City staff to implement $21.90 Durham Minimum Livable Wage; step plan changes, merit and part‑time pay spark council debate

Interim HR director Montique McClary and staff presented the city’s FY26 compensation recommendations, describing three intertwined elements: pay‑for‑performance (merit), a 1.45% structure (market) adjustment, and implementation of an increased Durham Minimum Livable Wage (DMLW).

Why it matters: changes to the pay plan affect existing employees’ salaries, create compression risks inside salary ranges, and have particular consequences for part‑time and seasonal workers whose jobs are classified as commensurate or non‑commensurate with full‑time roles.

Key points from HR materials and discussion: • DMLW increase: HR proposed raising the Durham Minimum Livable Wage to $21.90 per hour for FY26 (an 11.8% increase from the prior DMLW), and staff warned this year’s increase creates significant implementation complexity and that FY27 could pose a still larger challenge. • Structure adjustment and timing: HR proposed a 1.45% market/structure adjustment to pay tables. Staff explained implementation sequencing: structure adjustments reflected on the July 11 paycheck, pay‑for‑performance increases processed July 25, and approved reclassifications later in August. Any required manual moves to bring employees to the DMLW would be processed retroactive to July 1 with pay reflected on August 22. • Merit and cost: staff said merit (pay‑for‑performance) would continue to operate under existing rules; HR estimated pay‑for‑performance costs at about $9.2 million for the general fund and $12.6 million overall (staff figures). The cost to implement the proposed structure adjustments — including benefits — was shown as about $4.2 million total, with roughly $3.1 million charged to the general fund. • Step plan impacts: HR showed the current step plan had 83 employees on steps below $21.90; after the 1.45% structure adjustment that number would shrink to 47. Merit increases were expected to move many employees up a step; after processing merit, HR projected about 28 employees would still require manual moves to first steps at or above the DMLW. Staff emphasized only a few employees would be materially compressed but acknowledged compression will grow if DMLW continues to rise in FY27. • Part‑time employees: HR reported about 242 part‑time employees work in non‑commensurate jobs (seasonal/low‑hour roles such as scorekeepers, lifeguards, program assistants). Those non‑commensurate jobs are not currently eligible for DMLW by ordinance definition; HR estimated roughly 201 of those 242 part‑time employees would be below the proposed $21.90 minimum after proposed adjustments. HR recommended part‑time merit at 3% and the 1.45% structure adjustment; council members pressed HR for a job‑level inventory and dollar estimates for raising non‑commensate part‑time roles to the DMLW.

Council response: several council members praised the DMLW increase but urged staff to return with detailed cost and headcount sheets for part‑time, seasonal and program‑level impacts. Multiple members asked HR to start planning now for FY27 because projected DMLW growth could produce substantial compression without an actuarial or policy response.

Staff follow‑up: HR committed to supplying itemized lists identifying affected part‑time job titles, projected FY26 hourly rates by title under the proposed package, and cost estimates for alternative scenarios (for example, applying a higher merit percentage to part‑time staff).