As the economy began to reopen this spring and summer, many employers in the public and private sectors found a labor market that was far tighter than originally anticipated and have struggled to fill open positions. AWC wants you to know about some tools local governments can use to help attract needed workers back to work.

Earlier this year, a combination of factors were blamed for slow hiring, such as inadequate childcare options, continuing fears over COVID-19, workers changing careers, generous pandemic unemployment benefits, and low compensation in many sectors. Some states ended pandemic unemployment benefits early (and all additional pandemic unemployment benefits will end in September), but studies suggest that those that did so merely changed the average age of who was being hired, not the overall rate of hiring. Most states have also re-imposed “work search” requirements for those on unemployment, including Washington.

Offering higher wages, including retroactive pay increases for existing employees, is one tool that many employers are considering to attract new workers or reward current ones, particularly for frontline workers like first responders, public hospital workers, transit drivers, and others. However, local governments in Washington should think carefully about how they go about implementing “premium pay,” even though it is an authorized use of stimulus funds under the federal American Rescue Plan Act. An MRSC article provides a good rundown of the state law limits that cities may have in authorizing premium pay for essential workers.

While cities may like to reward their essential worker employees who stayed on the job during the pandemic with premium pay, it would likely be illegal. Namely, Washington’s Constitution prohibits state and local governments from providing extra compensation to employees for work that has already been rendered, otherwise such bonuses and retroactive pay increases could be considered an unconstitutional gift of public funds. Earlier in July, Island County attempted to use ARPA funds for premium pay to county employees for their work during the pandemic, but later had to rescind the premium pay because of Washington’s limits on gifts of public funds.

Cities can put in place employee recognition programs that offer bonuses or premium pay to public employees for extraordinary work already preformed. However, to be able to offer such bonuses, recognition programs must already be in place before the premium pay is offered (i.e. the program already existed as an incentive for extraordinary work), and must have clear performance standards and goals beyond normally compensated work to allow a public employee to take extra pay.

Local governments can use their ARPA funds to increase pay for future work for essential workers. This has the added benefit of making these types of jobs more attractive to future employees as an enticement to work for a city. Cities could also consider putting employee incentive programs in place now so they have clear and legal methods to reward workers for their extraordinary work during ongoing and future emergencies.