Thursday, May 2, 2013

Minnesota legislators’ pay could jump by 32%—but still, 2014 is no 1979

Originally published in the Twin Cities Daily Planet.

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On Tuesday, April 16, the Minnesota Senate voted 34-32 to pass SF 1589, a bill that would raise the pay of Representatives and Senators next session by about $10,000 annually, from $31,000 to almost $41,000 in 2015.

The pay raise was included in an omnibus bill covering a range of topics, and debate largely avoided discussion of the pay raise even as Republicans and a handful of Democrats from swing districts threatened to kill the legislation. But the brevity of discussion on the pay raises ignores the historic conversation surrounding Minnesota legislators’ salaries.

The first reference to legislative salaries appears in a travel book by a Swedish visitor to the state.
“Although the government officials in America are in general very poorly paid, which naturally results in fraud on every side, on the other hand, the members of the legislative bodies are paid enough so that they do not have to go home empty handed. The senators and representatives are paid five dollars a day, and they receive free travel back and forth and about twenty dollars for stationary [sic].” (Hugo Nesbitt, Two Years in America (1872-1874); Accounts of Travel, republished in Minnesota History, December 1927)
Ever since the 1870s, debates over legislative pay have been vigorous. Legislators may be reluctant to vote for pay raises because of negative public reaction. In 1961, for example, Liberal Rep. Peter Popovich floated an anonymous trial balloon in the media proposing a pay raise. After blistering Conservative criticism on the floor of the legislature, Popovich acknowledged his authorship of the proposal, which did not become law.

Missed in this debate is the actual value of the legislative salaries. The following chart compares actual historical legislative pay with the same salaries adjusted by 2013 inflation using the national consumer price index (CPI).
Drawing from records in the state legislative library, this chart compares legislative salaries over time with the same salaries adjusted for inflation. Chart created by Daniel Surman.

It is important to pay attention to the troughs and the peaks in the salary levels. Where actual pay may remain constant over several years, inflation causes the value of that pay to decline over time. Thus, in 1973 legislators received an annual salary of $8,400, a total of about $44,000 adjusted by 2013 CPI. Legislators received $8,400 again in 1974, but the inflation-adjusted value of that same sum had declined by about $4,300. The same $8,400 was worth more than $3,300 less the next year. By 1978, the total value of that same $8,400 dropped below $30,000, losing $14,000 in inflation-adjusted value in just six years.

Facing this problem, employers often include a small cost-of-living raise over time for employees. However, legislators must pass a law to raise their own pay.

Many legislators fret over the potential conflict of interest created by voting on their own pay. In 1983, the legislature passed a law to establish a Compensation Council that would recommend pay increases for legislators, the governor, and other constitutional offices. That body still exists today, and in March the Compensation Council recommended the presently-debated salary increase for legislators and other state offices. Still, the core problem remains: legislators must vote to accept the compensation council’s recommendations and deal with the fallout if they vote yes.

Legislators can employ workarounds to this problem. Most members take per diem payments for attending session and committee meetings (the Pioneer Press has tracked per diem payments for individual legislators since 2007). In 2012, individual Senators received between about $6,500 and $11,000 in per diem payments, while Representatives received between $3,000 and $9,000. Legislators can also participate in a pension plan and those living outside the metro area have the option to be reimbursed for housing and travel up to certain limits.

These workarounds have historically been attacked as lacking transparency, a way to increase pay without talking about giving legislators a raise. Sometimes a legislative pay increase will still outpace the rate by which other Minnesotans’ salaries increase for the cost of living. Between 1978 and 1980, actual legislative pay jumped from $8,400 to $18,500. In contrast, in 1979 the median household income in Minnesota was $17,761, almost $1,000 less than the 1980 legislative pay raise even before taking per diem and other benefits into account.

The last salary increase was passed in 1998, raising actual pay from almost $30,000 to its present $31,000 level. Since then, the Compensation Council has recommended pay raises five separate times. The latest proposal in 2013 breaks with past tradition to explain why the council argues in support of legislative pay raises.

“We think that salaries of legislators should be high enough so that potential candidates for these policy-making positions are not deterred by loss of income from running for office,” the report notes. “Otherwise, we face the prospect of a Legislature that is not representative of Minnesota’s citizenry.”
The uncertainty of inflation only compounds the difficulty of determining just what a “high enough” salary is.

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