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Home My WebLink AboutIR 24-1843INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1843 To the Mayor and Members of the City Council May 7, 2024 G Page 1 of 4 , r SUBJECT: EMPLOYEE ENTRY WAGE ANALYSIS VA 11575 The purpose of this Informal Report (IR) is to share the City's proposed compensation initiatives for Fiscal Year 2025 (FY25). The Human Resources Department (HR) proposes to increase the base pay rate to $16.07 per hour in FY25. In addition, HR proposes to conduct a comprehensive compensation evaluation to review the entire classification system, pay structure and minimum wage rates. This compensation evaluation is necessary to support the competitive and changing labor market and to address workforce recruitment and retention strategies for all general employee classifications. The City conducts biennial market studies comprised of both the public and private sector pay data to set pay ranges. Market studies consider the going rate of pay for a benchmarkjob as it relates to knowledge, experience, skills and abilities in comparison to similar jobs in the public and private market to ensure the City is competitive in attracting and retaining top talent. The market study approach is a validated practice compliant with the Professions and Intellectual Property Section of the Department of Justice and creates an effective and equitable approach to establishing pay. Market data provides, in aggregate form, comparable benchmark jobs within public and private sector and prevents price fixing salaries that create pay inequities impacting sound factors in establishing base pay. Over the years the City increased entry wage rates from $7.88 to $15.45 per hour as of FY24, resulting in a cumulative increase of 74% as compared to the U.S. Federal required minimum wage of $7.25 per hour, which has remained unchanged (see Chart A below). CFW Minimum Starting Salary v. US Federal Minimum Wage $18.00 $16.00 S15Ao $15.45 $1400 $12$14 ..15 $1035 $ 00 10.65 $10.98 $10.98 S10.98 S1Y.3 . $10.00 $7. 88 $g.20 $8_0o s6.00 $7.25 S4_oo $2Ao $oAo FY 2014 FY 2015 FY 2015 FY 2017 FY 201B FY 2019 FY2020 FY2021 FY2022 FY 2023 FY 2024 _CFW Min imum Starting Salary -Federal Minimum Wage Chart A City Proposed Minimum Wage Rate for FY25: The City proposes to increase the minimum entry base rate to $16.07 per hour. The increase is based on market pay projections for FY25, an evaluation of Consumer Price Index, and allows for an incremental increase without impacting the City's salary structure or pay compression. Job classifications impacted by the minimum wage rate of $16.07 include entry level jobs with minimal experience and educational requirements (see Table A for sample jobs). ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1843 To the Mayor and Members of the City Council epnr� Ca SUBJECT: EMPLOYEE ENTRY WAGE ANALYSIS J" VA 1673 May 7, 2024 Page 2 of 4 Job Classification Minimum Qualifications Certification/ License Supervises Arborist I High School Diploma / GED, No Experience Not Required No Customer Service Rep I High School Diploma / GED, No Experience Not Required No Community Center Aide High School Diploma / GED, 6 Months Experience Not Required No Food & Beverage Attendant High School Diploma / GED, No Experience Not Required No Golf Shop Attendant High School Diploma / GED, No Experience Not Required No Library Page Less Than High School Diploma / GED, No Experience Not Required No Public Events Attendant Ability to Obtain High School Diploma / GED in 1 Year, No Experience Not Required No Recreation Assistant 16 Years Old, No Experience Not Required No Table A As previously mentioned, market data provides a foundation of comparable jobs and the rate of pay for similar skill sets. Increasing the base pay above the market price has a ripple effect through all job classifications and people. Pay compression occurs in which pay variances are minimized between low skilled jobs and those jobs that require higher knowledge, skill sets and abilities (see Table B). From Job Class Job Grade Minimum Qualifications Certification/License/Skills Supervises/Leads/Trains Recreation Assistant Temporary 16Yrs Older, No Experience Not Required No Customer Service Rep 1 503 High School/GED, No Experience Not Required No Library Page 1 503 Less than High School/GED, No lExperience lNot Required I No Maintenance Worker 1 504 JHigh School/GED, No Experience INot Required I No To Senior Customer Service Repl 507 JHigh School/GED, 3Yrs Experience Public Records Systems Leads Staff Sr Equipment Operator 508 1 High School/GED, 3Yrs Experience CDL, Hazmat, TCEQ Supervises, Trains Staff Fleet Mechanic 11 508 1 High School/GED, 2Yrs Experience CDL Trains staff Electronics Technician 508 1 High School/GED, 2Yrs Experience CAS Clearance Trains staff Table B Alternative Minimum Wage Rate Options: As requested, alternative minimum base pay scenarios, including wage amounts using the ALICE wage tool, were also evaluated (see Table C). ALICE is an acronym for Asset Limited, Income Constrained, Employed, and represents households with income above the Federal Poverty Level (FPL) who earn too much to qualify as "poor" but are still struggling to cover basic household expenses. Impact Analysis Summary Minimum Base Pay Employees Impacted Job Classifications Affected Pay Structure Impact Pay Increase Cost Estimate Compression Cost Estimate Total Cost Estimate Pension and Medicare Portion $16.07 121 15 None $679,006 $0 $679,006 $148,905 $18.00 525 34 Yes $2.9M $62.9M $65.9M $14AM $21.17 964 70 Yes $6.2M $131.7M $137.9M $30.3M $25.95 1,816 127 1 Yes $22.2M $231.11VI $253.3M $55.6M Table C ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1843 To the Mayor and Members of the City Council epnr� Ca SUBJECT: EMPLOYEE ENTRY WAGE ANALYSIS ra ra May 7, 2024 Page 3 of 4 Addressing salary compression requires a large financial commitment as reflected in Table C. However, leaving salary compression unresolved or through a multi -year approach will cause pay inequities and will negatively impact employee morale. This approach would further exacerbate turnover and hiring challenges. Operational Impact Analysis Considerations: The City provides services in an active marketplace at the Convention Center and Will Rogers including services such as maintenance and repair. The cost of increasing the starting salary may impact operations and service delivery for city departments and it makes the jobs and employees more susceptible to outsourcing or privatization of services. Modeling the various pay scenarios beyond $16.07 per hour in the Neighborhood Services, Park and Recreation and Public Event Departments reflects an impact that could result in reduction of hours, staff and/or services. For the Convention Center, increased wages present a negative effect and downstream impact on hotels and businesses in the downtown area as wage increases would be passed down. This could result in decreased sales and hotel tax revenues collected by the City. Total Compensation for Full -Time Employees: When evaluating pay adjustment scenarios for employees, the City must consider total compensation and observe mandated pension contributions. Listed below is a table displaying the total compensation for an employee making $20 and $25 per hour in the City. FICA Pension Health Insurance Total Hourly Hourly Rate Annualized 1.45% 26.64% Contribution Rate Annualized $ 20.00 $ 41,600 $ 0.29 $ 5.33 $ 3.69 $ 29.31 $ 60,961 $ 25.00 $ 52,000 $ 0.36 $ 6.66 1 $ 3.69 $ 35.71 $ 74,282 In addition, below is a comparison of employee, employer, and total pension contribution rates of municipal and public organizations in the primary labor market in which the City competes forjob candidates (see Table D). This cost places the City at a slight disadvantage with a higher cost of labor and forces the City to more carefully evaluate salary adjustments. Plan Name* Eligibility Employee Rates Employer Rates Total Rate Fort Worth Employees' Retirement Fund** General and Sworn Fire Employees with the City 10.95`.xo 26.64% 37.59% Dallas Employees' Retirement Fund General Employees with the City 13.32`.xo 14.46% 27.78% State-wide Retirement Systems Employees Retirement System of Texas Employees ofthe State of Texas Agencies 9.501/8 16.83% 26.33% Texas Municipal Retirement System Most small to large cities (104k + population] 6.71% 14.50% 21.21% Texas County &District Retirement System Governmental entity ofthe State of Texas not in other statewide public pension plan 6.785& 12.31`6 19.09`6 *Note: Rates As of FY 2022 ** City of Fort Worth Rates as of 2023 Table D ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1843 To the Mayor and Members of the City Council May 7, 2024 G Page 4 of 4 , r SUBJECT: EMPLOYEE ENTRY WAGE ANALYSIS � rn 1875 Conclusion: In closing, the City recommends the proposed minimum wage rate increase of $16.07 per hour for FY25. The City does not support a higher wage rate at this time nor does HR support a phased approach. It should be noted in benchmarking the primary DFW municipal labor market, the average minimum wage rate is $14.74 per hour and expanding the market to include major Texas cities reflects an average of $15.48 per hour, supporting the existing and proposed minimum wage rate. The incremental increase to $16.07 in FY25 allows the City to preserves the current structure and minimizes pay compression. This position allows the City to conduct a comprehensive market study in FY25 to evaluate pay, including minimum wage rates, job classifications, FLSA exemptions and other factors. The City's goal is to be good stewards of public funds while providing high quality services at the reasonable cost to the tax payer, rate payer and users of city services. For questions, please contact Dianna Giordano, Director of Human Resources, via e-mail to dianna.giordano@fortworthtexas.gov. David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS