The Dominion Post is running an opinion piece of mine this morning, comparing the cost of paying the Living Wage to Wellington City Council staff (about $1.7 million a year, on campaigners’ estimates) with the payments for the council’s senior staff in recent years. Below is a spreadsheet with the details of the calculations.
What I have done is take the data from the council’s last four annual reports, which is when they started reporting on the number of staff earning over $100,000. They don’t give exact salary figures for each staff member, in order to protect privacy; instead, they list how many staff members are in the salary bands over $100,000, e.g. $200,000-$280,000.
To come up with the total payments each year to staff who earn over $100,000, I have taken the number of staff in each bracket, assumed they are all earning the midpoint of that bracket, e.g. $240,000 in the example above, and then multiplied the two figures. I have also taken out one of the figures in the top bracket, since that has to be the chief executive and their salary is listed separately. What the figures show is a substantial (30%) increase in both the number of staff earning over $100,000 and the total payments to those staff.
Year Staff on $100k+ Salary bill for $100k+ earners
2011-12 148 $20.4 million
2012-13 155 $21.7 million
2013-14 174 $24.8 million
2014-15 192 $26.8 million
As can be seen, the cost of the Living Wage is about 6.4% of the salary bill for the highest earners, implying that restraint at the top would create ample room for the increases at the lower end.
One question is how much of this increase – about $6.4 million – is an actual increase in pay and how much is just the effect of greater numbers, i.e. people moving up over the line and thus bringing another $100,000 of income into the figures. You can estimate that by taking the increase in staff numbers – 44 – and subtracting the amount they bring into the figures (44 times $100,000 = $4.4 million) from the increase. That leaves about $2 million – still enough to cover the Living Wage costs to the council of around $1.7 million, according to campaigners’ estimates. (Although there will still be pay increases being contributed by those staff, since they are clearly rising in salary, and one could also question the necessity of that number of staff being on or nearly on $100,000.)
Now, it could be that even more of the increase is due to new people coming in (if they were employed in new positions on, say, $250,000). But I’m not aware of that happening at WCC recently; in general, the council has been downsizing, not taking on new staff. And even if that is occurring, it still represents a high pay phenomenon – the employment of larger numbers of highly paid managers – that is a deliberate HR policy. The WCC could take a different policy, that of enabling more staff to be self-managing and flattening management hierarchies, thus eliminating tiers of management and freeing up income to pay lower-paid staff more.
Either way, the point remains that the WCC has a substantially increased upper salary bill, compared with even a few years ago, and the alternative has been open to them to redirect that salary bill increase towards their lowest paid earners. And the costs of increases at the lower end are a very small fraction of the highest earners’ salary bill.