Item T2
Board of County Commissioners
Agenda Item Summary
Meeting Date: July 15, 2003
Bulk Item: Yes C No m/
Division: Board of County Commissioners
Department: George R. Neugent
AGENDA ITEM WORDING:
Discussion regarding a growing gap between higher and lower paid workers. This can be
equitably rectified by compensating all employees by the same amount of dollars rather
than by percent. I would also propose that within senior and Upper Management
positions, yeoman like meritorious efforts be the justification for merit raises. Merit
raises would be justified by appropriate Manager or the County Administrator and then
approved by the Board of County Commissioners.
ITEM BACKGROUND:
PREVIOUS RELEVANT BOCC ACTlON:
CONTRACT I AGREEMENT CHANGES:
STAFF RECOMMENDATIONS:
TOTAL COST:
BUDGETED: YES C NO C
\>>-
Source of Funds:
COST TO COUNTY: $
REVENUE PRODUCING: YES C NO C AMT PER MONTH:
YEAR:
APPROVED BY: COUNTY AllY COMB/PURCHASING C RISK MANAGEMENT C tJ-A
APPROVAL: ~ ~ ~ -L1~
CommissiCmer EORGE . NEU NT 'e. U - -
DISTRICT II
DOCUMENTATION: INCLUDED ~ TO FOLLOW C NOT REQUIRED C
DlSPOsmON:
AGENDA ITEM #
'-rL
EQUIT ABLE COLA SYSTEM
Equitable COLA System Salary
Year Emplovee A Emplovee B Difference
1 Beginning Salary 65,000 19,000 46,000
2 Salary Growth 66,350 20,350 46,000
3 Salary Growth 67,700 21,700 46,000
4 Salary Growth 69,050 23,050 46,000
5 Salary Growth 70,400 24,400 46,000
10 Salary Growth 77,150 31 ,1 50 46,000
The Equitable COLA system keeps the salary gap between the higher and lower paid workers
the same. The total COLA cost to the county would also be the same no matter which
systems is used. The difference is the an Equitable COLA adjustment compensates all
employees the same amount instead of rewarding those higher paid workers in senior
management nearly 3 times the COLA increase as those in the lower pay grades.
I believe the main constraint to changing to the Equitable COLA is the lack of an informed
electorate. I do not believe our Commissioners have been informed of the negative impact of
the present COLA system. I am hoping by sending them a copy of this comparison it will
persuade them to change to the Equitable COLA distribution method. The commissioners
may even want to freeze COLA raises to the higher paid pay-grades for a few years. Doing
this and distributing all or some of the saving to the lower pay grades would help correct the
growth in the wage gap caused by the old COLA system over past several years.
A second constraint to change is the vested interest of a few people in senior management.
Even after one makes the argument that a cost of living adjustment should be distributed
fairly there will be a few that will argue not to make the change. Their argument will likely
be based on a fallacy that it will cost the county more to change to an equitable COLA
system. This argument will be incorrect and untrue. A 5% COLA raise cost the county
exactly the same not matter which system is used. This is because total salary cost before the
COLA adjustment is used as a base for the Equitable COLA System.
A third constraint might be the argument that we would lose positions in senior management
because of wage disparity between other organizations. I do not think this is a valid
argument unless those making the case can give some examples. I am not aware of losing
senior management job positions as a result of wage disparity. In fact the opposite is true.
Because our lower paid workers have gotten an unfair share of the COLA over the years,
they are the ones leaving county employment for better and fairer paying jobs.
In summation the county's existing COLA distribution method is unfair and results in a
widening wage disparity between the highest and lowest paid workers. A fairer system
would be an Equitable COLA distribution that gives all employees the same living
adjustment in real dollars regardless oftheir base line salary. The total cost of the Equitable
COLA system to the county is the same as the old COLA system presently in place. Serious
consideration should also be given to freezing COLA increase to those in the upper pay
grades for a few years. This would help correct the growth in the wage gap between the
highest and lowest paid workers over the years caused by the old COLA system.
CPM Case Study Question & Answer
8. policies are statements of an organization's positions on issues and provide broad
guidelines for behavior of organizational members.
Select an important policy issue in your agency about which you feel strongly.
Develop a policy argument on the selected issue for presentation to top management.
In doing so, be sure to address all the elements of a good policy argument.
Monroe County should consider changing its present COLA distribution system because it
unfairly rewards the higher end salaried employees at the expense of the employees at the
lower end of the pay scale. The following table illustrates how a 5% COLA increase
unevenly rewards a high salary employee at the expense of the lower salaried worker.
High Salary and Low Salary
COLA Distribution
Salary
5% COLA
COLA Increase
High Salary
Employee
65,000
5%
3,250
Low Salary
Employee
19,000
5%
950
Salary Gap
46,000
New Salary
68,250
19,950
48,300
COLA is a cost of living increase to offset for the higher costs of living and should be the
same for all employees. Yet the existing COLA system will end up giving the higher end
employee a cost of living increase nearly 2.5 times greater then the lower salaried worker.
The existing COLA system used by the county also causes a greater salary gap between its
highest and lowest paid workers. The following table illustrates the growth in the salary gap
as a result of the salary percentage distribution system the County currently uses. This
example uses a 5% yearly COLA adjustment:
EXISTING COLA SYSTEM
Existing COLA System Salary
Year Employee A Employee B Difference
1 Beginning Salary 65,000 19,000 46,000
2 Salary Growth 68,250 19,950 48,300
3 Salary Growth 71,663 20,948 50,715
4 Salary Growth 75,246 21,995 53,251
5 Salary Growth 79,008 23,095 55,913
10 Salary Growth 100,836 29,475 71,361
In this example the salary gap nearly doubled from $46,000 to $71,361 in ten years. I do not
think it is the intent ofthe Commissioners to grow a salary gap between their higher and
lower paid county workers. A widening salary gap contributes to the retention problems
keeping the lower paid workers. Those employees that are hit the hardest with even a slight
rent or cost increases are given the lowest COLA increase in the existing COLA system.
A fairer way to adjust for inflation is to use an Equitable Salary Distribution system which
gives the same COLA raise for all of the employees. The following table shows how an
equitable COLA system based would work over a 10 year period: