Memorandum: In Support of Legislative Pay Raises

NEW YORK, NY (08/10/2016)(readMedia)-- MEMORANDUM

TO: Selected Editorial Boards

FROM: Susan Lerner, Executive Director at Common Cause/New York

SUBJECT: In Support of Legislative Pay Raises

Introduction

On November 15th, The New York State Commission on Legislative, Judicial, and Executive Compensation will issue a report on legislative pay raises and make recommendations. The Commission's meetings have attracted significant media coverage, with attendant speculation as to what the Commission may ultimately decide. Common Cause/NY has consistently supported setting appropriate compensation levels for elected officials, combined with a ban on outside income and legislative lulus.

Arguments

Legislative pay raises are needlessly controversial, and lawmakers fear backlash from voters and opinion makers. As a consequence, the state legislature has gone without a pay raise for 17 years. The longer the delay, the larger the increase should be to keep up with inflation and relevant salary increases, making it even more fraught. A Compensation Commission should examine this topic every four years to hold down the size of any raises and to emphasize that compensation adjustments are good management and not politically motivated.

The last raise, in 1999, represented a 38% increase over lawmakers' $57,500 salary, so any future increase indexed to inflation would be substantial. According to the Department of Labor's (DOL) Bureau of Labor Statistics Consumer Pricing Index, the buying power of $79,500 in 1999 would represent the buying power of $113,000 today: a 42% increase.

New Yorkers deserve qualified and talented candidates for public office. Although the public sector cannot and should not compete with private sector salaries, lawmakers and prospective candidates - many of whom have families- should not be penalized for pursuing public service.

Performance is a relevant concern and the Legislature's utter failure to pass meaningful ethics reform is deeply problematic. However, we regard a pay raise not as a reward for bad behavior but as a tool against corruption, conditioned on banning outside income and legislative lulus.

A ban on outside income and lulus helps to eliminate conflicts of interest, and attract higher quality candidates wholly committed to the public interest. A ban on lulus also reduces salary -padding opportunities by denying legislative leaders another tool with which to consolidate power and buy loyalty.

The Becker-Stigler model represents the relationship between increasing wages and reducing opportunities for corruption:

v(w-wø) > (1-v)b

In the model, v represents the probability of an audit (which can also be referred to as "being caught"); w represents the nominal wage, which, in our case, can is the $79,500 salary for state legislators; wø represents the opportunity wage, which would be outside income; b represents the bribe, or incentive, to act corruptly.

Economists Rafael Di Tella and Ernesto Schargrodsky1 tested the model in Argentina, and found that an adequate pay increase, combined with proper oversight, correlated to a decrease in corruption. The experiment can be extrapolated to the New York State Legislature, where a conditional pay raise could have the same effect. Coupled with the enforcement of ethics laws and passing stronger ones, corruption can, theoretically, be significantly reduced through this model by maximizing the incentive to act lawfully and minimizing the temptations to act unlawfully.

Conclusion

The state legislature is in need of a pay raise. New Yorkers deserve the most qualified candidates for public office, and we must and can do better to attract potential candidates to serve. Current lawmakers, some of whom truly struggle to get by on their base salary (particularly those with childcare needs), shouldn't be financially punished for taking a politically unpopular, but correct position.

However, a legislative pay raise should not come without serious reforms to reduce corruption. Common Cause/NY believes that banning outside income, eliminating lulus for "leadership" positions in the legislature, and raising the salaries of legislators is smart, anti-corruption, long-term policy that is long overdue. The Commission should couple any salary increase it supports with clear recommendations for banning outside income and lulus.

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1Di Tella, Rafael, and Schargrodsky Ernesto. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires." The Journal of Law & Economics 46, no. 1 (2003): 269-92.