With the outlier thrown out, the monthly increases in per-capita income is slightly larger than monthly increases in Congressional salaries, which is also reflected in the annualized increases. Congress is increasing their wages at a slower annual growth rate than that of per-capita income, which explains why the relative salary level has been falling so much over time.
I think I want to interpret this as a good thing. The fact that Congress increases their wages is often held to be a bit odoriferous, but the reality is that Congress has not stolen as much as they might have. I assume Congress increases their wages as much as they feasibly can politically, that is, the electorate hold the Congressional pay raises in check by the threat of voting the "thieves" out.
An interesting dissertation would be estimating the elasticity of candidate supply - looking at the change in actual candidates for Congress (those running in primaries) after a change in nominal and real salaries.
Wednesday, March 12, 2008
Fun with STATA
From Heavy Lifting- On Congressional Salaries