Shorting state workers’ pay hurts us all

Last year, the General Assembly provided the first meaningful raise to workers in state government in 14 years by providing an 8% cost of living adjustment. Though that increase was welcome, and helped keep state employees from feeling the worst inflation in decades, it was not nearly enough to correct a decade and a half of pay stagnation that has played a major role in shrinking the state’s workforce.

Fortunately, lawmakers planned to do more this year by setting aside $200 million for additional raises starting July 2023. As the legislative session draws to a close though, that promise looks as if it will go mostly unfulfilled. 

House Bill 444, which passed the House last week, allocates only $89 million toward a 6% state worker raise, leaving more than half of what they set aside for raises on the table, rather than in workers’ pockets. While any raise is better than none, HB 444 would still leave state workers across all three branches making $3,600 less in real dollars on average than they were making in 2007, the year before routine state raises came to a screeching halt.

If Kentucky is to meaningfully address the state worker shortage that affects vital services we all rely on, the legislature must correct the problem of stagnant worker pay with larger raises and a commitment to making up lost ground over the long haul.

That work began last year when the average executive branch employee’s pay was raised to an inflation-adjusted $50,343, up from $50,145 the year prior, according to data obtained from the Personnel Cabinet. That increase was driven by the 8% across-the-board state worker raise and one-time additional raises provided to two cabinets with significant recruitment and retention difficulties — Health and Family Services and Justice and Public Safety. These cabinets received extra funding to recruit more social workers, case workers and public defenders, and to provide bigger raises for state police. So while the average salary shows a nearly $200 inflation-adjusted raise for state workers last year, that number is greatly influenced by those one-time raises to only two cabinets.

Taken together, state workers in the executive branch were making 7% less on average in 2022 than they were in 2007. That $3,600 decline in buying power means a lot to the people who help children in crisis, defend those who cannot afford an attorney, keep our water and air clean and provide other critical public services. And that doesn’t account for the significantly less generous benefits package current workers receive compared to what was provided in 2011 — chiefly, the elimination of a traditional defined benefit pension plan for new hires starting in 2014. That pension was a key tool in attracting and retaining public employees, whose salaries are less than private sector workers for comparable skills.

The need for additional raises isn’t only about fairly compensating state employees, it’s about addressing a debilitating shortage of these workers. In the executive branch, 30% of authorized, full-time positions are currently vacant, and 33% of all positions are vacant. Understaffing increases the workload on each worker, and can ultimately increase the level of burnout and turnover, which further exacerbates the shortage of state workers. It is a vicious cycle that higher compensation can help address.

To take steps toward addressing this, HB 444 proposes a 6% raise for employees in all three branches, and a $2,000 increase for elected and unelected judicial branch employees (before the 6% increase is calculated). This increase is only enough to keep state employees from falling further behind. Through January, inflation has increased 6.3% in the last year on top of the 7.6% increase the year before, for a two-year increase of 14.4%. A 6% raise would only allow state workers to continue treading water.

The bill sponsor shared last week that more state worker raises may be coming in 2024 once the executive branch provides a study on how to restructure the pay scale. But the problem will persist as long as we let this issue linger.  Our state government workforce provides critical services, and taking care of them is paramount to them taking care of all of us.

Dustin Pugel is the Research Director at the Kentucky Center for Economic Policy (kypolicy.org).