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September 2006

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This article is in the news archives --- for current news go to the Third Branch News.


GAO Report on Trends in Judicial Pay Shows Decline in Earning Power

First the good news: the basic pay rates for selected federal pay plans increased in nominal or current dollars from 1970 to 2006. Now the bad news: when adjusted for inflation to 2006 dollars, the pay rates for justices and judges in real dollars decreased. Those were two of the findings of a June 2006 Government Accounting Office report on Human Capital: Trends in Executive and Judicial Pay.

The report was requested by the House Government Reform Committee Subcommittee on the Federal Workforce and Agency Organization.

"Critical to the success of the federal government's transformation are its people—human capital," the report notes in an explanation of why it undertook the study. "Yet the government has not transformed, in many cases, how it classifies, compensates, develops, and motivates its employees to achieve maximum results….GAO has reported that the federal government as a whole may face challenges in offering competitive compensation to its senior leaders who have reached a statutory pay cap."

GAO was asked in this study to provide trend data for basic pay rates of selected federal executive and judicial pay plans from 1970 to 2006; identify elements of total compensation for the selected pay plans in 2006; and identify principles for any possible restructuring of these pay plans.

The data shows that since 1970, courts of appeals and district judges have seen their pay decline by 1 percent, when adjusted for inflation using the Gross Domestic Product price deflator. Their pay fell 20 percent when compared to the Consumer Price Index. Justices have seen an even greater decline, with their earnings dropping 19 percent against the GDP and 34 percent against the CPI.

The report recommended that, if executive-level pay plans are to be restructured, certain principles should be considered. Unfortunately, most of those principles might be difficult to apply to Article III judges. For example, the report proposes that executive-level pay plans be market-sensitive, responsive to changes in the nation's economy, and reflective of responsibilities, knowledge and skills, and contributions.

However, the report also recommends that pay plans be transparent—where Congress, leadership, and the public can easily understand the value of compensation and contributions—and competitive, with reasonable total compensation and other elements necessary to attract and retain leadership.

The report wraps up with several observations, one of which is that a commission explore ways to maintain a reasonable relationship across executive level positions and to the relevant markets. "For example, in 1967 and 1989," the report states, "Congress established the authority to appoint commissions to provide salary recommendations to the President every four years for top-level executive, judicial, and legislative officials." The 1989 commission, the report duly notes, has yet to be appointed.

The GAO report, Human Capital: Trends in Executive and Judicial Pay, is available at www.gao.gov/new.items/d06708.pdf.