Public sector pay was a hot button issue in 2011, based on this Govpro item and this Employment Policy Research Network briefing paper, and it continues to be a much-discussed topic in 2012, says Neville Kenning, vice president of the Public Sector Consulting Practice at the Philadelphia-based Hay Group. Kenning’s company is a human resources management consulting firm. The firm has experience in consulting on public sector workforce issues with cities, counties, states and federal agencies.

“The No. 1 issue that will be addressed in public sector pay in 2012 is determining total remuneration, because in the past, what’s occurred is that they have looked at salaries, and they have looked at benefits, but the two areas have been looked at separately,” Kenning says. “The big focus of 2012 public sector pay is to get a handle on the value of total remuneration, which is both salary and benefits.”

Kenning, who is based in Hay Group’s Irvine, Calif., office, says compensation consultants often hear the following from government hiring managers: “Benefits at this agency are so good that we don’t need to pay competitively on salary.”

Benefits and wage data in the public workforce needs to be studied, Kenning says. “You don’t know unless you’ve done an analysis of both benefits and pay on a combined basis, which has tended not to happen in the public sector in the past,” he says.


News headlines that say that government worker salaries are higher than average salaries paid in the private sector employees can be misleading, Kenning says, because the surveys and reports often do not take into consideration:

-Job to job comparison

-Time in job

-Age

-Experience

-Education

“The impact of these factors can be very significant in comparing compensation paid in the private sector vs. the public sector,” Kenning says. “As long as economic times are a challenge, unemployment remains high, and states, cities and counties’ budgets are in the red, these stories will continue to have air time.”

There is significant debate on the definition of what is fair and appropriate compensation for public sector employees, Kenning says. “There is a lack of planned alignment between revenue and compensation in the public sector, and it is seen as more difficult to create and manage that alignment than in the private sector,” he says.

Regarding pay movements for 2012, Kenning is predicting that private sector paychecks will grow about 3 percent over 2011 levels. He believes public sector pay raises will be less than that, because governments are still recovering from the economic downturn.

Some states are facing pressure on public sector pay. “For example, in North Dakota, because of the oil boom, the public sector is probably going to have to move more than what is going to occur in other states, because the oil patch is putting such pressure on wages within the entire state,” Kenning says.