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Giving employees low raises doesn’t save money

At the June WCC Board Meeting, Trustee Ruth Hatcher congratulated the administration for giving the Independent group 1.5% raises. Trustee Hatcher probably assumed that “something-is-better-than-nothing.” But the chronically low raises that the WCC Board approves each year might do the College more harm than good.

The first problem is the wage rate itself. In 2019, the last full year for which inflation data are available, the inflation rate rose by 2.3%. WCC’s employees, who were given the same 1.5% wage increase in 2019, took an inflationary loss by continuing to work at the College. Over time, these inflationary losses stack up. In 2018, for example, the inflation rate was 1.9%. And the inflation rate was steady in 2016 and 2017, at 2.1%. Employees who stay in their positions incur a loyalty penalty each year that their raises don’t equal or exceed the inflation rate. (Which happens to be most years.)

That brings up the second problem. Each position at the College has a minimum and maximum pay scale. An employee who is entirely new to the College will start at the bottom of the pay scale. If an existing employee is promoted into the position, and his or her existing salary exceeds the minimum pay for the position, the College will increase the promoted employee’s pay rate to 10% higher than the position’s pay floor. This is often referred to as “starting 10% in.”

Chronically low raises inflate long-term personnel costs

Starting 10% in could result in a salary increase that is much higher than the standard annual 1.5%. It’s more than an attractive option for employees who want to increase their salaries while remaining employed by the College. Sometimes, promotion is the only way to make up for a string of low raises.

By paying below-inflation (and often below-market) wages for a position, WCC encourages employees to seek higher-paid positions to “correct” their inflation-dented salaries. It also encourages managers and supervisors to create higher-paying positions specifically for employees they wish to reward – but otherwise can’t. Less obviously, the “10% in” wage jump isn’t a one-time event. That newly inflated wage rate gets baked into WCC’s personnel costs every subsequent year. It also increases the cost of benefits and taxes that WCC pays for based on the worker’s salary.

On the other hand, if the WCC Administration tied employee raises to the rate of inflation, fewer employees would seek promotions to correct wage imbalances. The College might also end up carrying fewer than 10 Vice Presidents and four dozen directors on the payroll.

The Trustees should spend more time considering the long-term damage that WCC’s traditional sub-inflation raises do to the College before they authorize another one next year.

Photo Credit: Kevin Cortopassi , via Flickr