What is Compression?

Salary compression is the situation that occurs when there is only a small difference in pay between employees in the same job classification, despite clear differences in length of total state service, time in current job class, skills and experience. Compression is a result of the market-rate pay for a given job classification outpacing the increases historically given by the state to high tenure employees. Newcomers can only be recruited by offering them as much or more than senior professionals. Career employees with 20, 30 or more years of dedicated service suffer significantly under salary compression. Under compression morale also suffers, as employees feel their experience and loyalty is of no value.

Since the early 2000s, TSEA has been fighting for the Legislature to address salary compression. In 2005, TSEA’s calls to the Governor and members of the Legislature to address salary compression were finally heard when the 2005 General Appropriations Act included a directive stating:  “It is the legislative intent to acknowledge the issue of compression in state employees’ salaries. This study shall address the issue of compression as well as the development of a comprehensive pay plan.”

The joint study was completed and presented with a specific recommendation to first concentrate on funding for state employee compensation by addressing salary compression. Once employee compression was fully addressed, study participants recommend focusing on the implementation of a Comprehensive Pay Plan (CPP).  The first two-thirds of compression were funded and received by employees. Unfortunately, due to the lack of funding available for the final third, the amount to fund compression now needs to be re-calculated. The final third of compression that was not paid out in 2008 is now outdated and the compression problem has increased since 2008.  Because of this, we must change our way of thinking and stop using the term “final third”.  We must now ask the Legislature to again fully fund compression.  Our argument is that the promise to fix the compression problem was never kept.  We need an updated compression study, with new payment charts.  Then we need the Legislature to fund it.  It is important to recognize that the final third of compression from 2008 will never be paid, but full compression based upon today’s salaries is a priority, and TSEA is working very hard to see this funding within the next few years.

Many Salary studies and publications (i.e. The Pay For People, Comptroller of the Treasury; State of Tennessee Compensation Program, William Mercer; Actual State of State Employees, TSEA; and the Southeast Salary Survey, Department of Personnel) clearly support the position that state employees have not been and are not presently being compensated sufficiently.  Compression must be addressed and then an effective Comprehensive Pay Plan must be implemented.

We are encouraged that the Governor included funding for a salary comparison study in his budget last year. This study is to compare the salaries of state employees with the private sector employees doing similar work.  The study will also allow for salary upgrades so that you will make more money for the job you do.  The positive thing about doing this study now is that it will help fix the problem of inadequate pay scales, which will make fully funding compression a smaller budget item.  The Administration wants to adjust the salaries and then see where we are with the compression problem.  On the House floor, legislators recognized that this study is only a partial fix and that they would have to fund compression once the salary study was complete.  We anticipate that the salary upgrades will start in January of 2013 and will continue for 2 years.  Once complete, TSEA will ask the Legislature to revisit the compression problem.  You can be assured that your Legislators are aware of this issue and will not forget their promise to fund this.

History of the Comprehensive Pay Plan development

October 2004

TSEA begins developing a Comprehensive Pay Plan

Phase 1 – plan to address compression issue identified as most serious issue

Phase 2 – develop Comprehensive Pay Plan

May 2005

Section 49, Item 6 of the 2005-06 General Appropriations Act directs the Department of Personnel to conduct a joint study with representatives of the Tennessee State Employees Association which shall address the issue of compression, as well as the development of a comprehensive pay plan.

July 2005

TSEA begins work with the Department of Personnel

October 2005

Joint Study of Salary Compression delivered to Legislators and the Administration.

May 2006

Section 10, item 38 of Chapter 963, Public Acts of 2006 directs the Department of Personnel to develop a comprehensive pay plan. The plan shall include provisions for providing periodic adjustments of individual employee compensation in a manner that appropriately moves state employees through their respective salary ranges and, thereby, avoids future salary compression problems.

July 2006

First third of compression adjustments paid

September 2006

TSEA/Department of Personnel Meeting

October 2006

Department of Personnel Report, Strategy for Developing Comprehensive Pay Plan, delivered to Legislators and the Administration.

March 2007

TSEA/Mercer Meeting

May 2007

State Comprehensive Pay Plan Review – Mercer Report

July 2007

Second third of compression adjustments paid