University Budget Office (UBO) Compensation Two-Year Timeline Betsy Larson/Jen Geary September 19, 2018 University Budget Office (UBO)

Workplace Trends Overall Trends: Unemployment at a 30 year low - 3.9% (as of July 2018) Indiana nearing an all time low unemployment rate - around 3.4% Labor market is tight and projected to be so for foreseeable future 46% of US employers are currently experiencing talent shortages 60% of all employers have job openings for 12 weeks or longer 10,000 baby boomers retiring every day or 4 million people a year

Wage and Salary Trends General Industry: Higher Education: Wage growth expected to gain momentum in 2018 Organizations that continue to keep wages below market will struggle with employee attraction and retention Recent WorldatWork Salary Budget Survey is projecting 2019 salary budgets to average 3.2% Higher Education: Overall median salary increases for professionals in higher education over past year - 2.2% Overall median salary increase for staff in past year - 1.9%

IU Compensation Committee Representatives from the OVPHR and OVPCFO meet to discuss industry trends and IU initiatives having (or will have) an impact on University compensation and benefits. Sub-committees appointed to draft the University salary policy and create compensation models as needed What’s changing with 2-year budgets? The next salary policy will apply to FY20 and FY21 Fringe benefits will be distributed for FY20 and projected for FY21 Phased approach to address hourly minimums

Low-earner Approach Background: Applies to all appointed faculty and staff employees; temporary, student, and dually-employed employees excluded All appointed faculty and staff employees below $15/hour will be brought to the new minimum by FY 2022 Employees continue to be hired at less than $15/hour Estimated number of employees – 1,100 825 are union employees

New $15/hour Minimum - Impact Phase I – Raise appointed faculty and staff to new minimum Move minimum pay rate over 3 year period FY 2019-2020 - $12.33/hour FY 2020-2021 - $13.66/hour FY 2021-2022 - $15.00/hour Consider financial impact on all campuses and spread cost Develop the Salary Guidelines: All applicable employees must be budgeted at new minimum rate in each fiscal year and at $15/hour in the FY2022 budget During each FY low-earners receive the budgeted increase plus a flat amount up to $624. The increase will be limited to the amount needed to reach $15/hour.

New $15/hour Minimum - Impact Phase II – Salary Compression Assess and address salary compression issues for lower wage earners after implementation of new Job Framework – projected to be October 2019 Utilize new market ranges assigned by role to: Determine where compression exists Set guidelines for determining additional increases Assess cost to University and Campuses Recommend approach for addressing

Low-Earner Cost by Campus Total Cost over next 3 fiscal years: $4.7M (including benefits) $3.4M (not including benefits)