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08/25/2011

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Jim,

Thanks for the thoughts on step increases.

I would add another observation about step increases. They hide pay increases in the public sector.

Perfect example. Many of you saw the dramatic headlines about a pay freeze for federal workers for two years. But what frequent Compensation Cafe readers knew was that the pay freeze only applied to across-the-board general and locality pay increases. General Schedule employees still received their longevity-based step increases. (Read more about this at: http://www.compensationcafe.com/2010/12/federal-pay-frozen-for-2011-2012-or-is-it.html?cid=6a00d83451df4569e20148c69a81d3970c#tp)

Paul

Good observation, Paul. That's one of the reasons step-increases are so beloved of labor unions, because they provide quiet automatic uncontroversial unnoticed seniority-based progressions based on nothing but time. Live longer on the job and you get paid more; what a deal! All you need do is mark time and don't get fired.

It is most relevant to public sector jobs today because the current "increase freeze" publicity deals with overall structures and not with individual rates. The same thing could happen in the private sector. Similar hidden pay creep would occur if the corporation cancelled all general increases, stopped changing pay structures, froze their grade ranges and eliminated "underwater" adjustments but continued to give merit increases. They freeze structural changes but continue individual pay progressions. Raises continue, only at slightly lower levels.

Jim,

Thank you for the further discussion on step increases. Another thought came to mind.

Isn't there another rationale for step increases? Couldn't one argue that the reason for step increases is to recognize that there is a learning curve for new/inexperienced workers coming into a position; and until that worker progresses on their learning curve, his/her pay rate should be lower than a person fully proficient at that same job?

The step increases then reward the worker under the assumption that the worker is learning those skills and applying them on the job.

If that is an acceptable rationale for step increases, it also suggests that there is a rationale for eliminating steps based on longevity, and building steps (or advancement through the range) on the attainment/use of measurable skill levels. Such a skill-based pay program would be a closer link between the pay provided and the skills demonstrated on the job.

Just thinking out loud.

Paul

Yes, that was the underlying justification for step increases. More seniority meant more experience and that generally tracked with training and proficiency within the job classification. Some step programs have strict gates related to performance regulating progression to the next step; without demonstrating the required KSA proficiency, you do not advance. That actually creates a merit P4P scheme within the step system versus an automatic progression. Without such formal merit provisions, employers must simply demote or discharge deficient workers whose advancement to higher rates would be unwarranted due to performance inequities.

Step systems tend to be rigid and based on time rather than on performance. (Continued employment confirms acceptable performance.) In general, step programs cannot easily accommodate dramatic differences in personal learning curves.

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