The state of Oregon continues to pay its workers competitive compensation despite pandemic fluctuations in the labor market, thanks largely to highly subsidized health insurance and generous retirement benefits, a new analysis by the state’s human resources office has found.
State workers’ average compensation as of Aug. 1, 2022, was a tiny bit more competitive than two years ago: 100.4% of the market rate, up from 100.2% in 2020.
Two years ago, Oregon agencies paid workers significantly more than private employers — 103.8% — but that was tempered by even fatter pay packages from other governments, especially large counties in Oregon and Washington.
Private employers in Oregon and neighboring states have since increased pay for their workers and the Oregon state government is now only paying 100.2% of what workers would receive for similar private jobs.
Meanwhile, the report shows Oregon government employee compensation in 2022 far outpaced that of state workers in neighboring Washington, Idaho and Nevada, at 123.5% of the combined average for those workers. Unlike in prior years, Oregon was unable to obtain pay data from the state of California “because they were unable to respond due to their pandemic staffing,” said Andrea Chiapella, communications director for the Department of Administrative Services.
County employees continue to earn more in total compensation than state and private sector workers. According to the latest report, Oregon state jobs pay only on average 95.9% of what comparable jobs at the dozen-plus large counties in Oregon and Washington that most significantly compete for Oregon state employees.
State government workers receive a large portion of their compensation — 29% — in the form of retirement benefits and health insurance, while salaries on average account for 71% of pay, according to the human resources report.
“While the executive branch is at the lower end of our market goal on salary structures, we are right at our compensation goal when looking at what employees are actually being compensated,” state human resources staff wrote.
For example, state workers pay only about $21 a month for health insurance to cover a family whereas other similar workers pay more than $484 a month for that coverage, according to the report. Those employee cost differences were not factored into the state’s analysis of compensation; it only looked at pay and the costs of benefits paid by employers.
The state of Oregon paid $2,077 per month for a family health insurance premium, compared with $1,708 per month paid by market employers for comparable jobs, according to the report.
Oregon also provides three layers of retirement benefits that are more generous than most private sector workers receive: a pension, a defined contribution plan similar to a 401(k) and Social Security. The state’s compensation analysis only looks at Oregon’s cost to provide pensions for employees hired after Aug. 28, 2003, or Tier 3. Excluded from consideration were the cost of pension benefits for longer tenured — and more expensive — Tier 1 and Tier 2 employees.
Nonetheless, Service Employees International Union Local 503 President Mike Powers said, without offering evidence, that salaries and benefits for state workers with high seniority are inflating the state’s compensation average and obscuring other workers’ low pay along with gender and racial pay gaps.
“This report shows what we already know about represented employees: workers nearing retirement are being compensated at market rates, but essential staff in lower paid positions have fallen behind,” Powers said in a statement. “The state is having difficulty recruiting for thousands of unfilled jobs, and losing job seekers to counties, which offer similar benefits but pay significantly better. To close gender and racial pay gaps, which often affect people at the lowest end of the pay scale, the state needs to lift up pay for these workers.”
Oregon governors typically pass along pay raises negotiated with unionized workers to nonunionized executive level employees, and Gov. Tina Kotek has not indicated she would diverge from that practice. SEIU 503′s initial proposal in state contract negotiations is for two consecutive yearly 10% cost of living raises.
Oregon’s central administrative department conducts the analyses every two years to inform the governor as she negotiates pay and benefits in new contracts with public employee unions. Kotek is now bargaining with nearly a dozen unions, and the outcome could significantly impact the $29.3 billion state budget. State workers have received regular cost-of-living raises and step increases, which are periodic increases in employee pay rates, every year since 2013, including during the shaky early portion of the pandemic when Washington and California’s governors delayed certain employee pay raises.
Kotek wants lawmakers to set aside $515 million for salary and benefits increases, recruitment and retention bonuses and pay hikes for unionized private sector home care and personal support workers over the next two years, according to her budget proposal. That is significantly higher than the $350 million that state budget analysts suggested the state might need to spend on pay raises late last year.
State human resources workers said they excluded some management jobs from their analysis because they are reclassifying managers and have not completed that work.
Not included in the report, which focused purely on salary and benefits comparisons, was another way in which Oregon’s relationship with its employees differs from many other employee-employer arrangements: State workers stopped receiving annual performance reviews years ago, under labor agreements signed by then-Gov. Kate Brown that made it more difficult for the state to get rid of poor performers. Kotek has declined to say whether she wants to reinstitute performance reviews.