Science and Technology in the National Interest Ensuring the Best Presidential and Federal Advisory Committee Science and Technology Appointments (2005) / Chapter Skim
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Appendix D How Much is Enough? Setting Pay for Presidential Appointees
Appendix D How Much is Enough? Setting Pay for Presidential Appointees
Pages 101-128
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A P P E N D I X D How much is enough? Setting Pay for Presidential Appointees Reprint 101
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Science and Technology in the National Interest How Much is Enough? Setting Pay for Presidential Appointees A Report Commissioned by The Presidential Appointee Initiative Gary Burtless The Brookings Institution March 22, 2002 Published in March 2002 by The Presidential Appointee Initiative A Project of the Brookings Institution funded by The Pew Charitable Trusts 1730 Rhode Island Avenue, NW Suite 301 Washington, D.C.
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Strong candidates seldom accept favor of a pay hike for federal executives senior administration posts solely, or even are widely seen as voting for an improve mainly, out of pecuniary considerations, ment in their own remuneration. but many people will be deterred from Constituent pressure often forces public service if a large financial sacrifice Congress to hold a yes or no vote on is required in order to serve.
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objectives, however, the level of top officials pay must have an impact on the The mechanism for setting salaries in recruitment, performance, and morale of Executive Schedule positions has varied senior administration officials. over time.
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This in turn increased pressure the Executive Salary Cost-of-Living on the Quadrennial Commission to recom Adjustment Act of 1975. The new law mend hefty pay increases to allow top fed provided that senior executives and mem- eral salaries to catch up with changes in bers of Congress would receive the same the cost of living and adjustments in the percentage annual salary increase as pay scale covering ordinary federal work white-collar workers in the civil service ers.
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. The percentage change in highsize of the congressional pay hike ignited level federal salaries is calculated as the a firestorm of public controversy, prompt- change in the ECI minus 0.5 percentage ing Congress to reconsider once again its points, but the percentage increase cannot basic procedure for setting top federal exceed the percentage adjustment made in salaries.
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Housing is always a critical Whereas congressional salaries increased item in family budgets. It is particularly 241 percent and Cabinet officer pay rose important when families are required to 169 percent between 1969 and 2001, the live temporarily a long distance from their Bureau of Labor Statistics Consumer permanent homes or to relocate altogether.
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. Figure 2: Annual Congressional and Cabinet Officer Pay Measured in Current and Constant Prices, 1969-2001 Congressional Pay $300,000 $250,000 $200,000 2001 prices $150,000 Current prices $100,000 $50,000 $0 1969 1973 1977 1981 1985 1989 1993 1997 2001 Cabinet Officer Pay Cabinet Officer Pay $300,000 $250,000 $200,000 $150,000 2001 prices Current prices $100,000 $50,000 $0 1969 1973 1977 1981 1985 1989 1993 1997 2001 Note: Price levels are calculated using the U.S.
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to the household budget and one that is difficult to avoid. Like housing costs, the Top federal office holders are not the only sticker price of a college education has Americans who face high living costs, of risen much faster than consumer prices course.
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has also climbed more slowly than the incomes of the middle class. Figure 4 shows the relationship between top office-holders salaries and median income over the four decades from 1960 Top Federal Salaries in to 2000.
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Salaries of Cabinet Officers andMembers of Congress Compared with Average Manufacturing Worker's Pay (1909-2000) 25 e 20 wag 15 manufacturing 10 to 5 Ratio 0 1908 1916 1924 1932 1940 1948 1956 1964 1972 1980 1988 1996 Cabinet officers' pay Congressional pay Sources: See references.
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The hourly wage of Whether the gap between top government highly compensated workers has increased salaries and average pay remains big significantly since the 1970s compared enough to attract the best candidates to with the wages earned by workers in the high-level federal positions depends on middle of the wage distribution. In 1980, the motivations of people who are asked the 95th percentile wage was 2.4 times the to serve, and on the salaries offered by median U.S.
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Relative Earnings of Highly Compensated and Well-Educated Workers, 1973-2000 Highly CompensatedWorkers 300 e wag 275 Wage at the 95th percentile 250 median of 225 percentage 200 Wage at the 90th percentile as 175 Wage 150 1972 1976 1980 1984 1988 1992 1996 2000 Workers with College and Advanced Degrees 240 e 220 Workers with post-college degree wag 200 median of 180 percent 160 as Workers with college diploma 140 Wage 120 1972 1976 1980 1984 1988 1992 1996 2000 Source: Economic Policy Institute tabulations of BLS hourly earnings data.
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For example, if the for top-level federal appointees has been wages of two workers are initially the greater than is implied by Figure 5, same but one worker receives pay increasbecause the market wage available to sen- es that are 1.4 percent faster than the ior political appointees has increased other, at the end of 20 years the worker noticeably faster than the average manu- with faster wage gains will earn one-third facturing wage. more income than the worker who receives smaller raises.
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Among the presidential appointees favored professors. Their average salary who came from outside the government, in the early 1970s was just 42 percent of a the most important sources of top officials Congressman s salary.
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Top Federal Salaries Compared with Business Executive and University Professor Pay Average CEO Pay as a Multipleaofmultiple Average CEO Pay as Executive Level II of Executive Level Pay Pay 100 92.7 pay 80 60 Congressional 40 of 20.3 12.9 20 10.3 8.5 Multiple 0 1960 1970 1980 1990 2000 Average University Professor Salary as a Percent of Executive Level II Pay, 1970-2000 65% 60% pay 55% 55% 50% 45% Congressional 42% of 40% % 35% 30% 1970 1974 1978 1982 1986 1990 1994 1998 Sources: see references 117
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Director of National Institutes of Health, DHHS 122,400 2000 a President of selective private research university 402,131 30% 2000 b Base pay of a CEO physician 302,000 41% c Median salary, president of private university 185,361 66% 5. Commissioner of FDA, DHHS 122,400 2000 a Chief executive officer, pharmaceutical company 1,987,500 6% 2000 b Base pay of a CEO physician 302,000 41% c Base pay of medical director / clinical department head 225,535 54% 6.
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tive pay when good candidates for the job can be recruited from public agencies or When a top federal job requires detailed nonprofit organizations. For example, the knowledge about science or medicine, assistant secretary of Health and Human however, federal salaries must seem far Services for children and families receives less attractive.
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Thus, even director. The director s salary is less than excluding bonuses, the average pay of half the average compensation paid to medical directors and department heads in physician-CEOs placed by Witt/Kieffer, hospitals and universities is almost twice the leading executive search firm special- that of the FDA commissioner.
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are similar, both in structure and in recruitment and relocation bonuses as generosity, to good pension programs other senior federal executives, there is litoffered by large private employers. About tle evidence that the agencies that have one-third of presidential appointees work discretionary authority to pay these bonusin federal jobs before accepting a presi- es often use them.
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adults are apparently unaware of the com pensation received by senior executives, doctors, lawyers, and scientists in the pri The Attractions of High-Level vate sector, but others may have little Positions knowledge of the actual salaries that are Most people willing to accept a top-level paid to top federal officials. government job recognize that the pay in such a job can rarely match that provided One puzzle is voters unwillingness to by a comparable position in the for-profit countenance salary schedules that past sector.
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Political appointees The economic rewards of federal service serve in top administration jobs for an have fallen, especially in comparison with average of less than two years. The wages and benefits offered to highly qualiresponsibilities of top federal jobs have not fied candidates in the private marketplace.
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same period, top federal appointees have Do we want the federal government to be seen their pay shrink, both in purchasing deprived of the talents of highly compe- power and in relation to the pay of aver tent people who may be deterred from age workers. Talented people who are public service by the financial sacrifice concerned about their families well-being they must accept in order to serve?
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2001. A Vote of No Confidence: How Americans View Presidential Appointees (Washington, DC: The Presidential Appointee Initiative)
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Figure 3: Changes in Living Costs Washington, D.C., housing costs. Bureau of Labor Statistics consumer housing cost index for Baltimore-Washington metropolitan area.
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. Base pay of CEO physicians and medical directors / clinical department heads.
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comments and suggestions. The views expressed are solely those of the author Prior to joining Brookings, Burtless was and should not be attributed to The an economist in the Department of Labor, Presidential Appointee Initiative, the from 1979-81, and in the Department of Brookings Institution, or The Pew Health, Education, and Welfare, from Charitable Trusts.
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