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Jan 26

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The Real Deal Behind Congress’ Pay

The heightened attention towards the Constitution and whether or not recent legislations abide by it or not is causing some to draft Constitutional amendments.   One of the suggested amendments is:  

Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 2.5%.”   

At first glance, this may seem like a rationale suggested amendment.  After all,   

  1. Do YOU get to decide what your pay raise is? 
  2. Doesn’t Congress work for us? 
  3. Shouldn’t we get to decide their pay? 

However, Congressional pay history instructs us that changes might not be necessary.  

Article 1, Section 6, of the Constitution requires Congress to determine its pay.  There are three methods by which Congresspersons may change their pay.   

  1. Via stand-alone legislation – This method was the primary one used from 1789 through 1968, during which Congress increased its pay 22 times.
  2. Via a “commission process” – In 1967, Congress established the Commission on Executive, Legislative, and Judicial Salaries to recommend salary increases.  Congress received raises under this method in 1969, 1977, and 1987.  After the Ethics Reform Act of 1989 passed, the Commission ceased to exist.
  3. Via “automatic annual adjustments”
  • Prior to 1990 (the passage of the Ethics reform Act of 1989), Congress’ pay was automatically linked to other federal employees’ pay increases (i.e., General Schedule (GS) federal employees).   
  • After 1990, the Ethics Reform Act required that Congress’ pay automatically adjust by a formula linked to the Employment Cost Index (private industry wages and salaries, not seasonally adjusted). 

The annual adjustment automatically goes into effect unless:  

  1. Congress statutorily prohibits the adjustment;
  2. Congress statutorily revises the adjustment; or
  3. Annual base pay adjustment of GS federal employees is established at a rate less than the scheduled adjustment for Congress, in which case Congress is paid the lower rate. 

The following table itemizes Congress’ pay adjustments since 1992, the first full year after the Ethics Reform Act that Representatives and Senators received the same salary.    

Year  Projected Percentage Adjustment Under ECI formula Actual Percentage Adjustment  Consumer Price Index (CPI) “Violated” Suggested Constitutional Amendment?
1992 3.5% 3.5% 3.0% Yes
1993 3.2% 3.2% 3.0% Yes
1994 2.1% 0.0% 2.6% No
1995 2.6% 0.0% 2.8% No
1996 2.3% 0.0% 3.0% No
1997 2.3% 0.0% 2.3% No
1998 2.9% 2.3% 1.6% Yes
1999 3.4% 0.0% 2.2% No
2000 3.4% 3.4% 3.4% Yes
2001 3.0% 2.7% 2.8% Yes
2002 3.4% 3.4% 1.6% Yes
2003 3.3% 3.1% 2.3% Yes
2004 2.2% 2.2% 2.7% No
2005 2.5% 2.5% 3.4% No
2006 1.9% 1.9% 3.2% No
2007 2.0% 0.0% 2.8% No
2008 2.7% 2.5% 3.8% No
2009 2.8% 2.8% -0.4% Yes
2010 2.1% 0.0% 1.6% No
2011 0.9% 0.0% N/A No
Average 2.6% 1.7% 2.5%  
Median 2.7% 2.3% 2.8%  

 The above table shows  

  1. On average, Congress’ actual percentage pay adjustment is significantly less than (i) that projected by the Employment Cost Index formula, and (ii) CPI.
  2. Over the past 20 years, Congress’ actual pay adjustment was more than or equal to 2.3% half of the time, and under 2.3% the other half.  This percentage is less than (i) that projected by the Employment Cost Index formula, and (ii) CPI.
  3. Over the past 20 years, Congress “violated’ the suggested Constitutional amendment “…Congressional pay will rise by the lower of CPI or 2.5%”, less than half the time (i.e., 8 out of the 20 years).    

In essence, the suggested Constitutional amendment that “…Congressional pay will rise by  the lower of CPI or 2.5%” already appears to be abided by most of the time (12 out of the 20 years).  Much of this time (8 out of the 12 years), Congress had no pay raise. 

About the author

Nicole Liska

I am a Principal at Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I hold an ABD and MA in economics from the University of California, San Diego. I perform damages analyses and serve as a damages expert witness. My resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2011/01/the-real-deal-behind-congress%e2%80%99-pay/

1 comment

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  1. charles stewart

    I’ve heard that when a member of congress resigns they still get pay and privalges is this true.

  1. Meat Slicer

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