Pay Boost on the Horizon for Some State Workers


State employees who stayed put through years of pay freezes, furloughs and layoffs could find good news in their paychecks this year. Modest pay increases have been promised at the bargaining table or are being considered in at least half the states.

In many cases, the increases aren’t pay raises, but a restoration of pay cuts and other measures taken during the recession. For example, Nevada Governor Brian Sandoval, a Republican, announced during his state of the state address that in the coming fiscal year employees will have to take three furlough days a year instead of six, and can look forward to raises in 2014. “The recession has hurt the entire Nevada family,” he said.

Even modest increases will likely make a big difference to state employees, many of whom haven’t seen significant pay increases since the recession began in 2008. State and local government wages grew by 1.1 percent in 2012, compared to 1.7 percent growth in the private sector, according to data from the Bureau of Labor Statistics. State and local governments have shed 681,000 jobs since their peak in August 2008, by far the largest drop of any recession in the past 50 years, according to the Rockefeller Institute of Government.

“We’re seeing minor adjustments in pay in many states, but it compares modestly with the private sector,” says Steve Kreisberg, director of collective bargaining for the American Federation of State, County and Municipal Employees, the largest national union representing state employees. “The public sector is still lagging in terms of both employment growth and compensation.”

Pay proposals

Some states with long-term collective bargaining contracts in place, including California, Michigan, Pennsylvania and Connecticut, will see raises or bonuses in their paychecks this year that were promised in exchange for salary freezes and other concessions in earlier years of their contracts. But for other states that grant collective bargaining rights to state employees, notably Maine and Illinois, raises are highly unlikely. Both states have been locked in labor negotiations for well over a year, and Illinois’ main state employee union is preparing its members for a possible strike.

AFSCME is still fighting in court with Democratic Governor Pat Quinn about raises he promised at the bargaining table for July 2011 but canceled because of what he called inadequate funding from the legislature. That ongoing legal dispute, as well as changes to state employee pension plans that Quinn is pushing in the legislature, has led to a deeply combative bargaining atmosphere.

“Unfortunately, unless we see a real change in Pat Quinn's stance and extreme demands, a strike is starting to seem a real possibility,” says Anders Lindall, spokesman for AFSCME 31, which represents 40,000 state employees.

Red State Proposals

The states mulling pay increases are almost as likely to be controlled by Republicans as Democrats.

Nevada’s move to cut back on furlough days is a recognition of the sacrifices that state employees have made, but it is also becoming a practical necessity as the state’s job market rebounds, says Lee-Ann Easton, administrator of the Division of Human Resource Management. Despite pay cuts and furloughs, turnover for state jobs has remained relatively low.

“We’ve tried to find other ways to make it a good place to work,” she says. “But Nevada was hit hard. There weren’t a lot of other places for people to go, so we didn’t have people just jumping ship.”

Now, competition from the private sector is a real threat to recruiting and retaining a talented workforce. Easton says the state streamlined its hiring process in recent years, including reducing the number of required civil service tests and making it easier for managers to promote qualified workers from within. Without those changes, the state would have a more difficult time recruiting and might have lost highly skilled employees, she says.

In Florida, where the governorship and the legislature are controlled by Republicans, the key point of contention isn’t whether state employees should get a pay bump. The question is whether the bump should be a one-time bonus or a permanent raise, and whether it’s fair to give teachers a bigger pay increase than state employees, as Republican Governor Rick Scott has proposed. Scott would like to give all state employees a $1,200 bonus and allow agencies flexibility to give permanent raises to some high-performing employees.

Democratic State Representative Michelle Rehwinkel Vasilinda, whose Tallahassee district is heavily populated by state employees, is proposing a 7 percent across-the-board pay increase, the first such increase since 2006. “Our state employees are working cheaper and leaner than any other place in the United States and they haven't gotten a raise in six years,” she says. “The governing ideology in Florida right now is to treat government like a business. Well I don't know any business that has been able to function effectively and sustain itself that hasn't given its employees a raise in six years.”

Politics of Pay

Even though the economy has improved, the politics of raising state employee pay remains tricky. The fear is that voters who are on hard times themselves will be quick to turn against incumbents who support bigger raises for state workers than they see in their own paychecks.

In Idaho, multiple studies and surveys have been conducted both in-house and by consultants. A recent state report found that salaries are on average 18.9 percent behind the market rate for similar positions in the private sector. In a recent survey of state employees by the legislature’s Office of Performance Evaluations, a fourth of respondents said they plan to find new employment within two years. Poor pay was cited as the top reason.

Still, a raise for state employees this year is far from certain, though some legislators would like to see it included in the budget. Republican Governor Butch Otter did not include a salary increase in his budget proposal, but instead created a task force to study employee compensation and broader state human resources issues.

Performance Pay

Some Republican-controlled states are using the lure of pay increases to try to get government to function more like a business.

In Arizona, Republican Governor Jan Brewer made a personnel system overhaul the centerpiece of her legislative agenda last year. New employees are now required to take “uncovered” status, foregoing traditional civil service protections. Managers now have the flexibility to reward or discipline such employees as they see fit. Current employees were offered a 5 percent one-time bonus in exchange for voluntarily giving up their “covered” status, and 5,276 of 13,761 eligible employees chose to do so. Others have opted to move to uncovered status since then; 71 percent of the workforce is now uncovered.

This year, Brewer is proposing to make the salary increases permanent for the newly “uncovered” employees. “It's important to make sure the state of Arizona can be competitive and be an employer of choice,” says Matthew Benson, spokesman for Jan Brewer. “Over time we believe this is going to result in a workforce that is more efficient and more nimble and more in line with what we see in the private sector.”

Other states, including Oklahoma and Florida, are working to transition to a performance-based system in which raises are tied to evaluations. On his way out of office, former Republican Indiana Governor Mitch Daniels ordered performance-based salary adjustments for state workers ranging from nothing to 8 percent, based on an evaluation system in place since 2006.

Republican Oklahoma Governor Mary Fallin declined to provide raises for workers in her budget proposal, but included $200,000 for a study to help inform the development of a performance-based pay system. State workers in Oklahoma haven’t seen a general pay increase since 2006.

To AFSCME’s Kreisberg, the talk about performance-based pay and rewarding exceptional performers is ill-timed. “You have people who don't know how to run a pay system but they know how to run their mouths,” he says. “The same people who talk about it are simply unwilling to make the kind of investments necessary to pay people at market … The good employees aren't going to stay there if they are not being paid at market.”


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