and local government employees make this the largest industry classification in terms of employment. State and local government employment is larger than manufacturing (139,041), retail and wholesale trade combined (276,174), health care and social assistance (205,486), and accommodation and food service (139,017).

Methodology

In order to calculate the amount of taxes paid, this analysis utilizes the information provided by “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” published by the Institute on Taxation and Economic Policy (ITEP), a liberal think tank based in Washington, D.C. ITEP uses a “family income” (FI) concept which is likely very similar to the “adjusted gross income” (AGI) concept used on federal and state individual income tax forms. In order to derive FI, the average private sector wages and salaries ($37,557) were increased by 30 percent to approximate AGI (according to the Internal Revenue Service, wages and salaries constitute about 70 percent of AGI). The resulting average FI was $48,850 per job in 2009.

The ITEP analysis shows that the effective tax rate for a taxpayer earning $48,850 is 8.9 percent—split 5.7 percent for state taxes and 3.2 percent for local taxes. Overall, the average private-sector job paid $2,781 in direct state taxes and $1,567 in direct local taxes in 2009. Dividing the average state-government compensation per job ($48,733) by $2,781 yields 18 average private sector jobs needed to sustain a single state-government job in 2009. Dividing the average local-government compensation per job ($46,633) by $1,567 yields 30 average private-sector jobs needed to sustain a single local government job in 2009.

The data presented on state and local government employment are from the Bureau of Economic Analysis (BEA). BEA employment counts may differ from Oklahoma state government data for several reasons: (1) BEA counts the total number of state and local government positions (full- or part-time) whereas state government data are often expressed as full-time equivalents (FTE), i.e., two part-time employees are equal to one full-time employee; (2) BEA data are an annual, composite employment estimate using data from the U.S. Census Bureau, Bureau of Labor Statistics, and Oklahoma state agencies. For instance, BEA government employment is averaged for the entire year whereas data from the Census is an employment snapshot taken in March; and (3) there are classification issues. BEA data are designed to be comparable across states, which may mean adding or subtracting employees that may or may not be classified as state government workers by Oklahoma state agencies. For example, employees of the higher education system are often not counted as state employees but they are counted as state employees by BEA.

Economists J. Scott Moody (M.A., George Mason University) and Wendy P. Warcholik (Ph.D., George Mason University) are OCPA research fellows.