In late February, Florida senator Rick Scott released a sprawling policy manifesto, “An 11-Point Plan to Rescue America.” Among the many concrete items grouped into the 11 points was a proposal to rein in government spending by capping the pay of the government’s top workers: “No government employee can make more than 5 times the national median individual income.” (Scott presumably means the federal government, though it’s not clear from the context.)
The emotional appeal of Scott’s proposal is easy to understand. No one likes to see employees of a dysfunctional government handsomely rewarded. But the idea is extraordinarily bad. Limiting spending on upper-level staff is a penny-wise, pound-foolish method of controlling government spending that is sure to produce worse and more wasteful government, one that will remain in thrall to special interests such as government contractors and industry lobbyists.
Political progressives have long made analogous complaints about excessive pay for corporate executives. It’s unfair, they say, for managers to earn hundreds of times what subordinates make. This complaint has a standard rejoinder—that fairness is beside the point. Executives exert massive influence on corporate performance, so paying large sums to hire the best ones is justifiable. If the top candidate for CEO of a company with $10 billion in annual revenue could improve that revenue by just 0.1 percent relative to the second-best candidate, it’s worth paying him $10 million per year. Whether the data bear out this argument is open to debate, but the abstract principle remains valid—and it also applies to government, which, after all, spends far more money than any corporation.
Many public-sector workers in roles requiring original thought are taking considerable pay cuts from what they could earn in the private sector. In an article for his newsletter Slow Boring, for instance, Matthew Yglesias notes that salaries for congressional members and their staff are only middling compared with their European counterparts—stingy, in fact, when one considers that U.S. incomes (especially for white-collar jobs) are higher, and that American legislators take more active roles than members of most European parliaments, who don’t write legislation themselves, but merely vote on bills drafted by the executive and rarely go against the party line.
As noted by Joshua McCrain, a professor of political science at the University of Utah, federal legislators receive a fixed allotment for administrative expenses that must cover not only personnel costs but also travel, office supplies, and other perks such as “franked,” tax-subsidized mail. This allotment has averaged $1.35 million in recent years, and not much of this relatively small amount goes to junior staff. Legislative assistants for members of Congress, who need working knowledge of several areas of public policy and research skills that would be valuable in the private sector, commonly earn only $30,000 or $40,000 per year. Such poorly remunerated work attracts employees motivated by dogmatic idealism or thirst for power, and who are willing to make sacrifices such as putting off having children in service of these goals. It’s far from obvious that either motivation produces better results than a simple desire for good pay. Idealism in service of a false ideal can be far more destructive than greed. In any case, as McCrain and Yglesias both note, few junior staffers can tolerate the work for long. Most leave after a few years, often for lobbying firms. (In my experience, it’s rare to meet congressional staffers out of their mid-twenties.) The resulting weakness of in-house expertise leaves legislators more beholden to industry lobbyists and NGOs.
The same problem exists in the civil service. Though the United States doubtless spends too much on public-sector personnel at both the state and federal levels, the worst overstaffing and above-market salaries are generally for lower-level blue-collar and clerical work—a problem worsened by restrictive union work rules and a mechanical hiring process that has been highly ineffective at identifying good candidates ever since competitive civil-service examinations were substantially abolished in the 1980s.
Scott’s proposal would not solve this problem, but it would aggravate a symmetrical one: uncompetitive top-end pay makes public-sector agencies struggle to find higher-level staff, especially for positions that require skills in high demand in the private sector, such as computer programming. Even seemingly generous compensation is often backloaded into late-career promotions and pensions with long vesting times. This compensation structure further discourages workers in fields such as computer programming, in which competent workers expect to switch jobs frequently.
Though Senator Scott is likely concerned mostly with waste in the federal government, the same structural problems exist at state and local agencies. Consider an example from my own field of expertise, New York City’s Metropolitan Transportation Authority. Entry-level planners at New York City Transit, the largest division within the MTA, make approximately $50,000 to $60,000 (about half the earnings of a conductor on the Long Island Rail Road)—this for a position that requires facility with data analysis and logical reasoning that would serve workers well at many better-paying jobs in logistics or corporate strategy. (The handful of low-level planners whom I know at the MTA and similar agencies typically had special interests in public transit.) Pay is also uncompetitive for the information-technology jobs for which the MTA currently lists openings. Those that require a bachelor’s degree in computer science, multiple years of experience, and proficiency in multiple programming languages list mid-range salaries scarcely above $120,000, considerably lower than the nationwide average of $146,000 for technology workers, according to a 2020 report from Hired. Salaries at top technology companies, even for relatively early-career workers, can be more than twice that figure.
The difficulties with hiring technically skilled staff create massive inefficiencies and waste elsewhere. The Massachusetts Bay Transportation Authority’s Green Line Extension, for instance, ran billions of dollars over budget, thanks in large part to the main contractor’s incompetence. To prevent waste or malfeasance, agency employees with experience in large-scale civil construction should supervise contractors. However, as a report on the Green Line Extension by New York University’s Transit Costs Project describes, the ranks of MBTA’s supervisory staff had been so hollowed out by extensive private-sector outsourcing and hiring obstacles imposed by ostensibly budget-conscious politicians that “By 2005 . . . the MBTA no longer had the capacity to manage megaprojects like [the Green Line Extension] because the most experienced construction managers had left the agency or retired decades earlier.” The result: “MBTA oversight was understaffed and stretched thin. Different experts that we interviewed who were involved with different aspects of the project put the number of in-house MBTA design review engineers at either five or six.” A few additional design-review staff could have justified their wages dozens of times over by averting a small portion of the cost overruns.
It’s hard to blame Americans for believing that they’re not getting their money’s worth when it comes to public service. But the problems have little to do with overpaid high-ranking employees. Proposals to cap high-end government employees’ pay would make it harder to hire the best personnel for positions in which the difference between a single good and bad employee can be millions or even billions of dollars.