Public employee compensation continues to be a hot topic in California, and elsewhere, particularly when it comes to public employee benefits such as pension, health care and retiree health care.
Public agencies need to do a better job conducting periodic, objective, and robust public sector salary surveys. Moreover, the standard practice has been to only compare public agency salaries with other comparable public agency salaries.
The current standard practice when it comes to conducting public sector salary surveys has several major failings and leaves much room for improvement.
First, many agencies only compare straight salary, and leave out fringe and non-fringe based benefits. This is a huge mistake because these benefits are typically worth 30-40% of straight salary, potentially as high as 50-60% for public safety, and tend to be what is very different among public agencies and private agencies. All significant benefits should be included, especially pension and health care.
Second, most public sector salary surveys only compare public job classifications with other public agency job classifications. This is a usually a standard practice of public agencies and leads to a ratcheting effect where by public sector salaries are driven higher and higher from the prevailing private sector market rates. Data needs to be collected and analyzed for both private and public sector job classifications to provide a complete compensation analysis. (Note: this may not be possible for all classifications, but should at least be attempted)
Third, data needs to be collected for more than one pay step. Most public sector surveys only collect data for one pay step, usually top step. What typically differentiates the public sector from the private sector is the number and scaling of the salary step system. I would recommend using both the entry-level step and top step, but examining all of the steps for some classifications to provide more complete results.
Fourth, truly comparable classifications need to be used. The devil is in the details, and if comparable classifications are not used, the salary survey will show skewed results.
Fifth, the methodology is everything. Bad methodology will return bad results. Consult an expert prior to setting up your survey because they can require a significant investment of time and resources and you at least want to obtain useable results.
Lastly, I would add that you should not hold your breadth for the results. They may not show the results that you were hoping for, and they can take quite a while to produce, particularly for a large number of classifications. Although, no matter what the data shows, it is good to know where your agency stands in terms of total compensation to public employees for various classifications.
The Kersten Institute for Governance and Public Policy specializes in conducting public sector salary surveys and can help your agency set up and produce the salary surveys in accordance with industry best practices. Please do not hesitate to contact us today to get started with your agency’s salary survey. Please visit www.kersteninstitute.org for more information or call (510) 761-8065.