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May 12, 2009

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dearieme

"If he has a partner earning £30,000 a year" - which he finds peculiarly easy to arrange. He can also pay his sons (what was that bloke's name? Derek something.) Or, indeed, pay his eighty year old Mum (that was a Labour one - was it Hain or some other slithery creature?)

Gaw

This is an interesting perspective and deserves a wider audience. I too was labouring under the fallacies you expose here. Thanks!

TheOneEyedMan

I'm surprised at how little income it takes to get into the top 3% in UK. It takes about 50% to get into the top 3% in the USA.

Luis Enrique

I find all this data on wage distributions hard to interpret.

For instance, if I put bus driver into the salary calculator you link to above, then calculate income and NI using http://listentotaxman.com then put the result in the IFS calculator, I find that bus drivers are better paid than 69% of UK citizens. Which makes bus driving sound like a relatively handsomely paid job - is it?

john b

TheOneEyedMan's comment seems to not make much sense.

Luis - bus drivers being better paid than 69% of UK *citizens* seems entirely probable (as ~half of UK citizens are schoolkids, pensioners, students, housewives, long-term sick, etc).

Chris - what about committee work? That's more equivalent to law than social work, and a solicitor with five years' experience can easily take home £75k...

Andrew Duffin

"Even if we concede that an MP works longer hours than average "

Why ever would we concede that?

Have you looked at their hours and their holidays?

Recusant

Pay is (should be) set at a level to attract people to do the job. Is anyone suggesting there is a shortage of potential candidates out there? Seems the pay might well be too high already.

william macvean

I think their wage should be related to minimum wage so 3 times minimum wage seems fair to me likewise pension 3 times minimum pension gives them an incentive to improve things for the rest of us

JimH

The quality of MPs is low enough already, without lowering the salary, thereby removing the better candidates from considering being an MP.

Far better to only allow MPs to be over the age of 45 say. That way there is little chance of the career politicians we get now, who are desperate to feather their nests because they have no other skills/career to fall back on.

If you are an aspiring politician at university, and were unable to even be the prospective candidate for an unwinnable seat for another 20 years, it might make you go out and get a real job, and career, and family. Then later in life, with a bit of experience of life under your belt, if you still fancied telling your fellow countrymen what to do for a living, you could try and be an MP.

We might even be better governed as a result, with more independent thinking going on, and less slavish following of the party line.

Luis Enrique

John b,

well, sure, that's what I mean about interpretation. Sometimes people use income distribution data is if it is implicitly conditioned on having a job; hey, these guys earn more than 97% of people already! But if that 97% is calculated including children and pensioners etc. (the IFS numbers are relate income to the "population"), and has no adjustment for age and other considerations, it's hard to take a number like 69% and know whether that person is relatively highly paid or not. Yet I often see people compare salaries to the median income and argue that people are "already paid more than most" or such like.

john b

@JimH on the other hand, that would massively favour conservativism (not necessarily Toryism) and redistribution away from the young to the old. Both of which are already a problem as old people vote proportionately more than young people, but would only become more so.

john b

Good point. Having checked the IFS site & confirmed it relates to everyone, Chris is wrong in this post, and an MP is *not* in the top 3% of earners.

chris

Sorry John, I was carelessly using earners as a synonym for people.
I don't think, though, this undermines the substantive point, which is that MPs are better off than the vast majority of people, to a greater degree than is generally realised.

The Great Simpleton

Surely there is a body of evidence we can look at:

1. How many MP’s have resigned claiming they couldn’t afford to do the job? Did they go on to earn more or did they resign to spend more time with their families?

2. What is the median salary of MP’s before they stand?

3. What is the median salary of an MP 3 years after they have lost their seat?

I like the social work comparison. DK is always berating MP's for this aspect and he raises a good point.

Andy

With all the ho ha now they will all be watching their backs, wallets, and press rather than the UK.

Giles

Chris
I'm surprised at you. Someone who normally offers so many of the nuanced views that come from a deeper understanding of economics producing such a static analysis: this is where they are on the income scale, they are above the middle by some way, so it's fair, let's move on. Not as good as normal.

- you fail to take into account equivalisation in the static analysis. They tend to be bigger than 2 person families.

- What about the concept of efficiency wages? Do you think they would get LESS corrupt if they were closer to the poverty line? I used to pay traders: it was never efficient to pay them what a graduate would happily take to replace them.,

- what about the effect on the supply side. What sort of candidates would be supposedly queuing up if they were paid £30k? Lots of people with independent salaries, or supported by special interests in some form.

The MP's I know work their socks off, for years to get elected and then 6 day weeks for most of the year to stay there. But I mostly know Lib Dems.

The argument that a lot of people want to do the job and therefore the wages could be lowered is not effective; money is not the factor as far as the payer goes. We are not trying to fill 646 seats as cheaply as possible, as if they were routine workers. We want to find 646 of the highest quality least corrupt people. Does £30k per head help us get there? No.

VS

Giles has a good point. It does seem that you want to pay MPs more to (a) discourage corruption - I would have thought it is easier to bribe the low-paid than the well-paid; and (b) to make sure that they have sufficient money that they haven't got a financial incentive to cosy up to companies etc in the hope of getting a cushy directorship when they retire/get voted out

ydue

Recusant's post is hilarious. Fantastic market-wankery. Why not go the whole hog and replace elections with auctions?

The key point AFAIAC is that MPs receiving a salary of £65k are not badly off by any means (whether that puts them in the top 3% of earners in the UK or whatever) but, in response to just about any point that could possibly be made on this, I think you'll find it's a bit more complicated than that.

Look, it's simple! Efficiency wage theory! Pay people more and they will work harder and more diligently. Problem solved.

But wait, here's Gary fucking Becker with an objection: no, no, no, you're wrong! It's simple! Pay people as little as is needed to induce one person per constituency into wanting to become an MP! That's the efficient solution. Problem solved.

But not so fast! That's a corruption of democracy. The effective labour supply here would be severely skewed. What about the fact that this puts the rich, or those representing the rich, at an advantage? They don't need a high wage, or any wage: they've got enough already, and they've got powerful interests to support them. This means we do need to pay MPs a decent wage after all.

But hold on, be careful there! If you pay MPs too much, then you'll get people interested in politics who are excessively money-motivated rather than motivated by their perception of the public interest (oh, shut the fuck up, George Mason University), and this is not something we want from politicians. You're also risking getting a Nomenklatura who have no interest in their constituents' needs. Similarly, you're risking destroying becoming an MP as being an honourable position: rather like the blood donor who feels unhappier receiving a payment, the MP may see his role cheapened by the perception that it is solely a means of making money.

Ah, but hold on, that's too idealistic! It's an absolute fact that MPs will compare their earnings from being an MP to that of taking on another job, and you need to pay them a decent amount to compensate for things like the media attention they face. Pay them too little, and you'll get the ones who are power-mad rather than money-mad, and it's arguable which is worse. Oh, and they can get jobs on corporate boards to pay their way anyway. And so on and so forth.

I could go on, and no doubt others will. Ultimately, there is no easy solution to this which we can establish in the abstract. It's impossible to solve, given than the 646 MPs who will be elected are not known in advance of the establishment of the rules, and who, in any case, will each have different ways of looking at their job, different alternative employments, different ideological bents, and different interests to represent. Even if research was done into this and a magic figure that minimised outlays subject to a decency constraint (I joke only slightly), it's almost certain that finding the figure would affect what it ought to be. Here's my suggestion: How about... a wage of around £65,000? It doesn't seem an absurd wage; it's not punitive to the poor, it's not so high that people will see it as one career move among many, it's not so low that it would be offputting or - surely - that people would see themselves as being entitled to more. I would suggest that the best solution (and this isn't aimed at anyone in particular) is - at least looking at the pure money loss we're talking about - to grow the fuck up, accept that some further gaming of the system is inevitable, pay the rental value of the property occupied up to a maximum of x, publish all expenses claims above a token amount, and not worry about it too much. But as we've seen, I think I'll find it's a bit more complicated than that.

Richard T

Yet there is a Tory motion for debate this Friday to make observance of the minimum wage voluntary. Particularly well timed I think.

Frank

Since the purpose of an MP is to represent people it seems to me that their having some idea of how people actually have to live is more important than any particular skill set they bring to the job. Currently MP's salaries are linked, as are ministers, to Senior Civil Service rates of pay. It would be more appropriate to link them to one or other calculation of the national average wage

On the question of expenses what is the problem with implementing the kind of Inland Revenue approved scheme which operates in most companies which starts from the principle that people should not be out of pocket but nor should they make a profit from expenses. Why re-invent the wheel unnecessarily.

axp

The fat years on easy money have made everyone forget the worth the pound in their pocket. This is not only the mp's its everyone ...

Phil

ydue said:

"How about... a wage of around £65,000? It doesn't seem an absurd wage; it's not punitive to the poor, it's not so high that people will see it as one career move among many"

Yes it is, yes it is, and yes it is.

Which is, I think, precisely Chris's point.

Nick

According to http://www.statistics.gov.uk/cci/nugget.asp?id=285 for 2008:

"The top 10 per cent of the earnings distribution earned more than £946 per week, while the bottom 10 per cent earned less than £262". The top 10% therefore = £49,192.

"Median full-time weekly earnings in London were £613, significantly higher than in other regions, where they ranged from £418 in Northern Ireland to £500 in the South East.

The full-time occupations with the highest earnings in 2008 were ‘Health professionals', (median pay of full-time employees of £977 a week), followed by ‘Corporate managers’ (£727) and ‘Science and technology professionals’ (£691). The lowest paid of all full-time employees were those in ‘Sales occupations’, at £272 a week."

Saying that MPs are equivalent to "corporate managers" = £37,804.

David Gillies

The narrow argument from the efficiency angle is begging the question. Given that at the current levels of remuneration, every seat attracts dozens if not hundreds of aspirants, it is clear that salary is a weak determinant of the utility of the job to an aspiring MP.

There's an apocryphal story about the bank robber Willie Sutton. "Why do you rob banks, Willie?" was the question. "Because that's where the money is," replies Willie. Why do people want to become MPs? Because that's where the power is. Reducing the scope of influence over our lives that lawmakers (whether elected like MPs or civil servants enacting statutory instruments) possess would go a long way towards re-establishing the relationship between the governing and the government. A contraction of the State would be the best disinfectant possible. In times like these, one can usually do a lot worse than to look to Tacitus for guidance. Corruptissima republica, plurimae leges, he wrote. The more corrupt the State, the more laws exist. NuLabour has overseen a growth in the legal canon unprecedented in British history. At the same time, corruption has spread through the land to an extent few of us would have thought possible twenty years ago. The inference is obvious. Weaken government sufficiently and the impetus to graft and power-broking goes away.

Jackie

Well to be honest, i would have probably done the same

Jennings

@recusant. As a person recently graduating from a top UK university and a 1st class politics degree I can honestly say that the poor pay is a major deterrent to people looking into politics as a career. If you want to lure the best and the brightest you should pay them accordingly; if you want people with the skills of social workers, pay them like social workers.

Lee

For instance, if I put bus driver into the salary calculator you link to above, then calculate income and NI using http://www.taxcalculator.co.uk . i agree....they do pay more

Ray

Earning over £100k puts you in the top 1% of the richest and £14k puts you in the middle with 50% above and under - for a single earner on IFS.

Someone on £100k pays £35k in tax/ni and someone on £12k pays £2.4k in tax/ni according to the http://www.uktaxcalculators.co.uk tax calculator.

35% tax for the top 1% and 20% tax for the average earner. Is it fair?

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