LOUISVILLE, Ky. (WDRB) -- The University of Kentucky is spending millions of dollars to boost employee pay and benefits, with the hourly starting wage next July rising more than 20% to $12.50.
The university said it also will boost its retirement benefits, nearly double its parental leave and allow employees to take two sick days for “personal well-being” rather than illnesses or doctor’s appointments.
University President Eli Capilouto said the institution is making the changes because it its “the right thing to do” and to be “competitive and lead the market to attract the very best people.”
The hourly pay increase, from the current $10.40, will affect about 1,700 employees. The university said the increase would cost about $3 million per year. That change will take effect July 1.
Hourly employees who are earning between $12.50 and $14.50 also will see wage increases, the university said, though it did not provide details.
Beginning in January, UK staff employees will be able to use up to 12 weeks of accrued sick time for parental leave for childbirth, adoption or foster care, up from six to eight weeks currently. At the same time, employees will be able to take up to two sick days annually for personal well-being. Employees currently can take such days only for illness, injury or to care for a family member.
Starting in July, the university also will automatically enroll all new eligible employees in its matching retirement savings plan. The institution currently automatically enrolls employees only when they reach age 30. The retirement plan calls for employees to contribute 5% of their salary, with UK chipping in 10%.
UK said that a 25-year-old UK employee who starts with an annual salary of $35,000 and immediately begins contributing to the retirement account can expect to retire at age 65 with $1.8 million — or about 50% more than an employee who waits five years to begin saving. The calculation assumes that the employee gets an annual salary increase of 2% and that the savings generate an annual return of 8%.
“One of the most powerful things you can witness in this country is compounding interest,” Capilouto said. “This, we hope, pays benefits to our employees and their families, 20, 30 and 40 years from now.”
Capilouto said the increased pay and benefits signal that “our employees are our priority. Building a strong UK family, we are the University of, for and with Kentucky. And it starts with our responsibilities to one another.”
The institution could not yet say how much all the initiatives will cost combined, but it said that the investments were made possible “through ongoing efforts to increase efficiency and generate new resources through UK’s Our Path Forward initiative.”
The initiative aims to generate ideas to close a $200 million gap “between expected revenues and anticipated needs” in the next five years. The plan “seeks to achieve the appropriate balance between investments in operations, human resources, capital facilities, and technology to generate the resources necessary to maintain and expand our mission of teaching, research, health care, and service,” the university said.
The university said that it is making the changes although it receives about $50 million less from the state every year than a decade ago.
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