Danville Register and Bee: Official: City pay ‘out of whack’

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Pay compression is one of the issues that many firefighters believe is plaguing our department. Up to this point, I have referenced it but never had to explain it. I probably haven’t explained it because I never would have done the issue justice as it effects us. Today, I found the explanation that I would have loved to have given you. Apparently Danville employees are experiencing similar problems with pay compression. I encourage you all to read the entire article to understand how the problem occurs, how they have been told to fix it, and how saving a little bit of money over time is going to cost them a lot of money in the end. Note: due to a technicality, I put the entire article up.

Official: City pay ‘out of whack’

Register & Bee staff writer
October 15, 2006

DANVILLE – Danville police officers earn on average about 20 percent less per year than police officers working in nearby localities.

“Money’s not everything to the job, but it does matter,” said Lt. Mike Mondul, the former president of Danville’s Fraternal Order of Police. “Things are out of whack and they need to be fixed.”

Mondul shared his concerns with Danville City Council a few years ago when the police department was experiencing a high turnover rate.

Council then hired the private consulting firm Fox Lawson & Associates to conduct a comprehensive study looking at how Danville’s public employee salaries stack up with those of it’s local market, including Charlottesville, Martinsville, Lynchburg, Roanoke and High Point, N.C.

The study found that Danville police officers earn $29,900 per year, while the average police officer in Danville’s local market earns $36,162 per year. Across the board, the study found Danville’s city employees on average earn base salaries that are 13 percent less than the same employees in the local market.

The study also found the local market’s pay ranges – which dictate the minimum and maximum salaries an employee can earn depending on his or her job description – are 10 percent higher than Danville’s pay ranges.

Council is set to look at the problem and take action on a possible solution at their Tuesday meeting. But it won’t be an easy problem to fix, according to Assistant City Manager Lyle Lacy.


Lacy used an imaginary truck driver and rolled the clock back five years as he tried to explain how the salaries for Danville’s public employees fell so far behind the local market.

Lacy said the truck driver position had a pay range of $20,000-$32,000, which meant when the driver started the job in 2001 he earned $20,000. He said that year Danville and its local market were on an even keel.

In an ideal situation, a local government increases its employee pay ranges each year to compensate for inflation so that someone just starting a job can afford to buy the same things a person could buy when they started the job last year.

Also in an ideal situation, Lacy said the local government gives its employees a raise each year to reflect the experience they have gained on the job.

“If you’re a good employee,” he said, “we value your work and you move up the range.”

Though he’s not sure about the details, Lacy said he thinks localities in Danville’s local market increased their pay ranges by 3 percent each year to match inflation. When this happens, he said the employees automatically get a raise, or a cost of living adjustment.

Lacy said he thinks the localities also gave their employees a 2.5 percent raise for every year of seniority. This means that the truck driver who worked in the local market got a 5.5 percent pay raise each year.

At the end of the five-year period between 2001 and 2006, Lacy said the local market truck driver was now earning $26,139 a year. The local market truck driver position now had a pay range of $23,185-$37,097, which meant any truck driver starting this year could expect to earn $23,185. Things, though, were different for Danville.

“We were trying to balance the impacts on Danville’s economy,” Lacy said, adding that as the city’s economy faltered, it had less money in its budget to pay its employees.

In lieu of a cost of living adjustment, Danville gave all its employees a one-time 3 percent bonus in 2002. The city made this bonus a permanent fixture the next year and gave its employees a 3 percent raise in 2003.

Danville increased its pay ranges by 3 percent in 2004, which meant its employees also got a 3 percent raise but there was no additional pay increase based on tenure. This meant the Danville truck driver who had been on the job for three years since 2001 earned $21,218. A new hire for the truck driver position could expect to earn $20,600.

Lacy said this type of a situation – where employees doing the same job are earning the same amount of money regardless of their experience – is called compression.

Lacy also said that 2005 was an easy year to figure out, because nothing happened.

“I gave a lot of people hugs in 2005,” he said, adding the city couldn’t afford to increase its employees’ salaries or pay ranges.

In the budget cycle that ended in July, the city increased its employee pay ranges by 4 percent, which means all of its employees got a 4 percent pay raise. But by then, the damage had already been done.

Lacy said the Danville truck driver and the local market truck driver had been working the same job when they started five years ago. But the Danville truck driver was only making $22,066, almost 18 percent less than what the local market truck driver was making.


Fox Lawson & Associates recommended the city solve its pay gap problem by immediately increasing its pay ranges by 10 percent. Lacy balked at this idea and said such a plan would cost the city $7.5 million.

Lacy said the city’s overall plan to fix the pay gap problem would take three years to implement and that is only if Danville can afford it.

“This is about catch up,” he said. “It’s going to be an expensive proposition.”

Council will look at spending $1.05 million Tuesday night as it implements the first phase of this plan. Lacy’s recommendations to council include raising the city’s pay ranges by 3 percent. Any city employees whose current salary falls below the pay range minimum after this increase will get a raise.

“This will bring people back to the boat,” Lacy said.

City employees also are set to get a pay raise depending on two things, their current salary and their tenure on the job. Lacy said these pay raises are the only way to deal with compression.

Employees with 20 or more years of service who are still in the bottom sixth of their pay range will get the 7 percent pay raise. Employees with the least amount of experience will not get a pay raise outside of the pay range adjustment.

These raises would cost Danville $1.35 million, including the city’s contributions to social security and pensions. Lacy recommended the city only make the increases retroactive until Aug. 1, so that it would meet the $1 million figure council included for the plan in its general fund budget.

“We’re still busting our budget by $50,000,” he said, adding the pay increases would cost the city’s utility fund $300,000 as well.

If council approves the pay increase plan at its Tuesday meeting, Lacy said city employees should see their initial pay raise this month. He said employees would receive their retroactive pay raises in November.

But Lacy said these recommendations are only the first step in addressing the city’s pay gap problem. Over the next two years, he is asking council to include $2.5 million in its budget to further close the pay gap and adjust its pay ranges for inflation.

Lacy said that he would be against any plan to raise taxes or fees to raise this money and hoped Danville’s projected growth in the future would provide enough money to implement the plan by itself.

“We know how to get there,” he said. “But is Danville’s economy going to support a budget to do that? I don’t know.”

Contact Mac McLean at gmclean@registerbee.com or (434) 791-7985.

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