Tough Choices Behind Glib Facts

There is a statistic going around the talk show circuit among those decrying the supposed out of control growth of Federal Spending.  Although the statement is technically true, the reality behind the statement is far more interesting than what the speaker is usually saying it proves.

A recent citation of the statistic occurred when Michelle Bachman appeared on Fox News Sunday.

“We had one employee at the federal Department of Transportation that made $170,000 a year at the beginning of the recession.”…”We had the trillion dollar stimulus, and 18 months into the recession, we had 1,690 employees making over $170,000,”

Now, the statement is absolutely true.  The number of Department of Transportation employees earning over $170,ooo at the start of 2008, the number of DOT employees earning over $170,000 by the middle of 2009, and the fact that Obama took office and  there was a stimulus program in between those dates are facts.  However simply because there are facts do not necessarily mean that they are related facts.

1. There is a civil service rule that says that no employee can earn more than the head of the agency.
2. The Department of Transportation includes the Federal Aviation Administration (FAA)
3. At the end of 2007 the head of the FAA was earning $168 thousand.
4. The current pay scale of air traffic controllers had been set by the FAA in 2006.  Just under 1700 of the most senior air traffic controllers of the over twenty thousand employed by the FAA were limited by the $168,000 salary of the FAA Administrator by 2008.
5. In 2008 President Bush increased the wages of the FAA chief from $168,000 to over $170,000 and with that the most senior air traffic controllers had their wages automatically increased to match the new cap.  The jump in the number of employees in the Department of Transportation earning over $170,000 per year essentially happened in one day during the Bush administration.

So while the original statement about the number of employees is factually correct it is clear that it was but a tiny percentage increase that happened to cross the arbitrarily chosen $170,000 border, and a pair of dates that encompassed the election and stimulus.

So, are we getting our money’s worth?

1. What is a head of the FAA worth?
2. What is a highly senior air traffic controller worth?
3. Is one worth more than the other?

Currently the absolute maximum that anybody in the FAA can earn, even the Administrator, is $173,700 per year with a possible regional cost of living adjustment of up to $6,000.

Moreover the starting salary of an air traffic controller will be more in the range of $50,000.

On the one hand, it would seem that in the private sector it would be completely impossible to get a CEO of an enterprise as large and complex as the FAA for only $173,700 a year.  In the realm of CEO compensation that is laughably small.  At least not without a mountain of stock options.  Adjusted for inflation, Current FAA Administrator Randy Babbitt might have been earning more when he retired many years ago with 25 years as a pilot for Eastern Airlines.  Also possibly less than he made as President of the Air Line Pilot Association and as the head of a private aviation consulting firm.   Compared to his private industry value we are most likely getting him at a bargain.

With the air traffic controllers however it is almost impossible to figure out what to use as a benchmark.  There is no other career that has quite the same combination of stress, responsibility and tedium.  I guess though that in this job market you might be able to recruit talented people to take on the work for less than $50,000 a year.  But having invested a considerable quantity of money in training them would you keep them when the economy improved?  Would they stick it out to retirement in such a stressful job without the promise of increasing wages with seniority?  Anybody’s guess.