02/25/2013 05:36 pm ET

Stockton, California Went Broke As Quarter Of Workers Earned More Than $100,000: Report

In the same year that Stockton, Calif., became the largest city in U.S. history to file for bankruptcy, roughly one-fourth of the city’s employees earned more than $100,000 annually, according to local Stockton news outlet The Record.

To be precise, 23 percent of all full-time workers took home over $100,000 in 2012, as the city spent $107 million on total payroll, according to the report. That’s reportedly down from a couple years earlier, when about 30 percent of employees brought home more than $100,000 and the city spent around 15 percent more on employees over all.

Stockton must now establish Chapter 9 bankruptcy eligibility, which requires they “negotiate in good faith and prove they are broke,” according to Reuters. The city is one of three California cities to have filed for bankruptcy, including Mammoth Lakes and San Bernardino.

When Stockton filed for bankruptcy last June, it announced plans to cut roughly $11 million in compensation and benefits in order to make headway into the city’s $26 million budget deficit. Yet the city’s average wage was not among the highest in the state in 2011, nor did the city boast a particularly high ratio of city employees to residents, according to the California State Controller’s Office.

When asked about the city’s $100,000 workers, City Manager Bob Deis defended the city’s payscale. "We're not hiring people that work at McDonald's," Deis said, according to The Record. "We're hiring a lot of people with degrees." A 2010 paper published by the Economic Policy Institute backed up the general claim that the average city- and state-level worker is not overcompensated:

On average, full-time state and local employees are undercompensated by 3.7%, in comparison to otherwise similar private-sector workers.

Last month, California Governor Jerry Brown introduced a plan to eliminate the state’s own deficit, after years of the state’s compensation system facing criticism. While the state has one of the nation's lowest ratios of state employees to residents, those state workers still earned on average roughly $15,000 more than the typical Californian last year, according to U.S. Commerce Department data cited by Bloomberg.



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