June 13, 2025
We have too many employees per capita.
San Francisco is facing an unprecedented, historic $800M budget shortfall over the next two years. While Mayor Daniel Lurie has laid forth a plan that begins addressing this structural deficit, including not backfilling currently open roles and laying off approximately 100 filled roles, we cannot overlook that, even with these moves, the city bureaucracy is still significantly bloated as compared to peer cities in California.
In examining the size of our administrative bureaucracy relative to that of other cities, we look to the metric employees per capita, which examines the number of residents per city employee. Using this metric is helpful when comparing cities of very different sizes - in essence, it controls for size of city and is a closer proxy for service levels and quality.
As we talked about recently online, when we look at San Francisco against peer cities, San Francisco is a massive outlier both in terms of spend per resident and employees per resident.
SF spends $7,025 per resident on public employees a staggering 3X - 14X as compared to the peer group. Critics of these types of fiscal analyses of our city will say, “But, San Francisco is a city and a county! This isn’t a fair comparison!” Aha! Even when we remove the enterprise departments (revenue-generating departments) and typical county expenses, we still have the highest spend per resident.
Even more pronounced, though, is the employees per resident. San Francisco is the clear outlier - with an unjustifiably high number of employees per resident. Articulated another way, the employee to resident ratio is 1:21 in San Francisco. The next closest city? Los Angeles, at 1:54.
Look - San Francisco isn’t a cheap place to live. The Bay Area on the whole is one of the most expensive regions in the world when it comes to the cost of living. So let’s be clear - we’re not saying we shouldn’t pay city employees a fair, living wage. We are rather saying this: our city is paying too many people. Period.
Mayor Daniel Lurie put layoffs on the table as a part of his budget plan to get San Francisco back on the right financial footing. While his budget calls for the elimination of 1,400 roles, it’s an effective net reduction of only about 100 jobs; the vast majority are occupied by people we know are retiring, or are currently unfilled roles.
Nobody wants people to lose their jobs. But we also have to be realistic about the fact that San Francisco’s books simply will not balance if we don’t find more ways to reduce the size of the bureaucracy.
Laying off 100 employees represents a reduction-in-force of about 0.03%. Yes, you read that right. One-third of one percent. This, in our opinion, is inadequate. And despite this relative non-event of a reduction in force, labor unions still think it’s too much. We get it - they’re doing their job, advocating for more jobs and higher wages. But the Mayor is making the tough decisions that, we hope, lay the foundation for broader organizational changes to the administrative bureaucracy in the weeks and months ahead.
