Independent blogger John Tsitrian finds the Legislature’s proposed pay amendment reasonable, given that raising legislators’ annual pay from $6,000 to $10,200 is equivalent to what he calculates as a 2.75% annual raise each year since the current salary was fixed in 1998. (If we apply that pay raise in 2019, I calculate an annual rate equivalent over that 21-year span of 2.56%. If we look at the historical inflation rates I used in Tuesday’s fun post on state and county government spending, the average inflation rate since 1998 has actually been only 2.17%.)
But good businessman Tsitrian doesn’t like Mickelson’s selection of median household income as the criterion for future automatic raises. Tsitrian says legislators should use a metric that better reflects how good they are for business:
Given the nature of the job, I’d be more inclined to use an incentive-based system than one tied to household incomes or inflation. By using changes in our state’s Gross Domestic Product as the measure by which legislative incomes are set, our elected officials would have a performance-based standard for setting their wages. On that basis, long term growth justifies an immediate increase. The last six years, however, have been slow-growing, averaging less than 1% a year since 2011, Governor Daugaard’s first year in office. During that period, U.S. per capita GDP has gone up at 30 times the rate of South Dakota’s. This is pathetic [John Tsitrian, “South Dakota Legislators Need a Pay Raise, But It Shouldn’t Be Automatic,” The Constant Commoner, 2017.11.27].
From 2008 to 2015, per capita real income (I don’t see a household median option in the BEA interactive tables to which Tsitrian directs us) grew at an annual rate of 0.53% in South Dakota while per capita real GDP (both in chained 2009 dollars) grew at an annual rate of 0.73%. According to this Census data, real median household income over the same period grew at 0.65% annually. So arguably, tying raises to GDP instead of personal income would have produced bigger raises for legislators over that seven-year period.
But would they have noticed? Applying those percentage factors as pay raises over the next ten years, starting from $10,200 in 2019, 2029 legislators would see salaries of $10,757, $10,880, or $10,970. Would that variance of less than 2% register with legislators as any significant merit reward?
Our 2012 discussion of Governor Daugaard’s wrong-headed and rightfully rejected merit-pay plan for teachers left me suspicious of any proposal for merit pay. Setting pay for public servants needs to be first and foremost about offering salaries that will fill positions with qualified applicants. If merit pay has any merit for legislators, legislators will have to sift through lots of economic data to determine which if any of the various economic growth metrics would provide discernible more motivation for legislators to produce better legislation. Even then, the Legislature will be in for a big debate on the extent to which legislators, like governors and presidents, are responsible for any of South Dakota’s economic growth.