OCEAN CITY — In an effort to recruit and retain employees during decidedly challenging times, resort officials this week approved accelerated increases in the pay grades for full-time and part-time town staffers.
Ocean City’s full- and part-time employees could see modest increases in their paychecks after the Mayor and Council this week approved adjustments to the approved pay tables for staffers. Human Resources Director Katie Callan presented the proposed changes during Tuesday’s work session.
It’s no secret Ocean City, like most jurisdictions and the private sector, struggled to fill out its staffing ranks this year for a variety of reasons linked to the pandemic. For Ocean City, the departments most affected were public works, including solid waste and maintenance, the transportation division, including bus drivers and Boardwalk tram operators, and recreation and parks. Callan explained there were a variety of reasons for the pronounced labor shortage.
“Market factors have changed significantly over the past two years,” she said. “In addition, COVID has negatively affected the availability of potential employees. Few J-1 and H-1 students have been available, former employees chose not to return due to the lingering uncertainty of COVID and federal unemployment made it less attractive to return to the workforce in a seasonal position. Additionally, the town has experienced difficult hiring full-time employees at pay grade minimums.”
State mandates gradually increasing the minimum wage in Maryland have also contributed to the challenge. The state’s minimum wage has been steadily increasing to a peak of $15 per hour by 2025, and the increase at the bottom end of the town’s pay structure has moved the needle to the higher-grade positions.
The town has a pay grade structure in place with grade 100 being the lowest and grade 130 being the highest. Grade 100 includes most entry level and part-time positions, which typically are paid minimum wage. The current minimum wage is $11.75 per hour, which is scheduled to jump to $15 by 2025. However, the pay grade adjustments presented this week recommend jumping to the state mandated $15 this year.
Callan explained there are pay differences within the individual pay grades. For example, there is an average 56% spread between grade minimums and maximums to allow for an employee’s pay to advance with experience. Part-time positions are paid at the minimum of the grade. She also explained the increases in the minimum wage have resulted in the compression between the grades at the lower end of the pay table and the loss of the 5% spread between the lower pay grades.
Resort officials last adjusted the town employee pay tables two years ago. Callan explained there were a variety of reasons she was coming back before the Mayor and Council this week seeking additional adjustments.
“There are several reasons we are back in front of you two years later,” she said. “The summer of 2021 proved to be challenging with hiring, particularly with seasonal staff. There have also been aggressive increases in the minimum wage.”
Adjusting the town’s pay tables comes at a significant cost. For example, the cost for jumping part-time employees to the $15 per hour minimum wage, which includes 800-plus part-time employees spread over 100-plus positions, would cost roughly $567,000 a year.
The impact of the changes to the pay table for 66 full-time positions would come in at an additional $220,000, for a combined total of nearly $800,000 in the first year alone. In addition, Callan was recommending a market comparison study this year to the tune of around $15,000, along with a comprehensive pay study next year with an estimated cost of $25,000.
Fortunately, there is an identified funding source for hiking the pay scales for town employees, at least for this year. Callan explained overages in the town’s Other Post-Employment Benefits, or OPEB, plan this year could be used to offset the recommended increases in the pay tables. The town’s OPEB came in around $1.2 million over what was budgeted this year.
Mayor Rick Meehan said given the challenges the town faced this year with recruiting and retaining part- and full-time employees, adjusting the pay tables across the board made sense at this time.
“I think you’re being proactive,” he said. “We have to take a stance. We saw what happened last year. We can begin to use this for recruitment today. Now is the time to do it. It just accelerates what we’re planning to do.”
Councilman Mark Paddack pointed out the state mandated the minimum wage increases, necessitating the subsequent need to adjust the town’s pay tables.
“The public needs to understand this is an unfunded mandate from the state legislature,” he said. “We’ve been able to stay out in front of it, but it’s been challenging.”
The council voted unanimously to approve the recommended pay table adjustments.
