City employees likely to see raise in 2018

Good news for city employees: City staff wants to give them a raise, and some members of City Council are interested in pushing for an even bigger pay hike.

On Wednesday, the city’s human resources director told Council members that she is recommending a 2.5 percent across-the-board pay raise for all permanent city employees.

In addition, Human Resources Director Joya Hayes proposed hiking the wages of the lowest-paid city employees from $13.50 to $14.00 an hour. The city’s living wage ordinance states that all municipal workers should be paid $15 an hour by 2020.

The across-the-board pay hike will cost the city $14.3 million a year. There are only a small number of city workers currently at the lowest wage, so the 50-cent bump will only cost the city $7,000.

Hayes proposed that the 50-cent increase be implemented in October and that the 2.5 percent increase go into effect in December. The lowest-paid workers would therefore see their pay go up twice.

Last year, in addition to an across-the-board pay raise of 29 cents per hour, city employees were eligible for performance-based pay increases. Those who were rated at least “successful” on their annual performance reviews got a 2 percent hike.

“We want all employees to experience some level of increase” this year, said Hayes, citing the challenge workers face “simply to live” in a city as expensive as Austin.

An additional complication of performance-based raises is that they tend to attract more grievances, with workers who have been denied a pay bump alleging unfair treatment, said Hayes. She noted, however, that 77 percent of employees indicated in a survey that they wanted performance to play a role in pay.

The proposed pay increases, however, do not apply to temporary workers, many of whom are currently making the city minimum. Extending the same pay bump to them would cost the city another $533,000, estimated Council Member Greg Casar, who said that he was interested in exploring ways to increase their pay.

Casar said that at the very least he would like to see the city establish a set period of time that a person can work for the city without getting the same pay increase as permanent employees. Otherwise, he said, the city has an incentive to hire people into “temporary” roles, even if the jobs are in fact long term.

According to a city spokesperson, the city currently employs 4,183 temporary workers, roughly 1,200 of whom are seasonal summer employees. During the rest of the year, the city typically has roughly 3,000 temps on its payroll.

Council Member Ann Kitchen also said she would like to see what it would cost to raise the minimum wage further, to $14.50 or $15 an hour.

Like most Americans, city employees will see the cost of their health plans rise in the coming year. Both the city and employees enrolled in the city’s HMO and PPO plans will be paying 4.7 percent more in premiums, which is a lower rate of increase than that experienced by many other large public employers, including Travis County, the Austin Independent School District, Houston, Dallas, Fort Worth and El Paso.

Last year, the city spent $145.8 million on medical and pharmacy claims for employees, or an average of $12,017 per worker enrolled in one of the city health plans.

The city also spent $20.5 million on paying claims for the supplemental health plan that it offers the roughly 2,400 retirees who are over the age of 65 and therefore eligible for Medicare. Those retirees will only experience a 2.5 percent premium hike.

What is far more costly to the city are the more than 2,200 retirees who are not yet eligible for Medicare. Their claims last year cost taxpayers $37 million, or $16,250 per retiree. They’re more costly not just because Medicare isn’t chipping in yet, but because they are far more likely than older retirees to have a family member also enrolled in the plan.

As a result, the pre-65 retirees will experience a hefty premium hike this year of 14.7 percent, although those who opt for a high-deductible alternative plan will only see a 7.2 percent increase.

Kitchen said she planned to submit a proposal for the city to up its contribution to retiree health care to prevent retirees from experiencing a jump in premiums. Unlike current employees, said Kitchen, retirees aren’t going to see a cost-of-living increase, so keeping their health care costs down is about all the city can do to help its former workers continue to afford living in the city.

Council Member Ellen Troxclair, who is often at odds with her colleagues over city spending, did not comment on the proposed pay hikes during the meeting and when approached by a reporter afterward said she would prefer to comment on potential pay increases through a written statement.

In the statement, Troxclair criticized policies that she said could lead to inflation and stifle job growth. She also argued the proposals were not the best way to show gratitude for city workers.

“When you adopt blanket policies, such as across-the-board wage increases or rapid minimum wage increases, you stifle innovation, hinder production, and ultimately discourage your best employees by treating them the same regardless of the success they’ve contributed to the organization,” she said. “It is important to reward high-performing employees with great pay, and these policies prevent the city from doing this.”

Photo by John Flynn.

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