Saturday, April 13, 2024

Study suggests Whitefish increase employee wages

| March 27, 2024 1:00 AM

During the past few years, the city of Whitefish has lost employees to higher pay in other jurisdictions and has struggled to hire due to low wages. 

“We are still struggling with hiring at our base wage,” City Manager Dana Smith told the City Council last week. “We’re having to negotiate a higher pay to bring individuals on, often.”

During a work session, the council looked at partial results from a study examining city wages. The council requested the study to determine what raises would be this year and whether current wage increases were too high or too low. 

According to the study, they were too low. Additionally, inflation rates are higher than they’ve been since the 1980s.

Whitefish provided a 7% raise in fiscal year 2023 and a 5% raise in fiscal year 2024 for its employees. 

“During that time, though, CPI, our consumer price index that we use to adjust the cost of living, came in at 7.2% and then 6.2%, so even the raises that we were providing didn’t meet that cost of living rate,” Smith said. 

Communication and Management Services, a human resources firm in Helena, was hired to conduct the wage study. 

Jim Kerins, with Communication and Management Services, presented some of the findings of the study that surveyed 36 participants, including cities in Montana – Bozeman, Missoula, Kalispell, and other resort towns like Jackson, Wyoming; Taos, New Mexico; and Sandpoint, Idaho. 

The study looked at 31 positions, from police officer and firefighter to office manager and accountant, and found that wages in Whitefish were, on average, at 84% of the market rate.

Step five is the point at which an employee’s wages reach the market rate, which takes about four years or so of employment with Whitefish. The study found that about 81% of current wages are below 90% of the market.

“That’s the needle we want to try to move,” Kerins said. “Those are some of the numbers we’re going to want to try to improve with a wage matrix adjustment and, potentially, individual adjustments for employees.” 

The thought was out-of-state resort towns would have higher wages but that was not the case. Kerins said the prevalence of remote work is one factor contributing to the end of Montana’s “scenery tax” that saw employers in the state paying significantly less because, as Kerins said, “it's the best place to live.” 

Times have changed and Montana’s wages are rising across the state. 

Still, Whitefish Human Resources Director Sherri Baccaro said that in the last few days, three people declined positions with the city because of the wages. Since April 2023, the city saw 42 job applicants withdraw applications because the entry rate was too low.

Whitefish has 133 employees, including full time, part time, seasonal, temporary, and short-term employees. Thirty-eight live within the city limits and Baccaro said many employees who live outside city limits live just outside or within a short drive of city limits.

Kerins said the city should provide stable, consistent wages that are responsive to the market. 

“We don’t want to be radically reactive to the market,” Kerins said. “We’re enough behind the market now that I feel like we could and should make some fairly significant investments in our workforce at this point to make sure we continue to provide quality services to the citizens.”

One of his recommendations is when hiring to consider the market rather than just the job duties, something the city has not done in the past.

“The results of the survey and study are that Whitefish positions are currently paid under market and that has led to hiring challenges and has, in the past, led to retention issues,” Smith said. “This study will help the city come up with a compensation plan to help bring wages up to market over the next few years.”

Other major employers in town, including the school district and the hospital, face a similar situation.

The Whitefish School District employs a staff of 251 employees, 155 of whom live in Whitefish.

According to Mellody Sharpton, vice president of marketing communications at Logan Health, of the 473 employees at Logan Health Whitefish, roughly 23% live in Whitefish. Sharpton said many of those employees may live outside of Whitefish by choice. 

Even adjusting wages to meet the market, it could still prove challenging for employees to find housing, Smith notes. 

Since the pandemic housing prices have increased 50% to 60%, she noted, while interest rates have also increased. 

For the city, the next step is to determine how to implement the necessary changes based on the data from the consultants. Smith’s proposal, which seemed amenable to the council, was to include a 5% market rate adjustment to the city’s wages, on top of the regular annual wage increase, in the upcoming budget.

“We haven’t completed the budget yet so we’ll have to see where we can find savings,” Smith said. “But given the substantial nature of the increase, it will likely come with some type of property tax increase.”

“Over the past four to five years, we've provided either decreased property taxes or held them flat, so we’ve been able to have those savings … and provided relief to our city taxpayers,” Smith added. “Unfortunately, we’re at the point where we need to make sure our most valuable asset, our employees, are being paid market rate for the great work that they do for our community.” 

The final report on the market study will be discussed at a work session before the April 1 council meeting.