In 1915, an era in which the Rockefellers and Carnegies dominated American industry, the richest 1% of Americans earned roughly 18% of the nation’s income. Today, the top 1% earn 24% of all income; the top 20% of Americans earn 49.4%. The “bottom of the pyramid,” 15% of Americans living below the poverty line, share only 3.4% of the income.
One can argue that income equality is just the natural result of some people being more successful than others. Certainly we have entered a gilded age of entrepreneurship, creating billionaires by the dozens. You can argue that the super rich have earned their money by being smarter, luckier, or whatever. You can ignore the abundant evidence (albeit few prosecutions) that indicates a substantial amount of this wealth was stolen through fraud. Individuals, businesses and special interests groups can and do justify all sorts of their actions by the fact that their objective and moral code say they are “looking out for #1.”
But, no matter. What is undeniably true is that there is one institution in America that has responsibility for looking out for absolutely everyone’s best interest. This is the US Federal Government and the epicenter of that responsibility is the Congress. The Congress is specifically designed, selected and chartered to look out for everyone.
In this regard I argue individual Congressional representatives should be paid according to how well their only legitimate constituency is doing. That would be the American people. All of them. Not just the voters. Not just their party. Not the lobbyists, but all of the people. And the best way to insure that Congressional representatives stay close to the people is for them to live like the people. And that means being paid like the people.
Fortunately this is simple. There is a ton of data on income in the United States. See: http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States for a nice discussion. There should be no problem calculating and adjusting Congressional salaries every year based on the latest data.
The latest data seems to show that the median income is $40,900. It is important to use the median figures because it would be unfair for a few super rich people to pull up the average. The median best represents how most of the people are doing. Maybe it would be fair to use the median for college graduates, which is slightly higher at $43,143, since I bet most congressional representatives have gone to college and if that is the skill level the voters elect they should be prepared to pay extra. It would probably not be fair to pay all representatives the median salary that those with a doctorate degree get, $70,853. But 43 representatives do have a medical degree or Ph.D. so perhaps they should be paid the higher number.
Granted this is less than the $174,000 Congressional and Senatorial representatives pay themselves today. But two thirds of senators have a net worth of $1,000,000 or more; the median wealth of a U.S. Senator in 2009 was $2.38 million. The average member of the U.S. House of Representatives has a net worth of $666,000. It does seem like they all might be able to take a pay cut and get by.
To be fair, our congressional representatives have higher expenses than the average citizen; having to live in two places, etc. But those issues can be dealt with via expense accounts, etc. There is no reason why the base salary should not track precisely the national medians.