This chart shows why members of Congress really should earn more than $172,000

September 19, 2013

On Wednesday, National Review quoted Rep. Phil Gingrey (R-Ga.) complaining about his salary. He reportedly noted that congressional staffers could become lobbyists and "make $500,000 a year. Meanwhile I’m stuck here making $172,000 a year." (Gingrey says he doesn't remember making the comment.)

The statement generated predictable mockery. To state the obvious: $172,000 is more than three times the median household income in the United States. No one should feel sorry for members of Congress who "only" make that sizable sum.

But Rep. Gingrey really should get a raise. This chart shows why:

(Timothy B. Lee / Washington Post)

The blue line is congressional salaries, adjusted for inflation. The red and orange lines are the 95th and 99th income percentiles, respectively, as calculated by the World Top Incomes Database. In 1970, a member of Congress made more than $250,000, in inflation-adjusted dollars. That was enough to put him in the top 1 percent of income earners.

Since then, members' salaries have steadily declined in real terms. A member of Congress makes less than 70 percent of what he or she would have made in 1970. And the decline is much more striking in relative terms. Members of Congress today are barely in the top 5 percent of the income distribution. And if private sector incomes continue to rise as congressional salaries are falling, members of Congress will see their relative positions decline further.

That's a problem. Not because members of Congress "deserve" to be in the top 1 percent of the income spectrum. But because the declining economic fortunes of members of Congress has systematically negative consequences on Congress's performance.

Private organizations pay the highest salaries to the people with the most authority. They do this for two reasons. First, high salaries allow an organization to recruit the most qualified people to fill the position. And second, the high salary gives people an strong incentive to give the job their undivided attention.

If a private company were having trouble retaining senior executives because they kept accepting higher offers at other companies, the first thing it would do is raise executive pay. Raising salaries would be especially urgent if a company found executives giving sweetheart deals to vendors and then taking lucrative jobs with the same vendors. Obviously, we'd hope executives wouldn't behave that way regardless of the financial rewards. But a pragmatic firm would pay competitive salaries to make sure executives weren't even tempted to sell out their employers.

The government faces precisely this problem. Many members of Congress spend a few years in public office, making $172,000 per year, and then retire and take lobbying jobs that pay several times as much. Few members of Congress engage in explicit quid pro quos. But it's hard to believe that they aren't influenced by the fact that the person lobbying them today might be their employer in a few years.

Obviously, it's hard for a taxpayer making $60,000 to relate to someone who views a $172,000 salary as inadequate. But members of Congress are part of America's elite. Their peers are bankers, entertainers, corporate executives, doctors, and lawyers. The most successful people in all of these professions make a lot more than $172,000. They're living in nicer houses, sending their kids to better schools, and taking fancier vacations than members of Congress are.

Of course, that income differential doesn't justify members of Congress putting personal financial considerations ahead of the interests of their constituents. But it's not hard to see how some members could persuade themselves that their long years of public service, at a salary dramatically below the incomes of their private-sector peers, justifies cashing out at a lobbying firm at the end of their careers.

Paying members of Congress more wouldn't eliminate all temptations for corruption. But if we paid competitive salaries, a member would be much less tempted to treat his or her job as a stepping stone to a more lucrative job in the "private sector."

Continue reading
Show Comments
Most Read Business



Success! Check your inbox for details.

See all newsletters