Oregon pays state employees highly competitive salaries and benefits compared with key areas of the Pacific Northwest market, a new analysis by the state’s human resources office has found.
State workers’ average compensation as of July 1, 2020, was more competitive than two years ago: 100.2% of market, up from 97.5% of market in 2018.
The salary and benefit packages looked richer when contrasted with the private sector in Oregon and neighboring states: 103.8% on average of what similar workers in the private sector earn, the state analysis found.
Gov. Kate Brown’s administration conducts the analyses every two years to inform the governor as she negotiates pay and certain benefits in new contracts with public employee unions. Brown is now bargaining with nearly a dozen unions and the outcome can significantly impact the $24 billion state budget. In 2019, Brown negotiated $200 million in salary increases and has suggested the Legislature should plan for $190 million in salary and other compensation increases in the 2021-2023 budget.
The governor seeks to keep state employee compensation between 95% to 105% of “the compensation earned by similarly situated employees in comparable markets” but her 2017 executive order identifying that goal did not specify if that means total compensation or only salary. Through a spokesperson, Brown declined repeated requests by The Oregonian/OregonLive to say if she bases her market employer range on total compensation — salaries and benefits — or salaries only.
The state has approximately 35,000 employees, not including the university system, Legislature, judiciary and Oregon Lottery.
Human resources employees analyzed the state’s competitiveness as an employer by comparing state workers’ salaries and benefits with the salaries and benefits paid to people in similar jobs with different employers.
Highly paid county workers reduced Oregon’s competitiveness in the overall ranking. The analysis compared Multnomah, Washington, Clackamas, Marion, Lane, Deschutes and Jackson in Oregon and Clark, Thurston and King in Washington, finding those counties paid workers 9% more than the state for similar jobs.
Ben Morris, communications director for Service Employees International Union which represents approximately 30% of the state workforce, said the union views the county comparison as particularly important “because we see our members go to county jobs a lot.”
If a state employee leaves for a government job in an Oregon county, their years of service carry over and they retain the same generous pension and health care benefits. Public employees in Oregon receive both a defined benefit public pension and a defined contribution retirement plan similar to a 401(k), in addition to Social Security. Public employers in many other states do not pay into Social Security.
“Adding the value of employee benefits to wages has a significant impact on the monthly total compensation costs for state employees,” human resources staff wrote in the report.
State employees also receive significant paid leave time, more than five weeks — or 208 hours — in the first year for non-management workers and slightly more — 232 hours — for managers, which represents “68 and 92 hours of additional leave over the market average for represented and management employees, respectively,” human resources employees wrote in the report.
To calculate the competitiveness of the state’s healthcare benefit, Oregon human resources staff only considered the employer’s contribution rates — not how employees’ out-of-pocket costs compare. That is significant because state employees pay relatively tiny monthly premiums, $19.35 per month for family coverage under the most popular plan, Providence Choice, versus a market average of $565.59 per month to insure a family.
“A state employee at the employee and family rate will pay $546.24 less for monthly medical benefits,” according to the report. “Over the course of a year, this is an average savings of $6,554.88, which equates to more than the average monthly salary for a state worker compared to what an employee would pay for their medical benefits in the labor market.”
Many employees are well-aware of the generous benefits and choose to work for the state because of them. That became clear in 2019 when lawmakers decided to reverse a decision to eliminate the option for households with more than one public employee to sign up for double health insurance coverage.
Still, Melissa Unger, executive director of Service Employees International Union 503, zeroed in on state employees’ salaries which the report found to be on average 96.6% of the market last year.
“The multiple crises of 2020 taught us a hard lesson about the readiness of Oregon’s essential services,” Unger wrote in an emailed statement. “Years of understaffing, turnover, and a lack of investment in infrastructure left us unprepared for the pandemic and wildfires. Our goal in negotiating our next contract with the state is to make sure our essential services are ready for the future. The compensation report is one piece of that puzzle. It shows that state salaries are below the overall market and far below one of the most direct competitors – county governments. In order to disaster-proof our essential services for the future, we need to address that gap so we can retain the most talented workers in these critical programs.”
As a snapshot in time, the report does not reflect state employees’ current compensation nor changes in the broader market. Since July 1, state employees received a 3% cost-of-living adjustment, the largest in a decade, and a periodic increase in pay rates known as a step increase that on average boosted pay by 4.8%, The Oregonian/Oregon has reported.
In the past, critics have pointed out that in addition to ignoring state employees’ lower health insurance costs, the compensation report doesn’t factor in that public pension costs are picked up by taxpayers with the financing of public pension debt. The state did not change its methodology for calculating compensation from 2018, when The Oregonian/OregonLive described its analysis of the value of state pensions as “anemic and potentially misleading” because it only looked at the net pension contribution rates for employees hired after Aug. 28, 2003, or Tier 3. Excluded from consideration were the cost of pension benefits for older — more expensive — Tier 1 and Tier 2 employees.
John Tapogna, president of the economic consulting firm ECONorthwest, said the state’s analysis only captures one part of the compensation equation since it focuses on matching state jobs with positions in other sectors and comparing the pay for each. It does not examine what workers with similar qualifications are earning across the market, Tapogna said, which can also provide insight into an employer’s competitiveness.
“Those occupations probably are never identical,” Tapogna said. “You’re going to get some pretty specific types of work in state government that you just don’t have comparable occupations in the private sector … You don’t know exactly who’s going into that position, what kind of occupational background they have and what type of work experience they have.”
— Hillary Borrud: [email protected]; @hborrud
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