All hail Carlsbad: City abandons automatic ‘step’ raises

June 21, 2013

By Chris Reed

It may stun people under 30, but inflation used to be a consistently brutal factor in American life. Until Fed chair Paul Volcker mostly squeezed inflation out of the U.S. economy in the early 1980s, it had periodically squeezed workers and their families for decades.

This was one factor in the adoption of automatic “step” pay increases for public employees. They weren’t so much raises as cost-of-living increases. But for the past 30 years, they’ve pretty much been raises, leading to government employees making far more than those in comparable posts in the private sector.

logo_cbNow a local government finally has figured out this doesn’t make sense. It’s Carlsbad in north San Diego County. This is from a U-T San Diego editorial:

“In a move that may be unprecedented in California, Carlsbad and its largest employee union have agreed to a new contract that at the end of this year will do away with so-called step and longevity pay raises — increases awarded essentially for just showing up and lasting a long time on the job. A system of merit pay increases will be introduced in 2015.

“The new contract also opens the door to outsourcing of city services if the city can save money by doing so.

“In return, Carlsbad’s City Council gave the City Employees Association, which represents about 350 nonpublic-safety employees, a 3 percent across-the-board salary increase this year and next. After that, a 4 percent base pay matrix will be used to award raises to the most deserving employees as part of a pay-for-performance system, according to the agreement approved by CEA members in a vote last week and ratified Tuesday night by the City Council. Salary and benefits will be benchmarked not just against other cities, but also against the private sector — another big change.

“The new contract also gives Carlsbad ‘the right to contract out any or all of the services currently being performed’ by CEA worker … .”

 This sounds great but could end up blowing up if all workers’ performance is adjudged to be great, as routinely happens in teachers’ evaluations and in now-scrapped bonus programs, such as one used by Orange County and the city of San Diego’s water department.

Nevertheless, it is still a giant step by one city in the right direction.


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  1. Brett
    Brett 23 June, 2013, 12:36

    Beware of merit pay systems. We have a handful of those where I live now, and it has resulted in massive increases in pay.
    In some ways, the merit system is good. You really do land the best of the best. But the problem is that public sector pay is structured for the mediocre, not the best of the best. Normally embedded in all of these merit pay agreements is a matching pay clause. If someone jumps from the private sector, then you have to match their previous private sector pay. Imagine what would happen to if a Big 4 auditor jumps to a full merit pay public position? Suddenly you have a mid six figure salary on the book with five figure annual raises!
    This is what has happened to the merit pay cities in my state. They have average salaries near $100k and median salaries well over $100k. Great staffs, but they have to pay dearly for them.

    Reply this comment
  2. Rex the Wonder Dog!
    Rex the Wonder Dog! 23 June, 2013, 23:22

    Still way overpaid…………..

    Reply this comment

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