On February 14, 2018, the Wisconsin Legislature’s Joint Committee on Employment Relations (JCOER – often referred to as “joker”) approved the proposed 2017-2019 State Compensation Plan. This includes General Wage Adjustment (GWA) increases for state and university employees not represented by unions of 2 percent June 24, 2018, and 2 percent January 6, 2019. Madison Newspapers article Feb 15, 2018
The 4 percent increase in state fiscal year 2019 reflects only a small recovery of purchasing power lost from mid-2009 through 2017. See more context and history below!
ACE supported these overdue 2017-2019 increases! Inflation has continued in recent years, and the economy is at current full employment. In order to attract and retain qualified employees, and in light of state and university hiring experience, additional General Wage Adjustment increases will likely be required in the 2019-2021 Compensation Plan.
The 2017-2019 Compensation Plan also provides for market and parity increases for certain job classifications.
Here is a link to the proposed compensation plan as of Feb 27, 2018. 2017-19 Proposed Compensation Plan
History of loss of purchasing power 2009 through 2017
The first 2017-2019 General Wage Increase (GWA) takes effect only in the second year of the biennium (July 1, 2018 – June 30, 2019). The second 2017-2019 increase applies only to the last half of the second year of the biennium.
The loss of purchasing power accruing from mid-2009 through 2017 is -20.7 percent, see the compensation history that follows just below.
Compensation history since 2009
1) 2015-2017 biennium. There was no GWA in the 2015-2017 biennium.
2) 2013-2015 biennium. GWA’s were adopted with 1 percent June 30, 2013 (the beginning of the biennium), and 1 percent on June 29, 2014 (the beginning of the first year of the biennium).
Also effective June 30, 2013, any employee whose base pay rate was less than $15.00 per hour after implementation of the 1.0% GWA effective on that date, received an additional GWA increase of $0.25 per hour, except that the increase did not result in a base pay rate exceeding $15.00 per hour.
3) 2011-2013 biennium. There were no GWA increases in the 2011-2013 biennium.
4) Inflation. Since the last GWA increase in 2009, the CPI-Urban inflation index increased from 215.693 in June 2009 to 246.524 in December 2017. This reflects inflation of 14.3 percent from mid-2009 through 2017.
5) Act 10 effects – retirement contribution reduction in compensation. 2011 Wisconsin Act 10 decreased state and university employee compensation by 5.8 percent beginning in mid-2011, newly requiring employees to pay 50 percent of retirement contributions.
6) Act 10 effects – health insurance contribution reduction in compensation. Act 10 required that the employee share of health insurance premiums increase from approximately 6 percent to 12.6 percent. This equates to an increased annual cost of approximately $1,000 for family coverage. This equals approximately 2.6 percent for an employee with a wage of $18 per hour.
7) Add up the loss in purchasing power. Inflation 2009-2017 from 2009 through 2017 = 14.3 percent. Reduction due to 2011 Wis Act 10 retirement contribution = – 5.8 percent. Reduction due to 2011 Wis Act 10 health insurance premiums = 2.6 percent. Gross loss of purchasing power = -14.3 – 5.8 – 2.6 = -22.7 percent. In the same period GWA increases were 1 percent + 1 percent = 2 percent in the 2013-2015 biennium.
8) Net. Net loss of purchasing power = 20.7 percent. The 4 percent increase approved for state fiscal year 2019 reflects only a small recovery of purchasing power lost from mid-2009 through 2017.
ACE Compensation Plan Goals 2015-2017
General Wage Adjustment (GWA)
During the last five years, state employees received one percentage pay increase 2013 and 2014. In addition increases in retirement and health insurance contributions decreased take home pay in most cases.
ACE recommends that pay increases be no lower than the Consumer Price Index (CPI). The CPI averaged 2% in 2013 and for the first six months of 2014. ACE recommends that 2% pay increases be provided in each year of the 2015-2017 biennium.
Work toward increased pay for low-income state employees
In the 2012-2013 Fiscal Year, a provision was added to pay employees earning less than $15 per hour an increase of $.25 over the General Wage Increase (GWA.) There were 104 classifications representing 4,542 employees who benefited from this per hour increase. The lowest base salary was $11.40 at that time.
ACE recommends that all state employees should be paid at least $15 per hour and recommends that the Office of State Employment Relations (OSER) continue to provide incremental increases in the pay plan to bring existing employees to that compensation level and also to set the base pay level for these classifications at $15 per hour.
Adjustments should be made to other civil service classifications that experience compression with this increased wage for low-income employees. This will help offset the impact of across the board increases for retirement and health insurance contributions on low-income employees.
Funding for market survey adjustments identified by OSER
OSER was only able to fund 48% of the needed classification market adjustments that were identified by market studies and by departments. Only the classifications with the highest needs were compensated. ACE recommends that sufficient funding be included in the compensation plan to provide for closer to 90% of the identified needs. ACE understands that some market adjustment studies yield ambiguous results.
Pay compression between managers, supervisors and their employees
ACE long worked successfully for parity compensation for managers, supervisors, and confidential employees when there was pay compression relative to the bargaining unit contracts for those supervised. However non-represented employees fell behind before Act 10 was enacted and this has never been rectified.
Non-represented employees were not successful in obtaining the GWA of 2% that came June 7, 2009, the end of the 2007-2009 biennium, that many unions had negotiated and were unwilling to give up at the state’s request. The 2% increase was removed from the non-represented pay plan and was not available in FY2009-2010. This caused pay compression between managers and supervisors and the employees they supervise.
ACE recommends that an adjustment be made to rectify this problem.
Health insurance benefits
Both higher and lower paid employees contribute toward their health insurance premiums at the same rate. In the past, ACE has pointed out that lower paid employees are at risk of losing their pay increases when premium increases exceed the General Wage Adjustment.
ACE recommends restricting increases in employee’s health insurance premiums to a percentage equal to or less than the increases in the state’s health insurance costs and in an amount that does not exceed the GWA for lower paid employees.
Sick leave conversion
ACE recommends preserving the current program where sick leave can be converted to health insurance and the state provides a supplement up to a specified number of hours.