Gov. Mark Dayton is under no illusions about the political appeal of the salary increases he will authorize Wednesday for the heads of executive branch agencies. Legislators in both parties made clear earlier this year that his January executive order boosting salaries for 30 commissioners was not popular. They rolled back salaries to their 2014 levels and removed gubernatorial authority to set such salaries — beginning on July 2.
That left Dayton a one-day opportunity — Wednesday — to set his cabinet’s salaries where he believes they belong, up to 133 percent of his own salary, a boundary boosted from 95 percent of the governor’s salary in 2013. He’s seizing that chance, the DFL governor said, because it’s “right for the quality of state government in Minnesota.”
We share that judgment. Minnesotans can’t expect to attract and retain top talent to lead state agencies if they continue to pay subpar salaries.
Subpar aptly characterizes the $119,517 per year most cabinet members were paid in 2014, up from $108,400 between 2000 and 2013. For all but seven commissioners, 2014 compensation was below the 25th percentile for comparable positions in the 50 states, according to a Council of State Governments ranking. They were paid about as much as the average Minnesota school superintendent ($119,564) and a good deal less than the average for the top 10 city administrators ($155,265) and for county administrators in Hennepin, Anoka and Dakota counties ($169,839).
Gaps that large have impeded the recruitment of executive talent from other states and local governments. Recruiting from the private sector is even harder, judging from a comparison using the Hay system of evaluating positions in the public and private sectors. For example, private-sector positions comparable to the commissioners of natural resources and revenue were paid $336,300 in 2014.
Clearly, Minnesota has been getting state agency leadership at a bargain. And while bargains are good for buyers in the short term, over time they erode quality. Dayton was fortunate to recruit a strong, loyal cadre of commissioners as he began his governorship in 2011. Without Wednesday’s salary boosts, the next governor may not be as lucky. The same goes for the hundreds of other agency staffers whose salaries are capped by those of their agency’s head.
A more politically cautious governor might not have imposed double-digit pay raises in one step in January. But in what he says is his last term, Dayton is not much driven by political calculation. Salary increases in small increments would only prolong a hiring problem that’s exacerbated by a strong Twin Cities economy and a looming shortage of highly skilled workers. Even with new annual salaries ranging from $120,000 to $155,000, agency heads will earn between 19 and 60 percent less than comparable private-sector positions, according to a Hay Group analysis.
Heightened awareness of Greater Minnesota’s political importance likely contributed to the resistance Dayton’s salary move faced from the 2015 Legislature. A worrisome rural/urban income gap has widened in this state since the Great Recession. The most recent data from the 2009-13 American Community Survey put median household income at $49,183 in 64 rural counties and $64,698 in 23 counties deemed urban. That difference undoubtedly skews outstate perceptions about salary adequacy.
Like it or not, the seat of state government is in the metro area. It must compete for workers in one of the hottest job markets in the country. It stands a better chance in that competition now that state agency salaries have climbed out of the bargain basement.