Recommendations for Executive, Legislative, and Judicial Salaries Message to the Congress Urging Approval of the Recommended Increase.

To the Congress of the United States:

If the Federal Government is to meet successfully the enormous challenges it faces in these difficult times, it must be able to attract and retain men and women of outstanding ability and experience for its highest posts.

Monetary awards are not the principal attractions offered by the public service, and complete parity with private sector salaries is neither desirable nor possible. Those who serve at the highest levels of the Federal Government expect and are willing to make some financial sacrifice to serve their country. Nevertheless, compensation levels today have fallen below the point at which they provide adequate monetary recognition of the complexity and importance of top Federal jobs.

The financial sacrifice demanded of top Federal officials is becoming far too great. Since the last quadrennial adjustment in 1977, the salaries of those officials have increased only 5.5 percent. During that same period, the CPI has risen by about 45 percent, which means that the purchasing power of these salaries has declined by about 28 percent.

I fully recognize that the salaries already being paid these officials look very large to the average taxpayer. But when we are seeking to fill an Assistant Secretary position, a Bureau Chief position, or one of the other top level policymaking positions in the Executive Branch, we want people who know the specialized field involved and who have had extensive experience and success in it. Usually, these people are already being highly paid, and there is a limit to the financial sacrifices they can afford to make.

Not only is the discrepancy between private sector executive pay large now; it is continuing to widen. Since 1977, for example, while Federal executive pay has risen only 5.5 percent, private sector executive pay has gone up about 25 percent. If this gap continues to widen, government service will be so unattractive that increasing numbers of the best qualified will refuse to serve.

These observations apply equally to the selection of judges. The Federal judiciary has traditionally drawn a substantial number of appointees from the top echelons of the legal profession. These individuals are mature, experienced, and often at the height of their career earnings. When they become judges, it is usually at a financial sacrifice. If the sacrifice we ask becomes too great, increasing numbers of 'those best qualified will refuse consideration for appointment. The Attorney General tells me we are already receiving many declinations from lawyers of the quality we desire. We must not allow that trend to accelerate.

In addition 'to the recruiting problem, there are important considerations of retention and of equity. Resignations from the Federal bench show a disturbing tendency: only seven Federal judges resigned in the 1950's, and eight in the 1960's; but 24 resigned in the 1970's. Three resigned in 1980 alone.

The Constitution wisely provided that Federal judges would be appointed for life. The founders believed, and experience has confirmed, that lifetime service enhance the integrity and independence of a judge's performance. It also strengthens public confidence that judges possess these qualities, and increases public respect for their decisions. When lifetime judges leave the bench because of inadequate salaries, the public loses more than their experience and efficiency. The public also loses the confidence in the judicial process that is central to the success of our Constitutional system.

Obviously, many judges will not leave the bench even for the much larger salaries they could earn by returning to private practice. But the devotion of these judges should not be rewarded by unfair treatment. Something must be done to encourage and reward continuous judicial service.

Turning now to career executives, you know that Executive Levels IV and V are by law the ceiling for career salaries. You know also that General Schedule salaries have risen by 31.9 percent over the period in which executive salaries rose by only 5.5 percent. As a result, more and more GS employees each year reach the executive pay ceiling.

Consequently, we now have a salary system in which up to seven levels of career executives and managers are all receiving the same pay. Career executives who are promoted to more responsible and demanding positions often receive no pay increase whatsoever to compensate them for taking on heavier responsibilities. Agencies with field organizations, which need to advance successful managers from district offices to regional offices to headquarters offices, find it increasingly difficult to persuade capable employees to move their families for "promotions" that carry no pay increase.

One result of this compression is that many experienced and valuable career executives are retiring as quickly as they become eligible for retirement. For the twelve month period ending last March, a startling 75 percent of career executives in the 55-59 age bracket who were at the executive pay ceiling and were eligible to retire, did so. The result is that talented, experienced and creative public servants are leaving when they are of maximum value to their agencies. Unless these trends are reversed, the nation cannot expect to retain a high quality senior career group.

Congress shares many of these salary problems. We all know that people do not run for office because of the salaries involved, and that many people would run for Congress even if the members drew no pay at all. But it is of vital importance to have Congressional salaries high enough to attract a broad range of people, including those who want their families to enjoy the same standard of living they would if they were carrying even moderately comparable responsibilities in other occupations.

Congressional salaries have experienced the same loss of purchasing power as those already discussed. Yet, Congressmen face even greater expense than the other groups because they must maintain two residences and have other expenses stemming from their unique responsibilities. So they, too, need pay increases.

As the law provides, a Commission on Executive, Legislative and Judicial Salaries has considered these and related salary issues. This Commission, which was composed of distinguished private citizens with no selfish interests in Federal pay scales, made the findings I have summarized above. To correct them, it has unanimously recommended salary increases averaging about 40 percent.

I have no doubt that the facts fully justify those recommendations. Nevertheless, I continue to be concerned, that we balance compensation needs against Federal Government leadership in fighting inflation and in minimizing the overall costs of government. Consequently, I am recommending to you in my budget for FY 1982 that smaller increases be allowed at this time, but—just as importantly—that we commit ourselves to allowing future increases annually to prevent these salary problems from continuing to worsen.

As you know, General Schedule employees received increases in FY 1979 and FY 1980 that totaled 16.8 percent. By operation of PL 94-82, the legal salaries of top level officials also increased by these same amounts. Congress, with my concurrence, enacted appropriation language that temporarily prohibited the payment of those increases to the top officials. Consequently, their payable salaries are now 16.8 percent below their legal salaries. Several judges sued over the application of that appropriation limitation to the judiciary and recently won a Supreme Court decision that means many judges will receive the 16.8 percent in question.

I believe the least we can do at this point is to give the Executive and Legislative branch officials the 16.8 percent already received by most General Schedule employees and already won by the judges. Just as important as the immediate increase, however, is adoption of the principle that we will allow whatever increase is granted General Schedule employees in October of 1981 and in subsequent years to be paid also to the top level officials, as PL 94-82 provides. Only by following this principle can we prevent the salary muddle from becoming worse every year. Experience has shown that if we wait four years to make salary adjustments in a time of rapid inflation, the needed catch-up will be so large as to be unacceptable to our citizens.

Because the case for a significant increase in the salaries of Federal judges is especially strong, I urge also that Congress give consideration to a salary scale for judges that would explicitly recognize the public importance of continuous judicial service; for example, by an annual or periodic increase for longevity in addition to the cost of living adjustments that are made from time to time.

In addition, I urge that Congress give careful consideration to the five non-salary recommendations made by the Commission, especially their proposal for a special two year study of the complex and harmful compensation problems that now exist.

The Commission concluded that the conditions I have outlined constitute "... a quiet crisis, unperceived by most citizens of the nation but requiring an immediate response by the President and the Congress to safeguard the high quality of its senior officials." I agree with that conclusion and urge you to act favorably upon my recommendations. President-elect Reagan has authorized me to say that he fully supports these recommendations.

PL 95-19 provides that each House must within 60 days conduct a separate recorded vote on my recommendations for each branch of government. In addition, if you wish to accept my recommendation to make the current legal rates payable now, you should amend section 101 (c) of P.L. 96-536 accordingly.

In the event that you decide you do not wish to approve increases for your own Members, I strongly urge that you allow them for officials of the Executive and Judicial branches. The gravity of the "quiet crisis" those branches face requires you to do no less.

JIMMY CARTER
The White House,

January 7, 1981.