Why Pay More?

To paraphrase the prophetic words of the late Sen. Everett Dirksen, a thousand here and a thousand there and pretty soon you are talking re...

To paraphrase the prophetic words of the late Sen. Everett Dirksen, a thousand here and a thousand there and pretty soon you are talking real money.

Dirksen was of course talking billions as it related to the Federal budget. For the City of Elk Grove it might only be thousands, but pretty soon those thousands can add up to real money.

A prime example is the hiring of the city's new finance director, Brad Koehn.

Formally introduced at Wednesday night's city council meeting, Koehn comes to Elk Grove from Mammoth Lakes, Calif. where he was that city of 8,000 residents finance director. Koehn's has an annual salary is $136,578 and is being extended $5,000 in relocation reimbursement.

Koehn's replaced Rebecca Carr whose final annual salary was $130,075.

Although we don't generally agree with the mantra from some politicians that government should be run like a business, there are a few cases where government should take a look at the private sector. Executive compensation and exempt personnel wages are one such area.

In a depressed labor market employers have the upper hand. Even high school economics students understand that with an abundance of talent available and few jobs to go around, employers can offer lower wages.

An Internet search reveals that Koehn had been out of work for about 18 months. He was obviously facing a very competitive job market.

A smart hiring manager will use the fact that an applicant who has been out of work for 18 months will likely be willing to take a slightly lower salary or at a minimum the same rate of pay they were paying before.

What does our city do? We hire an unemployed person at a rate higher than they were previously paying in a labor market that is heavily titled in favor of employers.

This is either a case of gender-based wage bias or just plain stupidity.

We know the usual argument about paying for talent is paramount to the city's future et cetera will be used as a justification for increasing the wages being paid. But really, do you think Koehn or any other talented unemployed applicant would have turned down a job offer of say $110,000 and $5,000 in relocation expenses?

A cynic might say Koehn's wages were jacked-up from what Carr received so that at some point in time it could be used as a justification by the city's executive team to jack-up their pay, but we'll leave that discussion for later.

With property assessments being lowered and the historical lag time between private sector economic recovery and government revenues, Elk Grove still has several years of financial challenges in front of us. But as Dirksen said, five-thousand here and five-thousand there, pretty soon you are talking real money.

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Anonymous said...

This is so true. Good artical. Who makes the decision on how much employes make? And does the council have anything to do with it? This sounds like someone knew someone or owed someone a favor.

Anonymous said...

One possible explanation could be that PERS retirement fund just announced they have reduced their earnings projections for next year and must increase the contribution requirement of cities.

Could it be that the padding of the salary is to help offset the impending bad news to employees that they will have to begin paying part of their retirement contributions? A recent Bee article showed that Elk Grove is one of only about two cities in the region that does not require their employees to pay a part of their retirement contribution.

Could this be a case of what they giveth, they can taketh away. Or, the staff furloughs were eliminated this fiscal year, but maybe next fiscal year they take retirement money? They couldn't keep both measures in place or else they would have a morale nightmare!

Anonymous said...

What? A morale nightmare. You can't be serious!

With unemployment still in double digits, city employees make d*mn good money, not to mention the good benefits.

No, if there is bad morale that stems from a lack of effective leadership form the city's executive team.

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