On the Money-More Money for Savers

FILE - This Oct. 24, 2016, file photo shows dollar bills in New York. (AP Photo/Mark Lennihan, File) ORG XMIT: NYBZ306

New Orleans city government should raise its employees' pay by 10 percent, provide for annual merit raises and allow new hires to be offered more than the minimum salary for their positions, according to a report by a consulting firm hired by the city.

The report, completed last month, argues that increases in the cost of living in New Orleans and the availability of higher wages in the private sector have made city jobs less appealing and harder to fill.

The last widespread boosts in salaries for city employees came in 2008, meaning most have seen at best minor raises over the past decade, according to the report.

The study, put together by Baton Rouge-based SSA Consultants, suggests higher wages could help reduce turnover in city government, meaning the city could retain more experienced and highly skilled workers.

The 10 percent pay increase for all classified workers — those with permanent, civil service-protected jobs — that is at the heart of the report would cost $10.9 million a year, not including employees of the Sewerage & Water Board.

The report also calls for regular merit raises of 1.25 percent for “competent” employees and 3.75 percent for “exemplary” employees. Those raises would provide an ongoing incentive to employees to do their jobs well.

That provision also would help solve a problem the report identified in the way employees' salaries are determined. The city now has a salary range for each position, but because of a lack of raises, many employees are clustered near the minimum end of the applicable range, according to the report.

The study also suggests the city consider indexing wages to inflation to provide yearly adjustments. And it recommends salaries should be reviewed at least every three years. 

To improve hiring, the report recommends allowing departments to offer pay above the minimum for each position.

The report cites three factors in arguing for better pay: the rising cost of housing in the city, less generous benefits and a lack of raises that has caused city employees' pay to fall behind that of other workers in the market.

The report notes that the price for homes has risen significantly in New Orleans since the last large-scale pay adjustment, a cost that “directly affects the purchasing power of employees and the ability of the city to attract and retain talent.”

In addition, city workers have seen their health care costs rise by nearly 500 percent over the past decade even as changes have been made to require that employees put more money toward pensions whose benefits could be scaled back.

Finally, the report notes that overall, regional public and private salaries rose by more than 14 percent between 2008 and 2016 while city employees saw only minimal increases.

All that may have contributed to an attrition rate of about 14 percent a year in city jobs between 2014 and 2017. While salaries are not the only factor in turnover, the study suggests higher wages could reduce the number of employees leaving, which would reduce inefficiencies caused by having to train new employees.

The city began putting some of the changes recommended by the study into effect when the 2018 budget was approved earlier this month.

That budget includes a 10 percent raise, at a total cost of about $1.5 million a year, for the nearly 520 employees who now make less than $24,000 a year. At the time, top officials said that amounted to a first step toward raising salaries across the board.

At the same time, the City Council also signed off on more dramatic changes to the New Orleans Police Department’s pay plan aimed at bolstering the number of officers and retaining mid-level supervisors.

The new report endorsed that proposal, noting that it would bring experienced officers in line with those in other departments.

While the NOPD pay plan offers new officers more money than they could make in similar departments, the report argues that “attracting talent to the department has been difficult and a more aggressive pay philosophy can accelerate hiring rates and improve candidate quality.”

On the other side of the ledger, the report says the city’s sick leave policy is more generous than other governments in southeast Louisiana.

That policy gives workers 13 days of sick leave a year during their first five years and provides those with more than six years of service 15 days of sick leave annually and those with 16 or more years of service 20 days of sick leave each year. The report recommends all those figures be capped at 12 days of sick leave per year, to meet the regional average.

The report also recommends changes that would make city workers' retirement system less generous, noting that other governments in the area require workers to contribute more to their own pensions. The changes recommended are similar to those the city put in place for new hires starting next year.

Follow Jeff Adelson on Twitter, @jadelson.​