Hiring Bonuses Don’t “Compensate” for Other Issues Impacting City Worker Retention; Bright Economic Forecast Won’t Zero Out Budget Gap

1. During a briefing at the city council’s public safety committee about the city’s struggle to retain qualified staff in every department, City Councilmember Sara Nelson suggested there is no need to “study the benefit of [hiring] incentives” for police, “because it’s been shown to work in other cities—pretty much most if not all cities in our region.” With public safety “such a crucial issue right now,” Nelson continued, “this is something that doesn’t need a lot more study.”

Nelson, whose legislation to fund hiring bonuses will come before the same committee later this month, was responding to a presentation by the city’s Human Resources Department about a survey that concluded the biggest barrier to retention for most city staffers is the city’s 32-year-old job classification system, which creates artificial barriers to advancement for many city workers. 

Her comments elicited immediate pushback from other council members, including committee chair Lisa Herbold, who pointed out that recent short-lived hiring bonuses did not lead to more applicants for police jobs, although they did get people to apply for jobs at the city’s new 911 call center. (After the city offered hiring bonuses for new SPD recruits in 2019, slightly fewer than one in five applicants said the hiring bonus was one factor in their decision to apply). Councilmember Andrew Lewis asked, semi-rhetorically, whether there was any city in the country that wasn’t currently struggling to retain officers right now. And Councilmember Teresa Mosqueda went further, apologizing to SDHR’s Keith Gulley “on behalf of the council” because “the work that you’ve done was impugned” by Nelson.

So, about that work: SDHR’s analysis found that, in general, hiring incentives serve as “a one-time quick fix that may not compensate for uncompetitive wages, difficult or unsupported work conditions, lack of opportunity to develop career relevance, experience and skills, and limited promotion opportunities” at the city, Gulley said. Additionally, signing bonuses for new hires can hurt the morale of existing employees who “feel undervalued and underappreciated” because they’re doing the same work with no extra reward.”

The hardest jobs to fill, according to the department’s survey, include carpenters, plumbers, and truck drivers as well as IT programmers, senior civil engineers, and public safety auditors. 

The shortcomings of the city’s job classification system are especially troubling for mid-career employees, who frequently get stuck in mid-level positions because they lack a requirement, such as a graduate degree or specific college credits, to move up the ranks. Gulley gave the example of an accountant who had been at the city for more than 15 years but got stuck on the ladder because she hadn’t taken 24 hours of required coursework back in college. “That’s where the majority of our employees who have worked for the city for years get stuck,” Gulley said.

Of three possible scenarios, the city is using “baseline” assumptions in its forecast.

2. An economic forecast released by the city’s Economic and Revenue Council last week predicts the city will take in about $90 million more in taxes and fees this year than a similar forecast predicted six months ago, thanks to higher-than-expected revenues from sales taxes, the JumpStart payroll tax, and the tax on real estate sales.

In all, the city expects to collect about $711 million in general-fund revenues, which fund the city’s annual budget, in 2022—a 5.6 percent increase over 2021. The forecast also predicts the city will take in about $447 million in other taxes and fees that can only be spent on specific purposes, including taxes on real estate sales, which fund capital projects. Next year, the city predicts that revenues will continue to grow, but at a slightly slower rate.

In a press briefing last week, ERC director Ben Noble cautioned that the actual value of city tax dollars—the bang the city can get for its buck—will be reduced this year because of high inflation. And he noted that job growth has been distributed unequally: While tech and other white-collar jobs have more than bounced back, hiring in hotels and the hospitality industry, as well as manufacturing, is still far below pre-pandemic levels.

Those white-collar jobs also provided the bulk of payroll tax receipts, meaning that the tax—which the city started collecting last year—is heavily dependent on a few types of businesses, which would be a concern if tech companies started moving outside city limits at some point in the future. Similarly, if the housing market slowed down (because of higher interest rates, for example), the amount of money the city gets from real-estate taxes would also decline; historically, REET is a very bumpy revenue source.

Currently, the city is facing about a $150 million budget deficit for next year. In a recent poll by the Seattle Chamber, most voters said they would prefer to cut the budget back to “basics” rather than raising taxes. In his first State of the City speech, Mayor Bruce Harrell said any unanticipated JumpStart revenue, which is earmarked for housing, small businesses, and Green New Deal programs, “must go toward alleviating the budget issues we expect in 2023.”

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