Lexington city workers make 11% less in wages on average than their counterparts in other cities.

That’s the highlight of a new compensation study presented to Lexington City Council Thursday night by Margaret Schmitt, human resources executive manager of the Berkley Group, an outside consulting firm.

The Berkley Group is recommending that the city increase its minimum wage to at least $12 an hour by 2023, raise employee pay across the board to be no less than 10% below the market average and address unique problems facing law enforcement.

The recommendations come as the competition for workers has intensified.

“We have fewer applicants and higher expectations than we’ve ever seen,” Schmitt said. “We’re no longer able to pick and choose.”

Schmitt said the city’s problem in finding workers is made more difficult by raised expectations of competitive pay and benefits, not as something to work toward, but as a starting point.

“They want both stability and good benefits and competitive pay…. They want it all,” Schmitt said.

The change in the labor market also coincides with a change in workers’ priorities, expedited by the COVID-19 pandemic. Schmitt said she does not “see it changing back.”

Many new workers are placing less of a priority on long-term benefits like retirement and placing more emphasis on immediate pay.

“Probably the biggest reason why they don’t value it [long-term benefits] is that they don’t see themselves staying in the same job or with the same employer for 30 years,” Schmitt said. “I hear the phrase, ‘I can’t take the retirement to the grocery store.’”

Council Member Charles Aligood also pointed out that finding affordable housing in Lexington is another issue that goes hand-in-hand with wages.

“I go to Walmart and there is a sign up saying ‘[hiring] $16-$35,’” Aligood said. “That’s a far cry from $12 [per hour]…. Even at $12, they couldn’t move into a one bedroom [apartment] unit at the market rate” in Lexington.

Schmitt said that Lexington offers “rich” retirement benefits to city employees, but they have to work for many years to gain those benefits. Employees are also required to pay 5% of their salary every year to cover those benefits.

Such a setup could create problems when trying to hire people for city jobs, Schmitt explained. 

Workers today want more flexibility in controlling the money they make. They also want more flexibility in how they work, Schmitt said. However, many city jobs do not offer remote work.

“You can’t pick up the trash from your couch,” Schmitt said.

To address the problems, Aligood proposed cutting benefits to save money. He said the city could potentially “cut the benefits and save money if it doesn’t matter.”

The survey also recommended raising police pay to be equal to its competitors in the surrounding areas in order to attract and retain officers.

In December of last year, Lynchburg raised its starting police salary 25% to $50,000.

Pay is not the only thing causing many on the force to leave. There were a number of “unique” factors that are also in play.

There has been a high turnover rate and fewer applicants as the police officers are leaving for different professions that are less dangerous, receive less negative media coverage and get more public support, Schmitt said.

It is important to “create a supportive environment and make sure that they know they’re valued,” Schmitt said. “That positive environment is going to help keep every employee regardless of the pay.”

Schmitt recommended implementing changes to local law enforcement over the next two years.

The Council will discuss the recommendations in a future meeting.