HIGH QUALITY LEADERSHIP - OUR GOVERNMENT'S MOST PRECIOUS ASSET THE REPORT IF THE COMMISION ON EXECUTIVE, LEGISLATIVE AND JUDICIAL SALARIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89G00643R000700040030-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 89
• Document Creation Date: December 23, 2016
• Document Release Date: December 20, 2011
• Sequence Number: 30
• Publication Date: December 15, 1986
• Content Type: REPORT

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Cony routed to ADDA & DDA.
DO NOT use this form as a RECORD of approvals, concurrences, disposals,
clearances, and similar actions
FROM: (Nam%, ors symbol. Aa I
Room No.-Bldg.
U.SOP.O: 1983 _421-529/320 FORM 41 (Row. 7-76)
NO Il A lal-1lift
STAT
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HIGH QUALITY LEADERSHIP - OUR GOVERNMENT'S
THE REPORT OF
THE COMMISSION ON
EXECUTIVE, LEGISLATIVE AND JUDICIAL
SALARIES
December 15, 1986
"In the search for effective leadership, the
government is but one among many competitors
in the marketplace. Its success will depend
to a substantial extent on the kinds of
incentives and satisfactions it can offer."
(Leadership in Jeopardy, National Academy of
Pubt3c Administration, 1985)
"In other words, it is the independently
wealthy, the very young and those in the
concluding phases of their careers who
increasingly constitute our candidate pool."
(Ann Banning, Director of Recruitment, Office
of Presidential Personnel, 1986)
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Commission on Executive, Legislative
and Judicial Salaries
Members of the 1986 Commission
Appointed by the President:
Chairman
James L. Ferguson
Chairman and Chief Executive Officer
General Foods Corporation
Vice chairman
C. Todd Conover
Former Comptroller of the Currency
Edwin L. Harper
Senior Vice President - Finance
and Chief Financial Officer
Campbell Soup Company
Appointed by the President of the-Senate:
Russell W. Meyer, Jr.
Chairman and Chief Executive Officer
Cessna Aircraft Corporation
Esther L. Coopersmith
Publisher
Spur Magazine
Appointed by the Speaker of the House of Representatives:
John J. Creedon
President and Chief Executive Officer
Metropolitan Life Insurance Company
John E. Lyle
Johnson, Wurzer & Westmoreland
Appointed by the Chief Justice of the Supreme Court:
James T. Lynn
Chairman
Aetna Life and Casualty Company
Robert L. Clare, Jr., Esq.
Shearman & Sterling
Executive Director
Chandler L. van Orman
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 90 00077 Paura0 g- 3. 077 th?rfl?iI poeu tn one
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total do D D t it = $233.016.000
Legislative Executive
I II
Judiciol
0
source: OPM
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54.9X
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PREMISE . . * s e e s . . . . . . s e e s so so . . . . 3
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . 4
RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . 5
THE COMMISSION'S REPORT . . . . . . . . . . . . . . . . . 10
FINDINGS AND CONCLUSIONS OF PAST COMMISSIONS . . . . 10
THE 1986 INTERIM COMMISSION . . . . . . . . . . . . 13
TWIN CONCERNS: PAY EROSION AND PAY DISPARITY
PAY EROSION - The Decline in-Earning Power . . . . . 15
PUBLIC AND PRIVATE SECTOR PAY. DISPARITY . . . . . . 19
APPENDIX:
THE 3UDICIAL BRANCH 22
THE LEGISLATIVE BRANCH . . . . . . . . . . . . . . . 30
THE EXECUTIVE BRANCH . . . . . . . . . . . . . . . . 35
THE QUESTION OF LINKAGE . . . . . . . . . . . . . . 42
MEMBERS OF PAST COMMISSIONS
ORGANIC STATUTE
tM
LIST OF SUBMISSIONS
BIBLIOGRAPHY
SPECIAL ACKNOWLEDGEMENTS
COMMISSION STAFF
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3,037 OF POSITIONS UNDER MANDATE
OF THE COMMISSION
Current Salary Number of
As of January 1987 Positions
Vice President . . . . . . . . . . . . . $100,800 1
Level I includes Cabinet Officers . . . 88,800 16
Level II includes Deputy Secretaries
of Cabinet Departments; and Heads of
Offices and Agencies such as the VA,
CIA, FBI, EPA, NASA and OMB . . . . . 77,400 72
Level III includes Under Secretaries of
Cabinet Departments; Chairmen of
Regulatory Commissions such as the
FTC, FDIC and the NLRB . . . . . . . . 75,800 192
Level IV includes Assistant Secretaries
of Cabinet Departments; Members of
-Regulatory Commissions; - Cabinet
Department General Counsels . . . . . . 74,500 460
Level V includes Directors of major
Bureaus of Cabinet Departments . . . . .. 70,800 99
Board of Governors of the U.S. Postal
Service .. . . . . . . . . 00 . ?. . 10,000 _ 9
Speaker of the House . . . . . . . . . . . 100,800 1
President Pro Tempore, Majority
and Minority Leaders . . . . . . . . . . 87,600 5
Senators, Representatives, Four
Delegates tW-,Congress,, Resident
Commissioner of Puerto Rico,
Comptroller General . . . . . . . . . . 77,400 535
Director of CBO, Deputy Comptroller
General, Librarian of Congress and
The Architect of the Capitol . . . . . . 75,800 4
Deputy Director of CBO, General
Counsel, GAO, Deputy Librarian of
Congress, and the Assistant Architect
of the Capitol . . . . . . . . . . . 74,500 4
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Current Salary Number of
As of January 1987 Positions
Chief Justice . . . . . . 00 . . . . . $111,700 1
Retired Chief Justice . . . . . . . . . 111,700 1
Associate Justices . . . . . . . . . . . 107,200 8
Judges, Circuit Courts of Appeal;
Court of Military Appeals . . . . . 85,700 236
Judges, District Courts; Court of
International Trade; Tax Court,
Assistant to the Chief Justice;
Director Administrative Office -
U.S. Courts; Director, Federal
Judicial Center . . . . . . . . . . . 81,100 821
Judges, U.S. Claims Court . . . . . . . 72,300 17
Deputy Director Administrative Office -
U.S. Courts; Circuit Executives . . . 70,800 13
Bankruptcy Judges U.S. Magistrates . . . 70,500 542
1,639
SOURCE: UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
ADMINISTRATIVE OFFICE OF THE U.S. COURTS
? ii
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PREMISE
Financial compensation is becoming a strong negative factor in
our ability to attract and retain our best people for the
Congress, the Federal bench and our executive agencies, despite
the great emotional and intellectual rewards and satisfaction
which come from public service. While we can all appreciate the
substantial financial sacrifices many have been willing to make
in order to serve, our democracy is strengthened when public
service is an option even. for those with modest means and family
responsibilities. Moreover, it should not be a necessary
condition for those so employed to exhaust their own personal
resources, go into-debt or seek other.income sources in order to
be able to serve.
The commission does recognize that parity between the highest
level public and. private executives is neither necessary nor
practical. However, as the disparities increase and the tft. sacrifice from loss of purchasing power becomes an economic
hardship, it has and will become increasingly more difficult to
attract to and retain in these top leadership positions the best
and the brightest people this country can offer.
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EXECUTIVE SUMMARY
The Interim Commission agrees with all past Quadrennial Commis-
sions that the low salaries paid to the nation's highest ranking
public servants constitute a serious national concern. Over the
last 17 years, the problem has worsened significantly.
Aside from infrequent cost of living adjustments totalling
31 percent, the country's top federal officials - around
1,000-persons, including Senators and Representatives, the
federal judiciary and Executive Schedule administrators - have
received no salary increases since 1977.
Our most senior government officials have suffered more than a
40 percent decline in purchasing power since 1969. The gap
between top level public salaries and salaries in the private
sector continues to increase. The pay differential between top
federal offi4ais and their counterparts in the private sector
came closest in February 1969, a gap of some 37 percent. Since
then this gap has grown enormously.
The loss of purchasing power and the widening of the salary gap
versus all other sectors of society make it more difficult to
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attract and retain the highest caliber individuals in top level
public positions.
Significant salary increases for top federal officials are
essential to restore this unintended pay cut and move towards
more realistic compensation for those with the most responsible
jobs in government.
Both principle and pragmatism prescribe these adjustments. To do
less is to risk beyond all reason the quality of our government's
most precious asset - its leadership.
RECOMMENDATIONS
Every position covered by the Commission review process now pays
less in real dollars than it did before the process began in
1969. Our recommendations set forth below offer the historic
opportunity to restore some measure of equity to the salaries
paid our top federal officials.
We recognize our recommendations represent substantial percentage
increases. However, it should be kept in mind that over the last
fifteen years the Consumer Price Index has increased over
200 percent. During this period most other wage earners have
more or less kept pace with the cost of living, while top federal
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officials have seen their purchasing power steadily decline.
Adjusted to current dollars. our recommendations fall entirely
within the range suggested by past Commissions.
It is the sincerest hope of the Commission that the salaries
recommended will be agreed to by the President. If this is done,
we believe that our ability to attract and retain people of
talent and dedication will improve and the personal sacrifices
necessary to carry the burden of high public office will lessen.
In spite of our statutory mandate, the Commission has had
insufficient time to analyze and -review the appropriateness of
the "relationship between and among" the respective positions
covered by, its mandate, especially those in the Executive
Schedule. We are recommending salary parity between the U.S.
Claims Court and the U.S. District Court in recognition of job
similarity. We recommend further that the next regular
Commission, to be convened in 1988, conduct a more probing
analysis of the "appropriateness" question and make further
recommendations. To facilitate this analysis, we finally
recommend that the Office of Personnel Management undertake a
thorough study of the appropriateness and relationship between
all 'offices and positions' covered by the Commission mandate so
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that the results of that study will be available to the next
Commission.1
The Commission feels strongly that if its proposals are accepted
and implemented and a significant degree of lost purchasing power
is restored, the need for Senators and Representatives to
supplement their salaries with outside income will be less
pressing. We think it only fair that as a quid pro cruo for more
realistic salaries the present system of honoraria and income
supplementation be re-examined with an eye towards a significant
reduction or elimination. -
1Particularly vexing is the current situation where the
second highest positions in all Cabinet departments are not paid
at the same level. For example, the second highest position in
the Department of Transportation, Deputy Secretary, is a Level II
while the very same position at the Department of Health and
Human Services, Under Secretary, is a Level III.
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'tHE COMMISSION'S RECOMMENDATIONS
Current Salary Recommended
As of January 1987 Salary
Vice President . . . . . . . . . . . . . $100,800 $175,000
Level I includes Cabinet Officers . . . 88,800 160,000
Level II includes Deputy Secretaries
of Cabinet Departments; and Heads of
Offices and Agencies such as the VA,
CIA, FBI, EPA, NASA and OMB . . . . . 77,400 135,000
Level III includes Under Secretaries of
Cabinet Departments; Chairmen of
Regulatory Commissions such as the
FTC, FDIC and the NLRB . . . . . . . . . 75,800 130,000
Level IV includes Assistant Secretaries
of Cabinet Departments; Members of
Regulatory Commissions; Cabinet
Department General Counsels .~. 74,500 120,000
Level V includes Directors of mayor,
Bureaus of Cabinet Departments . . . . . 70,800 110,000
Board of Governors of. the U. S. Postal
Service . . . . . . . . . . . 0, 0 10,000 10,000
Annual Cost of These Proposed Increases S 40,577.800
Speaker of the House . . . . . . . . . . . 100,800 175,000
President Pro Tempore, Majority
and Minority headers . . . . . . . . . . 87,600 160,000
Senators, Representatives, Four
Delegates to Congress, Resident
Commissioner of Puerto Rico,
Comptroller General . . . . . . . . . . 77,400 135,000
Director of CBO, Deputy Comptroller
General, Librarian of Congress and
The Architect of the Capitol . . . . . . 75,800 130,000
Deputy Director of CBO, General
Counsel, GAO, Deputy Librarian of
Congress, and the Assistant Architect
of the Capitol 74,500 120,000
Annual Cost of These Proposed Increases S 31,651,000
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Current Salary Recommended
As of January 1987 salary
JUDICIAL BRANCH
Chief Justice $111,700 175,000
Retired Chief-Justice . . . . . . . 111,700 175,000
Associate Justices 107,200 165,000
Judges, Circuit Courts of Appeal;
Court of Military Appeals . . . . . . 85,700 135,000
Judges, District Courts; Court of
International Trade; Tax Court,
U.S. Claims Court*, Assistant to
the Chief Justice; Director
Administrative Office -
U.S. Courts; Director, Federal
Judicial Center . . . . . . . . . . . 81,100 130,000
Bankruptcy Judges*, Deputy Director
Administrative Office - U.S. Courts . 70,800 120,000
U.S. Magistrates, Circuit Executives* . 70,500 110,000
Annual Cost of These Proposed Increases $ 77,600,200
Total Cost of All Proposed Increases S149829.000 2
* Current Salary As of January 1987
U.S. Claims Court $72,300
Bankruptcy Judges 70,500
Circuit Executives 70,800
2 We recognize that the implementation of our
recommendations will generate additional costs in terms
of fringe and pension benefits as well as in the cost
associated with uncapping both the Senior Executive
Service and the General Schedule. This should lend
credence to the importance of ongoing studies of these
issues. Nonetheless, the Commission feels that its
recommendations are sufficiently important to be enacted
dbspite such cost considerations.
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THE COMMISSION'S REPORT
FINDINGS AND CONCLUSIONS OF PAST COMMISSIONS
Since enactment of the Federal Salary Act of 1967, five Commis-
sions on Executive, Legislative and Judicial Salaries have been
convened. The distinguished Americans who have served on these
Commissions are impressive, not only for their obvious talents
and accomplishments, but for the diversity of the views and
interests they represented.. A list of former Commissioners may
be found in the Appendix.
Given the impressive character of past Commissions, their
thorough examination of the salary crisis, and the unanimity of
their prior conclusions, this Commission feels it appropriate to
recognize the wisdom, expertise and judgment of its predecessors.
This Commission asks the President to recognize that the collec-
tive knowledg..of all past Commissions is a very important part
of the structure upon which this Commission's recommendations
rest.
The past five Commissions have included chief executive officers
of major- corporations, three presidents of the American Bar
Association, two presidents of the AFL-CIO, a president of the
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National Association of Manufacturers, deans and presidents of'
major universities, economists, and other eminent Americans from
a broad variety of fields.- These individuals have been appointed
by five different Presidents, five Presidents of the Senate,
three speakers of the House of Representatives and two Chief
Justices of the United States. In short, those who have served
reflect an extraordinary cross-section of American constitu-
encies.
it would not have been surprising if this diverse group of past
Commission members had reached widely divergent conclusions
regarding the appropriate level of compensation for the senior
leadership of our government. Such, however, was not the case.
Without exception, each prior Commission concluded that top
federal officials were critically underpaid.
Each Commission expressed grave concern over the adverse effect
that both the erosion of real income and the growing disparity
between high level private and public salaries have on those in
top government positions, or those considering such positions.
Previous Commissioners have been particularly concerned about the.
impact of low federal pay on persons with family responsibilities
and those with no other source of income. They uniformly
believed it critical to the true representative nature and
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quality of national leadership that such people not be precluded
- from public service.
Given the weight of evidence each prior Commission has considered
and the thrust of their respective conclusions, this Commission
believes that consensus benchmarks have already been established.
The collective wisdom of these Commissions should not be ignored.
Little has occurred in recent years to improve the economic
plight of this country's top public executives. The conclusions
reached and concerns expressed by each previous Commission are as
valid today as ever.
The passage. of time and the ravages of inflation, albeit "modest"
in recent years, have only made the crisis recognized by past
Commissions more acute. As the aggregate of inflation-caused
salary dilution has become ever more burdensome, the need to
implement these consensus recommendations for significant pay
increases becomes ever more pressing.
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THE 1986-INTERIM COMMISSION
By addressing the legislative infirmities of the procedure, the
Fifth Commission in 1985 laid the foundation for a workable
process for determining and legislating the salaries of those who
govern our country. In its report, the Fifth Commission proposed
that an Interim Commission be established in 1986 for the express
purpose of making specific salary recommendations.
The task then of this 1986,Interim Commission is to build on that
foundation, determine appropriate compensation levels and make
recommendations to the President. This report sets out those
recommendations on pages 8-9.
The Interim Commission has closely examined a wide spectrum of
evidence. We have also relied heavily on the collective wisdom
of previous Commissions, and their conclusions have played an
integral part'4'iii our deliberations and recommendations.
No group the Commission examined has fallen so far behind'.
inflation as those to whom we entrust the reins of government.
While many workers have lost some ground to inflation over the
years, none except. for our top government policy-makers, have
dropped over 40 percent in purchasing power.
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The Commission has received submissions from 54 interested
parties. Not one commentator has claimed that the salaries paid
to those in leadership positions are anything other than totally,
even "dangerously", inadequate.
The new process recommended by the Fifth Commission and enacted
by Congress has generated high hopes that the Federal Salary Act
of 1967 can finally achieve its objectives. Many are looking to
the 1986 Interim Commission's recommendations as a final oppor-
tunity for real salary redress.
The Commission strongly believes that if these expectations are
not met, the adverse impact on the retention and morale of key
officials will be far more severe than any which followed the
failures of prior efforts to achieve adequate compensation
levels.
History conf? ms that many exceptionally gifted individuals have
been willing to serve at considerable financial sacrifice. That
sacrifice has now become so great that many who might have said
"yes" a decade ago,. quickly say "no" today. The Commission
believes the country can no longer afford to ignore the need for
significant pay adjustments for those who shoulder the heaviest
burden of government.
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TWIN CONCERNS: PAY EROSION AND PAY DISPARITY
Over the years senior public servants have experienced both an
absolute loss of earning power versus inflation and a relative
decline in remuneration as peer groups have achieved salary
gains. This situation cannot be allowed to continue.
PAY EROSION
The Decline in Earning Power
The period since the First Quadrennial Commission convened has
seen substantial inflation, particularly during the 1970s. The
Consumer Price Index (CPI) has risen from 108 in 1969 to an
estimated 334.3 in January 1987:
The real income of most Americans has roughly kept pace with the
rise in the cost'of living over this period, and many private
sector execut`fives have experienced real gains. In contrast, the
data shows that federal executives and legislators have experi-
enced a decline of over 40 percent in real income since 1969.
The consequences are obvious. The damage from loss of real
income over time is demonstrated in the difficulties both of
recruitment for positions of leadership and of retention of
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trained, experienced personnel at the peak of their career,
particularly in the judicial-branch.
Poor remuneration has had a profoundly negative impact upon the
once sacrosanct concept of lifetime judicial appointments. For
those whose assets have been exhausted in service to their
government, the private sector provides a tempting solution. How
can the country keep the trained and experienced people it wants,
of the caliber necessary to cope with the most demanding jobs in
government, when much more lucrative positions are readily
available in the private sector?
In many cases, the current pay of top level officials does not
allow them.even to maintain basic family obligations, much less
build up some financial reserves, AND stay in government. People
just cannot afford it. There comes a point when government
salaries are so absurdly low that no one can remain unconcerned
by the burdens endured by themselves and their families
regardless oft"the non-salary rewards of government service.
"Last year I used the last of my investments
to support myself and my family. All I have
left is the equity in my home. I will quit
before I sell it." (Hon. Warren J. Ferguson,
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EXECUTIVE LEVEL II.1969 SALARIES
Adjusted to Current. Indicators
What 1969 Executive Level II salaries would be
today if they had experienced the same increases as
General S hedule employees and military personnel or
if the salaries had kept pace with inflation.
J
1969 Salary Current Salary Adj.Per GS Adj.Per CPI
source: B LS,DOL - OPM
Adj.Per Military
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in response to a survey of judges by the
Federal Judges Association, 1986)
In 1969, the Administrator of NASA (Level II) earned $42,500.
Adjusted for inflation, that is worth $128,900 today. The
current Administrator earns $75,100 - an effective 42 percent pay
cut. As a former NASA Administrator, Robert A. Frosch, explain-
ing his resignation, told the 1980 Commission:
"I have simply arrived at a point where I
cannot have myself and my.family in a govern-
ment position."
Those faced with the cost of college educations underscore the
argument. In the words of the Fifth Commission, the high cost of
college tuition is often an "insurmountable" barrier to public
service. As former Judge Thomas A. Masterson explained:
"At that time I was 45 years old, I had five
children...I was going to be faced with three
or four kids in college at the same time. I
concluded that I'd resign explicitly on the
ground that I could not adequately take care
of my family." (The Fifth Commission Report,
1985)
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Although there are exceptions, government service has not
historically attracted the financially ambitious. Salary limita-
tions have been balanced by the benefits of power and position.
However, the "salary gap" is now far too wide to be able to be
balanced over any-reasonable time period by these more intangible
benefits. As a result, the personal sacrifice demanded for
public service has become unrealistic, unjust and unwise.
Without substantial increases for our judges, legislators and
executive schedule officials, we'cannot begin to restock the pool
of exceptionally talented people from which this country must
draw its leaders. Without more appropriate compensation levels
permitted for these positions, we will not retain the quality of
leadership needed in government. The recommendations of the 1986
Interim Commission are intended to ensure that we as a Nation do
not become, in the words of the Fifth Commission, "a government
led by the wealthy and by those with no current family
obl igations.
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19
PUBLIC AND PRIVATE SECTOR PAY DISPARITY
The Commission has already, stated that we do not expect to see
the pay of "government CEO's" and others in our purview equal
that of corporate CEO's - despite the often greater responsibili-
ties, much larger budgets and staffs those in government have to
manage. But, neither can these same salaries be absurdly low.
The government must become at least marginally competitive with
the private sector to be able to attract and retain the brightest
and the best. If top level government service means both leaving
high paying private sector 'positions accepting a salary so
low that even?minimum family obligations cannot be met, we will
see the pool of talent for senior government positions evaporate.
The Commission asked the Hay Group to undertake a series of
analyses - using Hay Access Technology - of Level II executive
jobs with comparable senior "second tier" corporate executive
jobs, such as Chief Operating Officers and Division Presidents.
It showed tit comparable private sector positions now pay
between $216,400 and $543,800.
The Hay Group states that:
"A pay increase of 90 percent would be
required in 1987 for Level II executives to
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achieve the same relative pay relationship
which existed in .1970 with private - sector
corporate executives -- a position 37 percent
below the low end of the range of comparable
private sector jobs."
This comparison, of course, examined only cash compensation,
taking no account of the substantial additional benefits in
incentive opportunities, such as stock options, stock apprecia-
tion rights and other "perks" available to corporate executives
which only serve to exaggerate the disparity.
The current salaries of the 3037 positions we have examined range
from $68,400 to $97,900. (Only the Supreme Court Justices earn
more: $108,400 for the Chief Justice and $104,100 for the
Associate Justices).
* The average deputy counsel in a corporate legal
department earned $134,100, 24 percent more than the
Chief Justice of the United States ($108,400) and about
70 percent more than the salary of a District Court,
Judge ($78,700).
Previous Commissions have warned of the danger that public
service may become the preserve of the wealthy; that only those
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21
able to live independently of their government salary will be
able to choose to serve -in government. Already, there is
widespread belief that substantial personal wealth is a prere-
quisite, certainly for elective office, and increasingly for
service in other branches of government.
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Level II Salary
Adjusted Relative to Other Changes
100
150
1JU
180 '
170
140
130
120
110
100
Because of limitations of availability of data, projections have been
made using annual averaging increases for items.
source: OPM
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22
THE JUDICIAL BRANCH
The framers of the Constitution intended judicial appointees to
serve for a lifetime. The twin guarantees of life tenure and no
diminution in compensation were designed to secure the total
independence sought by the Founding Fathers for the Judiciary.
Neither guarantee is secure today. Erosion of judicial pay
breaches faith with the Constitution.
"The simplistic potion that lifetime tenure
and lifetime salary make appointment to the
federal bench a plum is an anachronism.
A lifetime salary of $78,700 is not a
significant benefit in an economic environ-
ment where a successful lawyer:is likely to
be covered by a pension plan that pays from
$80;'`D00 to $90,000 in retirement income at
age 65."
(William M. Saxton; Butzel, Long, Gust, Klein
& Van Zile,, Detroit, October 22, 1986)
The Commission is concerned that judicial independence is under
siege. The decline in the purchasing power of judicial salaries,
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Uha JOD1JO?ObY see
U5 Claims Ct.
Military &
Circuit Court
[xnc;usti ves. etc.
source: OPM
Circuit ,Cou r is
of Appeal
Supreme Court
US Magistrates
8 Bankruptcy Judges
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combined with the fact that such substantially higher earnings
are common in the private sector, is beginning to undermine the
very concept and reality- of lifetime judicial appointments.
Scores of people are now considering "career changes" out of, not
into, the Federal Judiciary...
As the financial sacrifices of judicial service mount, lifetime
tenure becomes a sentence in itself, a sentence that more and
more judges are unwilling to serve. More judges have resigned
from the Federal bench in the last fifteen years than at any time
in the 182 year- history. of the judiciary. Fifteen judges
resigned between 1980 and 1984 alone.
When asked --in a study by the 1976 Commission what their reasons
were for leaving federal employment, some 75 percent of former
judges cited 'inadequate compensation' or 'better offers' as the
reason for their resignations.
"Juricial salaries in the United States have
become a national disgrace . . . . The
inequity in the present system is so extreme
that immediate corrective action is
critical."
(Bruce W.~Kauffman; Dilworth, Paxson, Kalish
& Kauffman, October 1986)
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24
Since the beginning of the 1970s, the rate of federal judicial
resignations has more than doubled, and most of the judges who
resigned stated that the level of remuneration was' their prime
reason for doing so. If the current accelerated rate of resigna-
tions continues, the early departure of 40 judges can be expected
in this decade.
It is hard to assess the real cost of replacing an experienced
federal judge who resigns at the pinnacle of his career, but the
implications for the judic.al'system are severe. It takes fully
five years for a qualified attorney, once appointed to the
federal bench, to reach peak efficiency. Early departure thus
creates a gap in the system which at best cannot be filled for
half a decade, but which at worst may result in a permanent
diminution in the capabilities of the service.
As new recruitment at inadequate salaries threatens to bring less
qualified men and women to the bench, the real cost cannot be
calculated in dollars. The real cost will be in the insidious
and longer term drain imposed on the nation's judicial system, a
loss we will all feel.over time, if not now adequately addressed.
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EROSION of PURCHASING POWER
Dist. Court Judges vs Sen. Staff Attys
? 20.0%
10.0%
0.0%
-10.0%.
-20.0%
-30.0%
-40.0%
U.S. District Court Judges have experienced a percentage
loss of real income of 34% compared with corporate senior
staff att~prneys who have seen a percentage increase in
real incc~fne of 16%.
~. +-- 1 .
1969 1972
O Dist. Court Judge
1975
1978
1981 1984
Sr. Staff Attorney
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25
The traditional view of Federal judges as older persons taking up
a judgeship at the conclusion of successful careers is not borne
out by current data. In the last ten years, almost 70 percent of
judges were only 40 - 55 years old at appointment. Another
8 percent were under 40 on appointment.
The figures suggest that modern judges are middle-aged, mid-
career professionals with families, and thus concerned with
financial planning and security. They are paid at levels well
below their earning potential which fail even to reflect the
impact of inflation over the years since their appointment.
"Judges don't expect to get rich on the
bench. But they do expect to get, in real
terms, what the job paid when they took it.
I don't see how anyone can reasonably quarrel
with that expectation."
(Hon.tJoseph L. Tauro, United States District
Judge, Massachusetts)
"I have been in public service for over ten
years. During this period, I have expended
most of my previously acquired savings in
order to maintain a reasonable standard of
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26
living. I will likely be required to re-
mortgage my home in'-order to educate my son."
(Hon. Donald E. Zeigler, United States
District Judge, Pennsylvania)
Because of this failure to keep pace with inflation, the level of
earnings in private practice is becoming an increasingly influen-
tial factor in judicial career planning. Its lure is irresisti-
ble for many.
Reservations about life tenure and the consequent possibility of
a return to private practice suggest the wisdom of "contingency
planning" on the part of potential judicial appointees.
It is feared that increasing numbers of nominees may accept
appointment with the quiet intention of serving only a few years
before "retiring" to private practice, with the enhanced prestige
of a federal judgeship and the substantial remuneration of a
partnership in a leading law firm..
Such a "stepping stone" approach to service on the bench begins
radically to subvert-the basic premises of the constitutional
structure. Any suggestion that a judge may view the attorneys
before him in court not only as current advocates but also
potential law partners would clearly do serious damage both to
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27
the integrity of the judiciary itself and to public confidence in
- its fairness.
While we do not expect our judges to be average in any way, they
earn substantially less than even the 1985 national average
remuneration of $164,000 a year for a 50 year old law firm
partner. In larger cities, the median salary figure for 50 year
old partners was $254,200 in 1985 and many top lawyers, of
course, earn substantially more, indicating the economic strength
of the profession. The top earning firm in the nation generated
$880,000 in profits per partner in 1985.
All judicial peer groups fare better in pay than our federal
judges. chief corporate lawyers earn around $127,000; when
bonuses are included, this becomes $157,000. Entry level posi-
tions at some major law firms pay more than federal appointments.
Young associates at some law firms in New York would have to take
pay cuts to accept a nomination to the federal bench!
. j.
As a result, the talent pool of "the best and the brightest"
- those willing and eager to take up the job for life - is
shrinking dramatically.
"If the present state of affairs continues,
those involved in the federal judicial
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selection process will have for consideration
only the wealthy- or those individuals for
whom a federal judgeship will constitute a
step up the financial ladder."
(Former Deputy Attorney General, Edward C.
Schmults, June 1984)
The First Commission wrote that "Judges cannot be expected to
endure the diminution of their purchasing power much longer
without the result being severe recruitment, retention and morale
problems." We continue to see all of these problems today as,
for 15 years, salary increases have been denied, reduced or
granted only sporadically.
The Third Commission wrote in 1977 that "a small investment now
will pay large dividends in the future," and Irving Shapiro,
retired Chairman of DuPont, told the 1981 Commission:
"In industry, we know that good employees get
better with years of experience, and we have
to do what we can to make it worth their
while to stay with us. Industry recognizes
its own self interest and finds ways to keep
these people. I ask that a way be found for
the government to do the same."
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The recommendations of this Commission, if implemented, would
reverse the.invidious decline in judicial remuneration and set a
course towards more reasonable levels of compensation for those
who nurture the American system of justice.
The commission's recommendations, if implemented, would help
restore fairness to the top federal salaries and provide some
small recognition of the enormous personal and professional
contribution these people make to public life. Such action would
help ensure our nation's ability to attract and retain the most
talented among us - and not just the wealthiest - to the service
of our country.
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THE LEGISLATIVE BRANCH
The question of congressional pay has generated much heated
debate throughout history.. Since the first Congress sat, the
subject has elicited, as Congressman Morris K. Udall put it,
"more self-righteousness and more passionate oratory and more
posturing and more nonsense . . . than almost any other subject."
Today-, Senators and Representatives are paid $75,100. Some feel
that a pay check of twice or even :..three times that earned by many
of their constituents is something of an embarrassment, and many
Members are understandably wary of voting an increase. It has
always been that way.
Since the Constitution mandated that "The Senators and Repre-
sentatives shall receive a Compensation for their Services, to be
ascertained by Law . . .", the Senators and Representatives
appear to have been inherently unable to set adequate and
rational levels of compensation.
Each attempt to raise pay was met by a public outcry and many in
Congress simply refused to vote for any increase at all. Over
100 years ago, -thepattern had emerged. When Congress voted a
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pay increase from $5,000 to $7,000 in 1873, it was denounced as a
"salary grab", as "plunder seized" and the decision rescinded.
The problem of remuneration became endemic. Today, the charge
that "he voted to raise his own pay" is still good copy for
election campaign commercials and thus makes many politicians
understandably vary. In an attempt to circumvent the dilemma,
congressional pay has been linked to that of top level executive
branch officials and the senior ranks of the judiciary in the
hope of seeing congressional salaries rise with them.
In fact, the reverse has been the case. Pay linkage has not
overcome congressional reluctance to vote a pay raise for top
officials, -including themselves. In' simple terms Congress has
been 'unwilling to take the abuse for voting itself a salary
increase. Instead it has arbitrarily suppressed A, top level
executive and judicial salaries in hopes that the pressure would
eventually build to such a degree that like the "rising tide that
lifts all boats" it could no longer responsibly hold back the
other branches and affected salaries would increase.
Since 1967 and the establishment of the Quadrennial Commission
system, Congress has reacted to the President's recommendations
by allowing increases pursuant to Quadrennial Commission
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procedures only twice, in 1969 and in 1977. All top government
officials have suffered as a-result.
After a raise to $42,500 in 1969, there were no increases until
1975, despite a rise in the cost of living of over 50 percent.
Today's salary of $75,100 represents an increase less than even
one half the cost of living during the same period
(77% vs. 224%).
A. profile of those serving in Congress shows that most enter in
their early forties, while the average age of a Congressman is
around 50 years. Most are married and have children. The
typical Senator or. Representative therefore is middle-aged, with
family responsibilities, maintaining two homes.
Some might feel little sympathy for the financial position in
which politicians may. find themselves. Some former Members have
been able to attain lucrative positions on corporate boards, in
law offices, and with special interest
groups, as a "reward" for
their service to the nation.
However, the lure of the private sector is getting stronger, and
being felt earlier. Although the call to public service and, in
the words of one Member, the chance "to do good" leads most
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? 20.0%
10.0%
0.0%
-10.0%.
-20.0%.
-30.0% -
-40.b% -
-50.0% -
EROSION OF PURCHASING POWER
Level It vs. General Schedule Employee
1969 1971 1973 1975 1977 1979 1981 1983
O Level II & Congress
-411
From 1969 the purchasing power of the average
General Schedule employee has declined by
5.7% in contrast to the 41% loss in real
dollars experienced by the Level II-executive
source: OPM
G:. 'i n- ploy-cc
1985
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Members to try. to remain in public service, the benefits of the
private sector are becoming increasingly more attractive.
"The combination of better pay and fewer
hours [in the private sector] creates an
irresistible temptation to many Members."
(Hibbing,,"Voluntary Retirement from the U.S.
House: The Costs of Congressional Service,"
Legislative Studies Quarterly, February 1982)
The large and growing gap between. congressional pay and private
sector salaries is more evident now than ever.
"The relationship of the congressional salary
to private industry salaries has done a
reversal. When I entered Congress, the
salary was $10,000. At that time, there
weren't but two or three lawyers in all of my
hometown making $10,000. Now the salary is
$60,000 but there must be two hundred in this
town making that, maybe more." (Ibid.)
The hidden stresses and strains of life in Congress have been
well covered by' the media. The New York Times featured Repre-
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sentative Daniel Lungren and his family in May 1986 in an article
it called "Down and A Little Out on $75,100 a year."
As Representative Lungren said, "We are doing fine on a day-to-
day basis. My concern is that I'm not able to prepare for the
future the way I should." He has three children between the ages
of 9 and 12 years.
In this situation, the incentive to increase income by a variety
of means is strong. The attractions of high paying honoraria and
apparently lucrative investments - with the potential for
perceived or possible conflict of interest - is in part a
consequence of inadequate congressional pay. To the extent that
such "back=door" compensation may approach the norm, or is even
I,
publicly perceived to be the norm, the integrity of its elected
representatives is undermined and the country's faith in the
democratic process is.'diminished.
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THE EXECUTIVE BRANCH
In 1969, a Cabinet Secretary, Level I
executive, earned $60,000 or the equivalent
of $182,000 in today's dollars. The pay
today is $86,200, which adjusted for infla-
tion over the two decades, has a real dollar
value of $28,400.
The Administrator of the Veterans' Administration is a Level II
executive. He runs an agency with a staff of 243,000 and a
budget over $25 billion. In 1986, he earned $75,100.
The Secretary for Health and Human services, running a department
which spends around $292 billion a year and employs 141,000
people, earned $86,200 in 1986.
The Chairman of General Dynamics, .with sales of $8.2 billion and
108,000 employees, received $1 million in total compensation in
1985, while the Chairman of First Boston, Inc., with sales of
$2.2 billion and a workforce of 4,500, received $2.3 million.
The 839 officials covered by the five levels of the Executive
Schedule are the managers, directors and general counsels of a
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wide variety of Cabinet departments and independent agencies of
government. They face complex issues and, make difficult
decisions, often with profound, long-term national and inter-
national consequences.
This Commission has concluded that present executive level
salaries are in no way commensurate with the responsibilities of
the positions held. It is not unreasonable to expect the
compensation of those to whom we entrust the highest responsi-
bilities and authority in government to bear some reasonable
relationship to those received by their peers in, the private
What do top government officials sacrifice to serve in govern-
ment? At what point does that sacrifice become too great? What
-.forces them to leave public service? Why are more individuals
asking NOT to be considered for appointments?
The enormous disparity between public and private sector execu-
tive pay is obvious. The gap is so wide one might wonder why
anyone would serve in government; and so wide it makes one wonder
with renewed respect at the even more significant contribution
many of our top public servants make in serving their nation.
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.
600
500
400
14
d
?4 'd
d
-
300
d 0
0
f~H
200
100
Private Sector Counterpart vs Level II
Salary Comparison
A pay increase of 90% would be required in 1987
for Level III executives to achieve the same
relative pay relationship which existed with
private sector corporate executives in 1970.
1969 1972
Level II (Jan 1)
1975 1978 1981 1984 1987
source: HayGroup - OPM
I- Upper Range Lowest Range
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The data are compelling. Our top government officials have lost
over 40 percent in purchasing power since 1969, and in recent
years, the trends are disheartening.
Public-private salary discrepancies at the executive level are at
an all-time high. A study done by the Hay Group for the Commis-
sion shows that, since 1969, the gap between public and private
sector executive pay has widened so dramatically that an increase
of over 90 percent would be necessary to bring Level II
executives back into their 1969 relationship with private
corporate executives. 0
The Commission has stated it recognizes that it is unrealistic to
attempt a return to the public-private salary relationship which
existed in 1970. But the rationale is sound, and the Commis-
sion's recommendations move towards narrowing the current gap.
earning power"is incontrovertible. Every indicator the Commis-
sion has examined - from the salaries of corporate CEO's and
Federal Reserve Bank presidents, to those in state and city
governments, universities and schools, as well as the salary of
the average government employee - illustrates the weight of the
argument for fundamental change.
The case for significant increases to stem this erosion in
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Hourly paid workers in basic manufacturing industries have also
done better than Cabinet_ officers in maintaining purchasing
power. Automobile mechanics and electricians have improved their
real income since 1969. Even teachers, whose pay has been the
cause of much national concern over the last few years, have kept
pace with the cost of living much more nearly than have our
country's leaders.
Even when comparisons are made WITHIN the federal government, the
top federal official has fared badly. The average civil service
employee in government departments and agencies - the General
Schedule employee - has done much better than senior government
executives in maintaining his or her level of real earnings.
While the purchasing power of top positions has declined by
41 percent since 1969, the GS employee has suffered a loss of 5.7
-percent in real income.
Had the salaries of top executives in government even kept pace
with increases given to the average GS employee, we would be
paying Cabinet members about $140,000 today.
Had the salaries of top executives in government kept pace with
the Consumer Price Index (CPI), we would be paying Cabinet
members more than $180,000 today, STILL well below the salaries
earned.by their counterparts in the private sector.
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The inequities are obvious. The arithmetic is clear as well. A
government salary is increasingly unable to support the cost of
one or more college educations, in addition to normal family
living expenses. Where choice is a factor, people are generally
unwilling to inflict severe financial sacrifices on their
families. For this reason they find that they simply cannot
afford to serve in government.
As Ann Banning, the current Director of Recruitment and an
Associate Director of White House Personnel said in
September 1986:
"What we increasingly see is that men and
women at the peak of their private sector
careers don't even seriously consider taking
senior federal jobs.
we find ourselves out of the running,
not only with large numbers of major
prospects in their 40s, but are increasingly
unable to persuade those in their 50s to even
enter the interview process."
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Purchasing Power - Misc. Occupations
(Economic Impact of Inflation)
. 50
The economic impact of inflation on the purchasing
power of Level II executives shows a 39%
loss of
40
real income, and a corresponding 8% loss
for the
average hou.ly index, from 1969 to 1985.
During
the same petiod, automobile mechanics and elec-
tricians experienced a 33.5% and 40.4% increase
30
in real income.
0 20
a
1
r
d
.
1o
0
-20
-30
-40
1969 1985
source: bureau of labor statistics
C3 L IT -~ 1?-?~.rl?rlv 6 R10kntrint.n A AutoMech
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Low salaries are not the only problem, although they may be at
the root of other problems. As one member of the Interim
Commission pointed out, a successful nominee for high adminis-
trative office not only has to take a large cut in salary when
appointed, but also has to accept the very high risks of public
office, placing his or her reputation on the line.
He or she must work under constant public scrutiny; may become a
target of the media; must be willing to live a fishbowl
existence; must be willing to lead private lives tightly circum-
scribed by the host of measures enacted by Congress to reduce or
eliminate potential conflicts of interest and which are open to
anyone who cares to investigate. Most top level executives serve
at great personal risk. When the -possibility of an unjust
accusation of misfeasance is coupled with confiscatorily low pay,
a potent formula results which dissuades many highly talented
people from even considering government service.
The Third Commission recommended many of these restrictions as
the price of adequate compensation. Today, without adequate
compensation, the current system works at cross-purposes.
Conflict of interest regulations seek to ensure the independence
of federal officeholders; low salaries force them to consider
life after government. The corrosive effect of the perception of
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such "contingency planning" in the executive service, as noted in
our discussion of the judicial'-situation,, is hard to overstate.
The prospect that officeholders may be spending part of their
time positioning themselves for lucrative private sector employ-
ment, in order to recoup the financial losses inflicted by
government work, is highly disturbing. It is a particularly
worrisome issue when those serving on regulatory bodies make
decisions involving millions of dollars to the private sector
they oversee, and to which they may be planning to return.
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42
T OT STTON OF LINThG
been placed a little
Congressional salaries have historically
of Cabinet Secretaries. The First and Second
under those should
Quadrennial commissions recommended that congressional pay
the same as that of Level II executives and Circuit Court
be
judges.
In
two schools of thought. about such "linkage".
There are
dePressed the pay of judges
practical terms, it has arbitrarily. politically
and executives simply because Congress found it and it has capped the
unpalatable to raise its own salaries,: ficials in the
salaries for several thousand senior career of been
Congress has
Senior Executive Service and General Schedule. branches of
reluctant to break that linkage with the other two
government in the. hope of generating enough political and public
support for across-the-board salary increases.
Others see linkage more as a matter of principle. The
Constitution has built a framework which balances the three equal
branches of government. Compensation for each of the three
Lower pay for Congressmen may
branches should also:be balanced*
k implying lesser status to Congress than to the highest ranks
ris p Y
of the judicial or executive branches.
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The Founding Fathers intended-Members of Congress to be equal to
the other branches in status, prestige, ability and integrity.
Setting Congress adrift on the pay issue is politically imprac-
tical and will not serve the national interest well. Therefore,
we have concluded that parity between Level II, Congress and
judges on the Circuit Court is important and should be
maintained. However if Congress is unable to develop the courage
to raise its own pay, it is better to limit the unfairness
thereby caused and not impose inadequate pay levels on the two
other branches, thus compounding the harm to our government and
our country.
z
twl
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MEMBERS OF PAST COMMISSIONS
1984-85 COMMISSION
Nicholas F. Brady, Chairman
Chairman, Dillon, Read & Co.-Inc.
Lloyd N. Cutler
Wilmer, Cutler & Pickering
Alexander B. Trowbridge
President, National Association of Manufacturers
Robert A. Georgina
President, Building & Construction Trades Department
AFL-CIO
Edward P. Morgan
Welch & Morgan
John J. Creedon
President, Metropolitan Life'Insurance Company
John E. Lyle
Johnson, Wurzer & Westmoreland
Marc Leland
David Packard.
Chairman, Hewlett-Packard Company
1980 COMMISSION
Joseph H. McConnell, Chairman
Former Chairm&i;' Communications Satellite Corporation
Thomas R. Donahue
Secretary-Treasurer
AFL-CIO
Martha W. Griffiths
Griffiths and Griffiths
Robert P. -Griffin
Miller, Canfield, Paddock and Stone
Edward P. Morgan
Welch & Morgan
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Senior Advisor to the Sarah C. Getty Trust
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Sherman Hazeltine
Chairman Emeritus
First National Bank of Arizona
Richard W. Young -
Executive Vice President
Polaroid Corporation
Bernard G. Segal
Chairman
Schnader, Harrison, Segal and Lewis
Otis M. Smtih
Vice President and General Counsel
General Motors Corporation
1976 COMMISSION
Peter G. Peterson, Chairman
Chairman of the Board
Lehman-Brothers Incorporated
Former Secretary of Commerce-
Lane Kirkland
Secretary-Treasurer
AFL-CIO
Norma Pace
Senior Vice'President and Economist
American Paper Institute
Joseph F. Meglen
_Meglen & Bradley
Bernard G. Segal
Chairman, Schnader,.Harrison, Segal & Lewis
Past President, American Bar Association
Tbs' s.
Edward H. Foley
Former Under Secretary of the Treasury
Sherman Hazeltine
Chairman of the Board
First National Bank of Arizona
Charles T.'Duncan
Dean, Howard Law School
Chesterfield Smith
Holland & Knight
Past President, American Bar Association
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1973 COMMISSION
Arch Patton, Chairman
Director, McKinsey & Company,'Inc.
John H. Lyons
General President, International - Association of Bridge,
Structural & Ornamental Iron Workers
David Packard
Chairman, Hewlett-Packard Co.
Joseph F. Meglen
Meglen & Bradley
Bernard G. Segal
Chairman, Schrader, Harrison, Segal & Lewis
Past President, American Bar Association
Edward.H. Foley
Corcoran, Foley, Youngman,-and Rowe
Former Under Secretary of the, Treasury
William Spoelhof
President, Calvin College
Roger M. Blough
White & Case
William T. Gossettt
Dykema, Gossett, Spencer, Goodnow, and Trigg
Past President, American Bar Association
1969 COMMISSION'
Frederick R. Kappel, Chairman
Chairman, American Telephone and Telegraph Company
John J. Corson
Consultant and Corporate Director
George Meany
President, American Federation of Labor
and Congress of Industrial Organizations
Stephen K. Bailey
Dean, Maxwell Graduate School
Syracuse University
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Sidney J. Weinberg
Senior Partner, Goldman,-Sachs & Co.
Edward H. Foley
Corcoran, Foley, Youngman, and Rowe
Former Under Secretary of the Treasury
William Spoelhof
President, Calvin College
Arthur H. Dean
Sullivan and Cromwell
Chairman, U.S. Delegation, Nuclear Test Ban and Disarmament
Conference
William T. Gossett
Dykema, Wheat, Spence, Goodnow, and Trigg
President, American Bar Association
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K d0
Comparison of Real Income
US Dist Ct Judge vs Corp Sr Staff Atty
220.0%
200.0%
180.0%
160.0%
140.0%
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
oo% -44
1969
sourer: BLS. DofL
. + Sr Staff At",j
? Comparison of Salary Increases
T.ochers and Level 0 Executives
1975 1978
1954
~?