Research Note: Member Pay

November 15, 2011

In his plan to overhaul Washington, Rick Perry states that:

When the first Congress convened in 1789 following the ratification of the Constitution, federal lawmakers were paid $6 a day, and an annual salary of $1,500 was not authorized until 1815. Had Congressional salaries merely risen with inflation, a member of Congress today would make less than $20,000 each year. Instead, annual Congressional salaries have risen almost 10 times faster than inflation and now total $174,000 – more than 3.5 times higher than the country’s median household income of $49,445 in 2010.

He then follows them with this chart, showing congressional salaries, 1933-present:

I haven’t checked if his statements about inflation are true (I have no reason to doubt them technically), but if they are true then almost all the real increase in congressional salaries took place in the 19th century.* According to the inflation figures Perry used, real prices fell by almost 50% between 1815 and 1907, while Members’ salaries went from $1500 to $7500. There’s the entirety of the 10-fold increase he cites.

Contemporary Members make little more in real dollars than Members did in the early 20th century. Below is a graph that charts inflation-adjusted (CPI) salaries for Members, 1913-2010, in constant 1913 dollars.** (For the short period of time in 1990-1991 during which pay differed for Representatives and Senators, Representatives salaries are used).

As the chart shows — and this is the same data that Perry uses — Members make approximately 1.7% more in real dollars than they did 100 years ago. So if the salaries of the legislative branch ran wild because something changed in Washington, that something took place in the 19th century, not the 20th.

Some details for people interested in the spikes on the chart: prior to 1967, pay raises were accomplished by specific pieces of legislation, and were sporadic. They occurred in 1925, 1934, 1935, 1947, 1955, 1965, and are reflected in the chart by the various spikes, which are then eroded/augmented over time by inflation/deflation (pay was also reduced in 1932 and 1933).

While Congress may still adjust pay by stand-alone legislation, since 1967 there have been a few other statutory mechanisms: first a commission to recommend increases (which occurred in 1969, 1977, and 1987), followed by a system begun in 1975 in which Congress needed to accept or reject raises based on formula (accepted in 1975, 1979, 1984, 1985, and 1987; rejected all other years 1976-1989), and finally, under the Ethics Reform Act of 1989, a system of automatic raises that go into effect unless Congress rejects them (rejected in 1994, 1995, 1996, 1997, 2007, 2010, 2011). Under the automatic system, Members will also not get a raise in 2012, because the law bars Members from getting a larger increase than federal workers, who are currently under a COLA freeze.

Because the automatic adjustment (1) has occurred more often; and (2) is calculated from a formula based on variables that reflect inflation, real pay is somewhat more stable in recent decades than it was for much of the 20th century, as shown in the chart. It is also the case, however, that real wages for Members are likely to slowly decline, because in any given year, the most likely outcome is either (a) an automatic raise that keeps pace with inflation; or (b) a rejection of the automatic raise, which results in real pay erosion. The action necessary to reverse inflation-erosion from the rejected years would be stand-alone legislation that authorized a greater-than-inflation increase in pay, and that is politically unlikely to pass in most climates. at least until real pay has eroded significantly over many years.

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* One slightly misleading statement Perry makes is that “an annual salary of $1,500 was not authorized until 1815.” That’s true, but it implies an annual salary was then used going forward. In fact, the annual salary was only used from 1815-1817, after which Congress returned to a per diem system until 1855, when the salary was set at $3,000.

**1913 was used instead of 1907 so that the consistent CPI metric could be used; the estimated CPI from 1907 to 1913 shows virtually no aggregate inflation, and using 1907 would not alter the findings.

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13 Responses to Research Note: Member Pay

  1. LD on November 15, 2011 at 5:22 pm

    What explains the peaks and valleys? Is that congress acting in an altruistic fashion at a time of the country’s need or just normal ebbs and flows?

  2. Kevin on November 15, 2011 at 5:43 pm

    Just guessing, but I’d think the spikes upward would be voted increases, which tail back down due to inflation.

    If you were looking for micro-behavior (analysis of specific moments/events), you could plot nominal pay along with a graph of inflation.

  3. Matt on November 15, 2011 at 7:33 pm

    Kevin: yes, the spikes are the statutory increases, followed by inflation eroding its real value. I’ve updated the post with a few brief paragraphs to make that more clear.

  4. Dave X on November 16, 2011 at 9:38 am

    Why not an extra Y axis for constant 2010 dollars?

    • Matt on November 16, 2011 at 9:44 am

      Just didn’t think it added much. In constant 2010 dollars, Members made just over $171,000 in 1913.

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