The American public is frustrated with Congress. There is a constant stream of bickering between the two parties and two chambers, while the country falls deeper into debt to the tune of $1.3 billion per day. Congressional approval ratings are an abysmal 13 percent. To top it all off, Congress is in the middle of a five-week recess. Followed by their return on September 8, where they are only expected to be in session for 15 days before they adjourn and head home to try and get re-elected. With such little action from our lawmakers and so much of their time spent elsewhere, there is no better opportunity than now to look into congressional compensation and the many financial perks that go along with being a member of Congress.
The Taxpayers Protection Alliance and Our Generation just released a report that shows rank and file members of Congress make $174,000 per year. In addition to a salary of $174,000 per year, which by itself puts DC representatives among the highest-paid 5 percent of American workers, they also receive more generous fringe benefits than typical American employees. In fact, in 2014, congressional compensation including benefits totals around $286,000 per year.
One way to measure the relative size of congressional salaries is to compare them to the average wages earned by private-sector employees. According to the Organization for Economic Cooperation and Development (OECD), an average full-time employee in the United States earns an annual pay of $55,048. This means that members of Congress make 3.2 times more than the average full-time American worker.
The perks really add up.
In addition to paid time off and U.S. taxpayer contributions toward the health and life insurance plans, members of Congress receive contributions toward retirement benefits as well. These contributions equal around 47 percent of their annual salaries, or about $82,000. In contrast, typical employees in the private sector are eligible only for a 401(k) type pension plan and do not qualify for retirement health coverage. Thus, Congressional pensions are considerably more generous than those offered to private sector employees.
Until the 1850s, members of Congress were paid on a per diem basis of $6-$8 for each day that Congress was in session. Although the number of days in session varied from year to year, members of Congress who were in session around 160 days per year made annual pay of around $960 to $1,280. During this same time period, service in Congress was considered part-time employment and members of Congress typically had additional employment outside of their duties in Congress. In fact, this tradition is still the norm in many state legislatures.
The Ethics Reform Act of 1989 put in place the current method by which Congressional pay is adjusted. Members of Congress receive an automatic annual salary increase based upon changes in wages and salaries measured in the Employment Cost Index (ECI), a measure of labor costs tabulated by the Bureau of Labor Statistics. The ECI is not a measure of inflation but instead tracks changes in compensation throughout the economy. Because private-sector compensation rises with productivity, the ECI will generally increase at a faster rate than inflation. From March 2010 through March 2011, wages and salaries as measured in the ECI increased by 1.5 percent. However, salaries for members of Congress cannot rise more quickly than the base pay for ordinary federal government employees, which Congress voted to freeze for two years beginning in 2011.
There have been recent attempts at reforming congressional pay. In the fall of 2013, there were two reform attempts that would ensure if the government shut down, members of Congress would not be paid. Rep. Richard Nolan (D-Minn.) offered, “The No Government No Pay Act of 2013,” which would “prevent lawmakers from receiving pay for every day that the government is in shutdown mode.” Rep. Chris Collins (R-N.Y.) introduced the “Government Shutdown Fairness Act,” which would “place Congress’s pay in escrow until the shutdown ends, compensating lawmakers retroactively.”
In January 2014, Rep. Keith Rothus (R-Pa.) introduced H.R. 3887, the Congressional Pay for Performance Act of 2014. This bill would ensure that unless Congress completed a budget and approved all legislation for appropriations, they would receive no pay.
Like many other taxpayer battles, the biggest roadblock is Congress, because members of Congress don’t believe they are overpaid. In fact, retiring Rep. Jim Moran (D-Va.) thinks that members aren’t paid enough. An odd sentiment, considering an analysis by the Federal Election Commission in 2013 revealed the average Senate seat costs $10 million to win while the average House of Representatives seat costs $1.7 million. Surely, a person wouldn’t spend $10 million or $1.7 million for a job that “only” pays $174,000 if there weren’t benefits to being a member of Congress.
