HELENA – 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 workers, 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.

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.

***

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 increases 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 raises 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.

***

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 Salaries.com. It 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 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.

***

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 professors, 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.”

***

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 a 10 percent 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.

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(23) comments

idiot state

Montana's GDP per capita is one of the lowest in the nation-44th. So it's a brilliant, genius move to increase taxes to pay for the public sector unions!

Joe Phillips

Thanks to you all for sharing your comments. I have a few questions for clarification purposes.

How does the State of Montana "earn" revenue?

Does Montana's GDP have any relevance to the issue of government employee pay raises?

Does our state government produce anything that can be traded and tallied as a performance metric?

Should state employee compensation be consistent with private sector economic forces? What happens if the private sector is producing at a slower rate than it produced in previous economic cycles?

If the private sector, (including individuals), finance the government should the compensation of the public sector be reflective of the private sector's performance?

Is worker compensation only measured by monetary instant gratification? Are there any other reasons why a person may choose a job with the state even though the pay is less?

I assume most reasonable businesses increase their employee pay consistent with revenue increases. If the company was not growing, perhaps a pay raise might still be used as incentive to boost production; prescribing that greater production may result in greater returns.

And finally, where do I find the tree where all the money grows on?

MommaBear

I think I am qualified to comment on this article. Maybe it will give some of you some insight (although one of you is clearly not impressionable) I worked in the private industry in MIssoula for 10 years after I finished my advanced degree (2 companies) In the last 6 months I became a state employee. These are are my observations;
- Pay: I took a 30% pay cut when I came to work for the state. I do so for 2 reasons; stability and security, and I would like to eventually teach. Additionally, I have noticed the state rewards well for years of service. So eventually (hopefully) I will get back up to where I was.
- Benefits: The benefits are similar to what I received in the private industry. I will say the companies I worked for had good benefit packages.
- Retirement: In the private sector it was optional, in the public it is mandatory. I contributed 4% to a 401k in the private, and 7.5% in the public.
- Hours/workload: I know alot of those in mgmt that work 50-60 work weeks. Personally, I worked alot more hours in the private sector.

So... for me, I had some trade-offs. I am not sure why anybody would argue against a pay raise?? As Montanan's we make so much less than others. What is wrong with paying people what they're worth and taking care of them in their elderly years? I think we all deserve those things.

The_Boneshackler
The_Boneshackler

I think that we need to ask: why does the private sector pay so poorly at a time of record Corporate profits, massive executive compensation, historically low tax rates, and an unprecedented amount of corporate welfare?

idiot state

Montana's deeply in debt because of its government workers' unfunded pension liabilities. Anyone who feels sorry for government workers is...well, probably a government worker. Govt employee unions are busting state budgets across the nation. All unions have outlived their purpose, and the greatest thing would be see to see every state a Right to Work state and government unions dismantled. But that's a never happening dream: with so many uninformed voters, and so many dependent on government handouts, any talk of privatizing is just dreaming. But government workers have to stop trying to garner sympathy; the private working sector has none.

BWO

What about the investment brokers who sold worthless investments to the state? Why aren't these the guilty folks in this equation? Why blame the workers?

ziggy

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????

Liberal Translation:

We stopped including benefits because we didn't get the desired outcome when they are included!!!!!

Sick time, vacation, education sabbaticals, health and dental, ...........much better on the public side.

zootown

Agreed with walter12 and Sukey. If you ask me, you can raise the wages and cut the benefits since the public has to buy their own insurance, use their own cars, etc.

Then consider what a lousy job most public employees do: waiting in line forever, waiting to get a response to a letter; waiting and waiting and waiting. Maybe if efficiency in doing their job was part of the pay raises that would make the difference and no more hiring friends and family when their are better qualified people.

idiot state

It's nonsensical to compare Montana to neighboring states in any regard and particularly economic. South Dakota and Wyoming are Open Shop states; Montana's highly unionized Closed Shop. South Dakota's public pension plan is fully funded; Montana's deeply in debt. Montana's got one of the lowest per capita incomes in the nation; South Dakota (13th; Bureau of Economic Analysis) Wyoming and North Dakota's incomes are higher than national average. So why compare Montana's public union salaries to neighboring states? They have nothing in common in any economic area...

pose

For every $1,000 per month you want to have for a 20-year retirement period, at the end of which the portfolio is zero, those in the private sector need to save a lump sum of $196,000, according to BTN Research. Thus, if you want $10,000 per month, you must have a lump sum of $1.96 million. If you feel like you have really good genes and expect to live 30 years in retirement, then the present value of that stream of money must be $269,000 per $1,000, or $2.69 million for $10,000 per month. If you keep everything the same, but assume a 6% positive return, the lump sum required is $179,000 per $1,000 for a 20-year payout and $237,000 for a 30-year span. Also, at least for the Private Sector, none of this is guaranteed. Much easier to have mostly taxpayer funded, and virtually guaranteed pension and healthcare for the rest of your life without the risk. Public Sector is clearly better compensated than most in the private sector.

JaneDough
JaneDough

@Sukey, you are sadly mistaken. While insurance is offered to retirees, it is out of pocket, the state doesn't pick up the tab as you would suggest. Try to educate yourself before spouting off misinformation. Oh, and just to annoy you further...Employees actually contribute to their own retirement, so it's not like the state foots the entire bill. And to annoy you further, they get BOTH social security and retirement. One isn't exclusive of the other. The only "in lieu" of social security that I'm aware of is railroad workers. You say you've been footing the bill for state salaries? Well, guess what? State employees pay taxes, too. And since you think we are all overpaid, that would mean we pay MORE taxes than you do. You say you are in small business...that business has to file all sorts of stuff with the state for taxes and licenses, etc..do you want some minimum wage uneducated person figuring out if you paid enough payroll taxes for the year? (That is not a dig at small business, just an example) As someone so much smarter than a state employee, you should know all these things.

@Walter...you have no idea. If your definition of easy hours is 40 a week, then I guess you might be on to something. Just curious, what's your normal workweek? Personally, I get paid for 40, but often put in more on my own time just so the work gets done.

Everyone thinks it's okay to slam and pick on the state employee. But remember, we all rely on them in some way every single day. From the line at DMV, to our taxes with state revenue, to helping the young mother trying to make a better life for herself and the next generation, to the child support worker making sure parents are held accountable for the support of their children, to the guy plowing the highways to make sure you can travel safely, to the guy making sure the gas pumps measure accurately, to the people keeping the mentally ill off the streets and safe, (and to the one job I could never do)....the social worker having to show up at 2am to remove a child from their home because of abuse, then having to decide if that family stays together.

I could go on an on and on but the bottom line is..do you want people in those jobs who aren't being paid enough for what they do? Do you want them constantly eying YOUR job in the private sector? Do you know how much employee turnover costs the state every time it happens? You get what you pay for.

ziggy

No....I DO NOT RELY on anyone in the public sector, with the BIG exception of police and firemen. ALL THE rest are parasites and we would be MUCH better off if the services were contracted out. Contractors do NOT get a fat pension from ME.

Janice

Oh, so you don't have a valid driver's license and no tags on your rig, or travel on any roads maintained or plowed?

lulu1999

...So you're saying you don't use any utilities maintained by the state? Your family members aren't educated by schools? You don't go to doctors, hospitals or clinics licensed by the state Health Department? Do you also live in a cave? Oh wait, that would probably be on public land...

Sukey

Surprise, Jane Dough, what makes you think all government employees are so well educated? We have elected legislators that are high school dropouts. We had a guy running for Governor, Ken Miller, who came in third, that has only a high school diploma. We have a past Governor, Judy Martz, that was a high school dropout. As far as government employees paying taxes, everyone except the unemployed and very poor pay taxes, so why is that such a big deal to you? As far as government employees contributing to their own retirement, so what? They GET retirement pay and most private sector employees no longer do so, they get at most a 401K plan. Why? Because this kind of financial ponzi scheme doesn't work and private businesses won't go bankrupt to subsidize retired workers, but government workers don't care, thats why America is BANKRUPT.

lulu1999

Ken Miller and Judy Martz were Republican candidates. And btw- those are electable offices ran for. So if you have an issue with under-educated officials in office, don't vote for them.

Zola

walter12: You sound jealous . . . easy work, easy hours, lots of vacations . . . I teach and would love to have you job shadow me for a week or two. Think 55-60 hour a week and because of the "high pay," you'll be able to tag along on a second job during the school year, as well as summers.

There's a reason why there's such a high burnout rate in education: low pay and stress. By the way, I taught with teachers with 10 years of experience in Montana who were eligible for free cheese and reduced lunch rates in the cafeteria. From the outside, teaching K-12 or at the college level may look like a cushy job but it's not.

Sukey: A clarification . . . those of us in education in Montana do not get health insurance after retiring unless we pay for it at 100% of the cost.

P.S. After 37 years of teaching in the state and an advanced degree, I still make less than a registered nurse will make in the first year on the job.

(I can't speak for the Forest Service or the government jobs at the state level.)

Sukey

Zola, thank you about clarifying about teachers having to pay for their own health insurance after retiring, I feel much better about sliding toward that fiscal cliff now. Why, in your opinion, is the teacher's pension so underfunded? Is it such a huge amount? What percentage of pay do you guys get in your pension? And, yes, registered nurses finally make money. In fact, a niece of ours in California got a job, with only two years of RN program and NO REAL JOB EXPERIENCE other than working in the hospital for her license, and of course now possessing her license, her starting salary with full benefits was $100,000/year. Why go to the Balkans? Guys can be nurses also, and they seem to always be short-handed...

BWO

What? Why the race to the bottom? Get good people, pay them exceedingly well, and expect them to produce. As a business owner I want great government on my side so my roads are safe, the communications systems work, and there's clean water and food for my employees. Why would I think government is not important to my profitability?

Sukey

The roads aren't safe anymore, county roads that is. The communications systems is a private company, not a government company. If you want clean water, stay away from a fracking area. And, the government doesn't grow food, farmers do. In fact, the government just took water away from food growing operations out in the Flathead...

fisher girl

I am state emplpyee and need to clarify a couple of things. But first I want to make sure you know that I am NOT SPEAKING for the state but for myself as a private citizen.
State emplpyees do not have health insurance for life. We pay an amount monthly depending on the health insurance we want/need.
When we retire we must pay for private insurance or have Medicare if eligible. We do have retirement but we pay 50% of the monthly amount not like other states where the employees pay much much less.
I have been with the state for several years and have been subject to a pay freeze aproximately 1/2 if that period of time. I personally agree with the public regarding what we see on the news and the effects of Obama care. However, this is Montana and not industrial or states like California. So please don't make the mistake of comparing us to the others.

walter12

You cannot make a comparison in the State of Montana. It is downright silly. Everyone who lives in Montana knows all too well that State jobs are the best in this state. They have very good salaries for Montana, great benefits, excellent job security, easy work, easy hours, lots of vacation and on and on. Compared to the corporate type, the state jobs are cushy and easy and the gravy train. Of course, we are not speaking of police jobs. In Montana, working for the US Forest Service is number one in best jobs in the state, second is college professor, third is State civilian job, and fourth is public school teacher in the 5 largest cities. None of them are in private industry, those jobs are tough.

Sukey

The problem isn't just pay. You HAVE to add in benefits, as the economic experts did, finding these people make 15.4% more than private sector. Going forward, get rid of pensions and lifetime health care. Put them on social security and medicare like the rest of us poor slobs who've been footing their bill for salary. The pensions of all these people and cradle to grave health insurance is bankrupting Montana (while the rest of us in small business have none - more than 50% of all jobs in America).

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