Durango doesn’t pay its workers enough, and if the municipality doesn’t start paying more soon, residents may see a decline in services, according to a study on city employee compensation.
Employee turnover – fueled by lower-than-average wages for city employees, an aging population of baby boomer workers retiring and a new generation of millennial employees who often change jobs after just a few years – is, in effect, draining city resources, an Illinois-based human resources consulting firm found after an evaluation of 166 city positions.
The city of Durango employs more than 300 people across almost a dozen departments. About 65% of the city’s approximately $92 million budget is dedicated to personnel services, including salaries and benefits, budget documents show.
“Turnover costs will typically calculate around 1.5 times the cost of the original position, so turnover will cost an organization more than it would to retain the employee; and may also have an impact to operations that can be felt to its constituents over time,” consultants wrote in the study for the city of Durango.
Potential impacts would likely be unilateral across city departments, said City Manager Ron LeBlanc. Parks and Recreation mowing crews, for example, may lose employees, meaning the grass in city parks would be cut less often, he said. It could mean fewer city garbage truck drivers, decreasing the frequency of trash collection, he said.
Mayor Melissa Youssef said she understands entry-level position salaries will be addressed first, hopefully in the 2020 budget. The cost of raising entry-level positions to meet market rates is about $700,000, she said.
The fact that salaries and benefits make up 65% of the city budget makes the issue a “significant priority,” Youssef said.
“Especially because of implications of not addressing it,” she said, “because it contributes to organizational inefficiencies and will end up costing us more.”
What does it meanCity Councilor Dean Brookie said the compensation study “is just a barometer, it’s not a gospel. It informs us as a council as to what we can expect in budget and what areas we can improve in,” he said.
The former council requested the compensation study last year. The last report Brookie said he can remember was about four or five years ago; he’s been on council since 2013.
City leaders need to take a “serious look” at the findings of the report and keep in mind other factors that may be contributing to employee turnover: the cost of housing, low unemployment rates nationwide and higher-paying jobs in other industries or places.
“We may have to get really, really serious about housing,” Brookie said. “Like teachers in Telluride – they have teacher housing. You pay a little bit of your salary, but it makes it tolerable.”
Kim Baxter, who was elected to City Council earlier this year, said she needs more information before she can make any decisions about how to address salary issues. She’s curious how city wages compare to private sector salaries in Durango. Where are employees coming from when they’re hired and where do they go after they leave? she asked.
“With one report and one brief conversation, it’s just not enough information,” Baxter said. “I think everybody (on council) was appreciative and agreed that we need to go forward and get more information.”
Stuck with lessConsultants compared city salaries to three market averages for similar positions in comparable Colorado municipalities and found, overall, that city of Durango government salaries have not kept pace with the market. They found the typical wage increases for municipal workers in other cities and the rate of inflation, or devaluing of the dollar over time, have each outpaced raises for Durango workers.
As things stand now, 39% of job titles in the city are below salary minimums, or “the minimum amount of compensation the organization has deemed appropriate for a position,” according to the report. An additional 20% of positions are “at risk” of falling below salary minimums.
Furthermore, 61% of Durango employees are making below the average market rate for similar positions elsewhere – meaning more than half of city workers make less than others doing similar work in other cities. If nothing changes, another 17% of positions will fall below average market rate, potentially bringing the ratio of underpaid employees to 78%, consultants found.
“With the number of incumbents at or below the average market rate, this might be an indication of not only the salary schedule falling behind market, but that employees are not moving through the salary schedule,” consultants wrote. “Thus, annual increases are insufficient to move employees through the salary range.”
‘A competitive, fair wage’Consultants suggested city councilors consider offering municipal employees two chances for a raise each year: once in January to match some market indicator, namely the Consumer Price Index inflation rate; and a performance raise, either on a work anniversary or some time in July.
“It is not wise to consistently increase the schedule (employee salaries)” by less than the rate of inflation or market indicators, consultants wrote. Doing so would make wage ranges “obsolete, requiring more financial resources to put it back in line with the external market.”
“Without a competitive pay structure, and providing employees with a competitive wage, the city will continue to experience greater-than-average turnover rates – which will ultimately affect the level of service Durango residents have come to expect,” consultants wrote. “Employees who work for government do not expect to become rich; however, employees do expect a competitive, ‘fair,’ wage to compensate for the services they provide to the city.”