What are the reasons for not calculating government officials' wages in terms of the minimum wage?

Question

In the context of Russian Federation, a deputy of the Duma (the lower assembly) is said to be earning ~400k rubles per month on average (actual amount doesn't matter, only the order of magnitude), while the minimum and the living wage in the country is ~11k rubles. The deputies are the ones controlling both for most parts, so they could in theory raise their wages bit by bit unchecked.

Why wouldn't a country have a (constitutional?) condition under which government officials' wages would be tied to the minimum wage, and be no higher than, say, 10 times the minimum wage? Wouldn't that work as a motivating factor for the officials, so that they actually work to increase the standard of living of the population, instead of being guaranteed a very high wage irrespective of their achievements? The same could apply to other officials, e.g., ministers, judges, even the president.

Answer 1

Raising the minimum wage sufficiently slowly and minimally can arguably increase the wages of low income people accompanied by insignificant increases in unemployment and insignificant disruptions to the path of low skill workers to their first job. The minimum wage is what economists call a price floor. Many economists are against them on principle because of their deep distortions and tendency to cause surpluses. In this case there is a surplus of labor people who are willing to supply relative to the demand for jobs at that skill and wage. The minimum wage in particular is a contentious issue among economists and political groups. So changes to the minimum wage have to be handled very carefully to avoid negative consequences.

Tying legislative salaries to the minimum wage doesn't help legislators optimize the minimum wage to do the most good to low income workers. It does put pressure on them to increase the minimum wage, but increasing it (especially by a very large amount, quickly) could cause unemployment and make it difficult for unskilled, especially first time workers, to get their first job.

A method of tying legislative salaries to low income earning people's salaries that would not promote this one dangerous tool is indexing salaries to some sort of median income. This need not be the income of the 50th percentile person, it could be the income of the 75th percentile person or the 95th percentile person (where the 0th percentile person is the richest person and the 100th percentile person is the poorest). This would empower legislatures to use a wide variety of methods for combatting poverty instead of just one.

That being said, politicians already have strong incentive to fight poverty without additional income incentives. Most voters care about poverty reduction, especially the proportion of voters in poverty. In a state with democratic institutions, if the population doesn't care about poverty reduction, it won't matter much how much financial incentive politicians have to help the poor. Voters can always vote them out for trying to zealously decrease poverty and replace them with politicians sworn to reduce spending on anti-poverty programs.

Answer 2

The political answer is: because turkeys don't vote for Christmas.

The practical answer is that tying wages to any particular metric is an invitation to game the metric. For instance if you tie legislators wages to the minimum wage then they might opt to raise the minimum wage but at the same time defang the enforcement so that everyone can ignore it.

Answer 3

1. It elevates the existence of the minimum wage to the level of a constitutional precept, even though it doesn't really belong there.

2. It creates an incentive for members of the sitting government to raise the minimum wage in order to benefit themselves, even if it would be detrimental to the country as a whole. Constitutions usually set out to avoid such conflicts of interest, not create them.

Answer 4

Incentives.

If I'm a talented Russian executive and my options are:

1. Make a fortune in business
2. Make a middle-class wage in government

Um, well, I guess I'll do business (cue public service brain-drain). Actually it's even worse than that, because there are (at least) two more subtler perverse incentives here: it means that the only people who can afford to go into politics are those who are already wealthy (entrenching elites) and if I already am a Russian government official and you cap my pay I can eat the gap... or I can look for ways to supplement my income, e.g. from bribery.

Figuring out what to pay people is hard.

Answer 5

There is a basic answer to this; one that I learned about in Political Science.

How a government official is paid is different depending on the state. Additionally, whether that official receives full time employment, part time employment, or additional staff is also dependent on the state. In short, a government official is going to find that their compensation depends on some factors.

Like any other job, no one wants to work that job if the pay is not equal to the work necessary. As you may imagine, the job of a full time congressmen may prove to be quite hectic (especially within a large state). Literally no one would run for office if they knew that pay was minimum wage.

Unless they're wealthy

See, poorer folks do not have the time nor the funds to run for an office that pays them minimum wage. So, if all government officials got paid minimum wage, then only people who 1. Have Free Time and 2. Have Plenty of Money could run for office. Not very democratic!

Answer 6

In a comment, you said:

Okay, then what about the living wage, the sum of the expenses that are absolutely necessary to meet one's basic needs? This can't be gamed, unless someone starts producing very cheap basic need products, which would be a win.

Why can't it be gamed? Consider a simple tax on groceries, rent, utilities, and clothing paid by the buyer. It cranks up the living wage, so the official makes more money for making people worse off. That's the opposite of what you want. And in general, you want the living wage to be low, so people have more excess over the living wage. This would encourage politicians to make the living wage high.

The average and median wage can be gamed by increasing the minimum wage so sharply as to ban many jobs. Sure, most everyone is unemployed, but the few people who still have jobs have a lot of money.

Per capita Gross Domestic Product (GDP) is calculated by the government, who then get more money when they calculate a high value.

In general, averages mean that giving more money to rich people is as effective as giving more money to poor people.

Medians reward giving money to middle class people at the expense of either the poor or the rich. And of course, as noted in a comment, medians incent politicians to encourage the poor to emigrate.

Others have already explained why tying it to the minimum wage could be counter-productive: minimum wages in general distort the economy. They are bad tools for their goal. Further, a high minimum wage may prevent people from getting entry level jobs. No entry level job means no promotion for experience. The best way to keep wages up is not to ban bad jobs but to encourage good jobs. If everyone can get a good, high-paying job, there would be no reason to take low-paying jobs unless they are actually better in some way.

The best way to keep government wages down is to vote for people who will pay themselves reasonably. If you don't have that, then no system will prevent them from paying themselves. They'll just change the system.

Answer 7

There is some demand in states for congressional pay to be tied to constituents' earnings, but it's usually tied to the median income (calculated by creating a list of all incomes per region, order them from smallest to largest, and find the middle point) of the constituency rather than the legal minimum. This in theory would inspire a "rising tide lifts all boats" scenario where the politician's pay is tied to decisions that are economically beneficial to everyone as the politician.

There are problems as it is all about rigging numbers but this can be controlled by other rules. In the U.S., Congress may not benefit from a pay change without being re-elected. If they give themselves a pay increase, it will not take effect until at least the next session and full effect won't be reached for six years (the lower house serves 2 year terms and the upper house serves 6 year terms, but one third will be up for re-election every two years, and always only one senator from any one state).