Pay Raises Continued

Q

I understand that there were significant financial pressures for delaying
the annual salary increase from June 1 to October 5 to address the Omnibus
Bill, and that the salary increase range movement was adjusted accordingly,
from 2.5% to 2.8%, to account for those extra months the raise will cover.
However, economic conditions have changed in ways that would have been
difficult to foresee when these percents were calculated. According to the
Department of Labor, inflation is currently growing at its fastest pace in
27 years.

In terms of buying power, the UCAR 2.8% range movement simply isn't enough
to keep up with the inflation the country is experiencing, specifically in
the energy and food expenditures categories. Extrapolating from the last
three months ending in June 2008, the compound annual rate of these special
indices is 53.6% and 8.5%, respectively, according to the
Consumer Price Index
.

In conclusion, I feel the cost-of-living increase we will receive in
October simply does not match inflation and presents a financial hardship
to me, my family, and to those I supervise. I understand that budgetary
pressures have not subsided, but is there anything that UCAR can do?

Answered on July 29, 2008

A

There are a couple of misconceptions and issues in your question that need
to be addressed. I think the overriding issue you raise is that the cost of
living is going up a lot and salary range movements for 2008 are lower than
inflation. You also ask what UCAR can do to help employees. Three things
are happening in 2008: raises have been delayed until October, the salary
ranges increased by 2.8%, and the salary budget was approved at 4%.

The delay is to save money for the FY08 budget. The 4% salary increase
budget is higher than in previous years (the budget in FY07 was 3.5%). The
salary budget is driven by the average pay and increases projected by other
organizations with similar jobs. UCAR has a policy of paying
market-competitive wages and has processes to manage pay, including salary
structures (ranges). Salary structure or range movement adjustments are
different than cost-of-living adjustments. A cost-of-living adjustment
would be an identical pay raise either as a flat rate or as a percentage of
salary given to all eligible employees, and based on the rate of inflation.
For example, under a COLA plan, all employees might get a 3% pay adjustment
based on the cost of living. Most organizations do not use COLAs; those
that do, typically use the Consumer Price Index (CPI). The projected CPI at
the time salary increases for 2008 were determined was 2.2% (U.S.) or 3.1%
(Denver Metro).

Range movement adjustments reflect approximate changes in labor rates,
which are based on supply and demand in the labor market. UCAR uses salary
structures as frameworks for managing employees' pay. Each job is evaluated
using market data. The job is then assigned to a salary range where the
market point represents the median paid by other employers for comparable jobs.

To keep the salary range structure(s) aligned with the market averages, the
market point (formerly midpoint) is adjusted on an annual basis. Human
Resources reviews projections from national and local salary survey sources
to determine the adjustment required to keep the structure current. Each
year these sources survey the market to determine anticipated adjustments
to salary structures for a wide range of organizations.

For exempt (salaried) positions, the projected national market average
adjustment for 2008 is 2.8%, which is how the 2.8% range adjustment for
UCAR was arrived at. UCAR management reviewed these projections and
historical adjustments, and believes that a 2.8% increase in all midpoints,
exempt and nonexempt, is required to maintain UCAR's alignment to market pay.

To answer the second part of your question, is there anything UCAR can do?
UCAR has many policies and benefits to assist our employees. The
transportation website outlines ways employees can save through the use of
UCAR shuttles, the Blue Bike program, and the RTD Eco Pass. More
information on these programs is available on Sustainable UCAR's
transportation website.

Our Work and Family Policy 6-12 includes flexible work
alternatives such as flextime, flexiplace, and compressed work weeks.

However, we must remember that UCAR is a 24/7 operation. UCAR staff can
negotiate alternate work arrangements with their supervisors if their jobs
are compatible with flexible schedules. Supervisors are encouraged to be
flexible, but the bottom line is that we have obligations to our funders
and our customers.

--DELAINE ORDENDORFF, COMPENSATION AND HR MANAGER

--BOB ROESCH, DIRECTOR OF HUMAN RESOURCES