State pay

Lawmakers to hear conflicting numbers in debating state employee pay hikes

Proposed raises were negotiated by Schweitzer, unions
2012-12-10T00:00:00Z 2012-12-10T09:58:05Z Lawmakers to hear conflicting numbers in debating state employee pay hikesBy CHARLES S. JOHNSON IR State Bureau Helena Independent Record
December 10, 2012 12:00 am  • 

Montana legislators soon will be debating whether to approve the proposed pay raises for state employees negotiated by Gov. Brian Schweitzer and public employee unions.

They likely will be comparing statistics about state employees’ pay with those of other public and private employees, and perhaps their fringe benefits.

In part because of recent pay freezes, the base pay for Montana state government workers lags further behind the prevailing midpoint of salaries for similar jobs done in the public and private sector in the five-state region, according to a salary survey done for the state.

“As of today, we are 14.48 percent behind the market,” said Paula Stoll, administrator of the state Human Resources Division of the Department of Administration.

Fringe benefits such as health insurance and pensions aren’t included in the comparison.

However, a recent study issued by a conservative think tank, the Montana Policy Institute, concluded that Montana public employees — state and local government and school district —actually earn about the same as their private sector counterparts.

“But when you factor in the fringe benefits, that’s when the public jumps ahead of the private by 15.4 percent,” said Glenn Oppel, the institute’s policy director.

State officials dispute that conclusion.

Pay deal from June

At issue before the 2013 Legislature is whether to approve and fund the pay deal that Schweitzer, a Democrat who leaves office in January, negotiated with public employee unions in June. It calls for giving each worker covered by the plan – a majority of state employees— 5 percent raises in their base pay in each of the next two years at a total cost of $138 million, including $71 million from the state general fund.

These pay hikes would follow what has been a four-year pay freeze for many state employees.

However, about half of the executive branch employees in the 2011 fiscal year received pay hikes under the state’s broadband pay raise.

In 2009, state employee unions agreed to take a voluntary two-year pay freeze when state revenues were falling during the recession. Those making $45,000 a year or less received a one-time $450 payment.

In 2011, the Republican-controlled Legislature rejected a deal reached by Schweitzer and public employee unions for 1 percent and 3 percent raises in base pay over two years.

Gov.-elect Steve Bullock, a Democrat, has endorsed the 5 percent pay raises that Schweitzer and the unions agreed on.

Yet Republicans again will control the state House and Senate in 2013.

Salary surveys

Every other year, the state Human Resources Division gets salary surveys so it can compare state workers’ pay with those of people holding similar occupations in the public and private sectors in Montana, Idaho, Wyoming, North Dakota and South Dakota.

The division buys three different salary surveys. One is from Kenexa, formerly It also also uses regional salary information collected by the U.S. Bureau of Labor Statistics. The third source is from a regional association of state governments.

Classifiers in the division look at U.S. Department of Labor job definitions and pick the ones that best describe 750 state government occupations. They then match the jobs with the salaries from the three surveys.

“We use the median pay – it’s not the average, it’s a median, meaning half of the employers who reported jobs in those occupations were paid less and half paid more,” Stoll said. “We look at what the average our state employees were receiving and then we compare that to the survey data.”

Stoll said the Human Resources Division follows the survey methodology recommended by WorldatWork, a national nonprofit human resources group and the Society of Human Resource Management, the world’s largest human resource management organization.

Under what the state calls Pay Plan 20 — used by a majority of state agencies and covering more than 11,000 state employees, each job is classified and placed into one of nine pay bands. There is a minimum and maximum salary set for each pay band.

For example, a delivery service driver is in Pay Band 1 and a livestock inspector is in Pay Band 3. A registered nurse is in pay band 6, a lawyer in Pay Band 7, a veterinarian in Pay Band 8 and a psychiatrist in Pay Band 9.

The survey found that the average annual base pay for more than 11,000 Montana state employees is $44,145, compared with the $51,620 average for the regional public and private market for a pay gap of 14,48 percent.

Disputed methodology

The Montana Policy Institute’s Oppel disputes the state’s survey methodology.

“We’re not suggesting state employees shouldn’t be paid more,” he said. “What we’re saying is the argument that they aren’t paid as much as private employees isn’t supported by the data….

“It’s disingenuous to suggest that they aren’t earning as much as their counterparts in the private sector. Policy should be driven by fact, not innuendo and political gamesmanship.”

He said there are two flaws in the state’s across-the-board occupational comparisons.

First, employees within occupational categories aren’t interchangeable, Oppel said. Some are more educated, some are older and some are more experienced, and that should be taken into account.

The other problem, he said, is the state fails to include fringe benefits – an important part of a worker’s total compensation — in its survey.

The Montana Policy Institute hired two economics professor, William Even of Miami (Ohio) University and Donald Macpherson of Trinity University, to analyze the Montana salary data. After comparing employees of similar personal and professional characteristics and including benefits, they concluded Montana public employees receive pay and benefits that are 15.4 percent greater than comparable private sector workers.

The Montana Policy Institute isn’t taking a stand on whether legislators should approve the proposed pay deal, he said.

“That’s up to them,” Oppel said. “We’re just throwing more information into the public debate. It’s the first time the public has been able to see a different perspective.”

Surveying techniques

State officials disagree with the institute’s findings.

“Our data doesn’t show it,” Stoll said. “We’re confident that the data is reliable. It’s a process that we’ve come up with using common surveying techniques, and it’s been periodically reviewed by policymakers here in the executive branch and by legislative branch employees.”

In the past, the Human Resources Division included employers’ benefits in its surveys. Stoll said the state dropped that in 2007 after finding benefits too difficult to compare.

Stoll and a legislative fiscal analyst separately estimated that including state government’s benefit package would lower the gap in state employees’ total compensation by about four percentage points. That would still leave public employees trailing private workers by 10 per cent or 11 percent gap in total compensation, she said.

Barbara Wagner, senior economist for the state Department of Labor and Industry, questioned the Montana Policy Institute study.

“Their study is the only study I have read that finds Montana’s state workers are compensated significantly more than the private sector,” Wagner said. “Some find that certain occupations are paid higher (and some are paid lower), some find that certain education levels are paid higher (and some paid lower) and some don’t find any significant differences between private and public pay.”

Wagner said it’s really hard to determine what benefit levels are in the private sector because they are highly dependent on the size of the business. Because the state government is one of Montana’s largest employers, state government’s benefit levels probably should be compared to those offered by other large employers, she said.

Turning to pay, Wagner said, “There’s a big difference between the education levels that are required for jobs in the public sector vs. the private sector. About 75 percent of jobs in our private sector don’t require a college diploma. In comparison, roughly half of public sector jobs require a college degree.”

She said her research has found that people with high education levels in the private sector are paid significantly more than their counterparts in the public sector. For those with lower levels of education, the public sector pays more than the private sector. Retail is one of the largest private employers, and employees there typically don’t get the benefits such as health insurance, she said.

A report, not recommendation

The two economists who did the analysis for the Montana Policy Institute have done similar work recently on public versus private compensation for conservative think tanks in other states, including Wisconsin, Virginia, Rhode Island and Idaho.

“The state think tank world is like a network,” Oppel said. “We’re all paying for and using data from national organization and networking.”

He emphasized that the institute’s study is not an issue brief or policy recommendation, but just a report relaying information from the economists for legislators and other Montanans to consider.

Eric Feaver, president of the MEA-MFT, the state’s largest union representing teachers and public employees, isn’t buying that argument. He argued that the Montana Policy Institute is hardly a neutral research group.

“I think the MPI simply wants to trash state government,” Feaver said. “Their agenda is to drown government in a bathtub. Their ideological bias is to do government in and privatize all of the government.”

The Montana Policy Institute describes itself as a “policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective of free markets, limited government, individual rights and individual responsibility.”

Worry over recruitment

Stoll, of the state Human Resources Division, said she worries about the state’s ability to recruit and recruit and retain employees, particularly for certain jobs, if the pay gap continues.

“We’re really concerned about overall competitiveness right now because of our retirement rates, and we’ve seen a drop in the number of qualified people applying for certain jobs,” she said.

She said the Consumer Price Index for All Urban Consumers, or CPI-U, covering all urban households in metropolitan statistical areas and urban places of 2,500 or more, has averaged about 2.8 percent over the past three years.

“If it holds onto that 2.8 percent and the Legislature were to approve the 5 and 5 (percent pay hikes), two years from now we’re still going to be below the prevailing labor market,” Stoll said.

The state is finding it particularly hard to recruit engineers, environmental scientists, others in the hard sciences and public defenders, said Bonnie Shoemaker, compensation and classification program coordinator in the division.

Copyright 2015 Helena Independent Record. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(13) Comments

  1. catspaw
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    catspaw - December 11, 2012 6:48 pm

    I am happy that you choose to stick to your classless commentary, and even did us a favor and added more. Any employee, public or private, knows that the dead beat employee is like a brick and there are both in each venue, If simply suggesting that deadbeats are the problem with services, then one would also suggest that this is the reason that unemployment is so high in the private sector. I seen businesses closing and folks looking for work, They must all be deadbeats according to you, right Steeline? Terminating someones employment for "just cause reasoning" is not only common sense for a variety of reasons, but also lays the groundwork for a safe and rewarding work experience. Your "at will" states sound similar to RTW states, which means you can terminate someones employment for absolutely no reason or for no wrongdoing on the part of the employee. Only 24 states have sigend on for this idea, and you will notice that many of those states lead the nation in unemployment.

    Another thing, I notice that you really did not comment on the topic at hand (state employee raises) here. but chose to comment about lazy employees and more right wing ideology about right to work. I guess when you think about it, your viewpoint on this topic ranks right up with the protesters that demonstrate at the funeral of a US soldier and suggest that s/he had it coming.

    This really is a new low for you Steeline. Keep it classy, my friend.
  2. steeline
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    steeline - December 10, 2012 7:55 pm
    I will stick to my comments. Any State employee knows that the "dead beat employee" is like a brick around the neck of the department they work in. It is almost impossible for State management to let a non-producer go. Once they have their six month probation period they are there for life, almost. Montana is a "just cause state". In fact it is the only state in the union that is. All the rest are "at will" states. Meaning that a state manager can fire with out going through all the hoops that are required in Montana. There are those who carry the load the there are those who are the load. When there is a problem with service to the public the problem usually will weave its way back to incompetence of someone. Government is not efficient and having to pay for inefficient employees who waste time, material, money and pass off their duties to others cost money to the tax payers that could be used to pay those who are productive. Now that is a fact. The producers will agree. One more thing the pay plan that they have now is worthless. The unions would get all over a State manager if they paid a "deserving" worker more than one who is not and in the same pay grade. State pay should be based on time in service, training, education, performance and dependability. We get good service now we would get great service if everyone had to pull their weight.
  3. Rocko1
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    Rocko1 - December 10, 2012 4:01 pm
    I couldn't wait to get home today to comment on this subject! When I see the comments made by people like Michael S. and Steeline it tells me that they do not have a clue as to the inner workings of government! As a state employee I am going to make several points! Point 1 as with any organization there are lazy and unmotivated employees just like in the private sector! As a former executive in the private sector I can tell you no amount of screening, vetting or background check can weed out all the bad apples! In working for the state I have met and know a lot of state employees and the overwhelming majority are hard working people who show dedication to their job! Point 2 State employees have seen the value of their pay decrease considerably since 2004 when the first of several pay freezes went into effect! At the same time we have seen the price of gas go up by more than double not to mention groceries, heating our homes, our mortgages, and a host of other things needed to live! Point 3 : The state of Montana has too few employees to do the jobs that we have been tasked with! For instance, every time we have a snow storm I hear complaints about how poorly the roads were plowed! The problem is there are far too few plow drivers to maintain every road in the state! Another example is law enforcement! There are simply too few officers to patrol the highways in the state of Montana! The point is this, nobody likes to pay more in taxes because they lose control of how that money is spent! I don't particularly like paying more in taxes but on the same token I also don't like it when I drive down a state highway that is poorly maintained. I don't like it when I have a wildfire burning 1/2 a mile down the road from my house and I don't like it when I read in the paper about a 2 year old child that was beaten to death by their parents. All of these issues are handled by state agencies and state employees and I know that there will be a lot more of all of it if we continue to treat state employees poorly and fail to compensate them fairly for their services! Finally to Michael S. No offense to you buddy but I don't know what outfit you work for but I managed one of the most prominent locally owned business in Helena and am fully aware of how private sector employees have been compensated and what I will tell you is when I handed out raises they were typically 1.00 per hour after 6 months and 50 cents an hour every year afterwards based on positive performance appraisals! During the darkest parts of the current economic crisis I still managed to double the sales in that store and continue to give out those types of raises! So what I would say is it sounds like your store has been mismanaged or you have had the wool pulled over your eyes!
  4. RamblingSyd
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    RamblingSyd - December 10, 2012 2:01 pm
    Presumably, people like MichaelS approve of private companies like Walmart deliberately paying their workers so little and giving them so few hours that the employees are dependent on the state for things like Medicaid and food stamps. Meanwhile, just six members of the Walton family are worth more than thirty percent of all Americans’ net worth put together?

    By the way, state workers still have to pay big deductibles and co-pays, so it's hardly a " full medical package", and there are no "golden parachute retirement packages" for 99% of them.
  5. FlamingLiberal1
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    FlamingLiberal1 - December 10, 2012 1:16 pm
    Seems to me that a lot of people think that slashing state government is a good idea, but really haven't a clue as to what that actually may mean with respect to state services they want done in a timely manner.
  6. AntiXenophobia
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    AntiXenophobia - December 10, 2012 12:09 pm
    This article was written by someone without any data analysis chops, so it is hard to underdstand what "data" is even present. There are conflicting statements about using average versus median incomes in different surveys, without enough detail to know which is used in the nice little bar chart on the top, for example. Speaking as a professional data analyst, you can't really use that chart without knowing more about what is behind it. What private sector jobs went into that list? Did they use all state jobs (what about the university system, teachers, etc.)? Given the scarcity of information about the data that went into making the pretty little graph, I think its intent is to inflame, not inform. Not enough information was given hear to act on or form an opinion based on anything besides your own personal prejudice.

    I have also worked in the private sector and the state, and there are lazy people in both. There are hard workers in both. Why do people want to claim that unions or state employees are lazy? What I have seen is that in any job, public or private, a small number of workers do nearly all the heavy lifting, and most employees are pretty average. A few are dead weight that find ways of hanging on. That was true in grade school, in college, and in the workforce, public or private.
  7. ThinkFirstThenVote
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    ThinkFirstThenVote - December 10, 2012 9:23 am
    Almost every legislator of either party has it branded on their campaign literature "Good jobs for Montana". They say what a travesty it is that our kids leave Montana for better paying jobs elsewhere.

    But then when they're in the position of the employer of 15,000 Montana kids who got their college degree and stayed in Montana and work for them -- well, then they trash them and tell them that they're not worth even a 1% raise which worked out to about 88 cents a day. When one of the largest employers in the states keeps their wages low, others follow suit. But it doesn't change the fact that groceries, gas, housing, and my electricity bills have gone up without a vote. But our pay hasn't -- despite the $460 million surplus.

    I had a renter one time with a son who laughed when I told them how we'd gone 6 years without a raise -- in the 90's when the state was in the black -- and then got 25 cents. He laughed and "Geez, my friend's sister got a $1.50/hr more after 2 mos at Burger King."
    The state average wages -- mostly private sector -- have gone up for the last 4 years, significantly. It's not unreasonable for the state to do the same.
  8. steeline
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    steeline - December 10, 2012 7:47 am
    The pay issue is simple. It is not that the State don't have enough money to pay wages and benefits to State Employees, it is that we have too many State Employees. If a State employee was really interested in getting a raise each one could take on a more responisbility and work so there would not be a need to have so many State Employees. Every State Employee knows someone in Government that don't pack thier weight or the position they are in isn't necessary. For every unecessary position in State Government means there is that much more money avaiable for those who are necessary. We have way too much government and can't afford anymore. WE have to restore America.
  9. catspaw
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    catspaw - December 09, 2012 6:17 pm
    What is this guy talking about? Private Sector profits are at an all time high. We in the private sector realize that the public sector took it in the shorts to freeze wages and help us out, now it is time to make it right. The battle is not a public vs private class warfare struggle that those on the right love to conjure up at any and all moments. Its a public service vs no service issue. When we have good, quality public services, we all win. When we dont. Montana Loses.
  10. The Big L
    Report Abuse
    The Big L - December 09, 2012 5:51 pm
    MichaelS – I have given my employees raises for 12 years in a row. Perhaps if you are not “getting” them, you are not “earning” them.
  11. MTanan
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    MTanan - December 09, 2012 2:37 pm
    Where does Montana Policy Institute get its money? "Conservative think tank" sort of screams Koch Brothers, doesn't it? Do we know how far their tentacles reach into state and local politics? They won't be satisfied until all workers, both union and non-union, from the public or private sectors, have zero protection and will be on the level of the serfs of old. Create conflict and envy.

    I'd sure take anything that comes from this bunch with a grain of salt. Who are these economics professors anyway? Do they have credibility? How much money did the MPI pay these guys for the study? We'll never know.

    If they want to hold so much political sway they should run for office.
  12. MJem
    Report Abuse
    MJem - December 09, 2012 1:35 pm
    In the Eastern part of the state, the public sector is having a difficult time filling jobs BECAUSE pay falls behind the private sector. As it is, people are already screaming because public services are being cut and are short-staffed. I know people working in the public sector who have not gotten a raise for over 4 years. For private OR public, I think this is unacceptable. If a business is not thriving and growing, maybe their higher ups need to rethink their business strategy - or quit keeping all the profits to themselves!
  13. MichaelS
    Report Abuse
    MichaelS - December 09, 2012 11:04 am
    no pay increases for state employees, zero..........just like the private sector. we in the private sector have long tired of hearing how tough the "poor" unionized public employees are having it with there 1 month a year off (paid holidays and vacations), full medical packages and golden parachute retirement packages. what Montana taxpayers really want to see is a reduction in goverment employees and a smaller more "steam-lined" goverment. Okay, boys now let me have it !

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