Since 2008 median income stagnates in PA, salaries of state officials grow: Enter Trump

 

Almost a decade into the Great Recession, the average Pennsylvanian is stuck, and unable to move ahead. It’s a different story for state politicians.

by Bill Keisling

 

State officials in both political parties have done little to better the economic standing of average Pennsylvanians, even while they accept generous cost-of-living increases, further insulating themselves from the economic hardships felt by their voters.

As we approach the spring primary in Pennsylvania two little-discussed numbers explain both the anger of the public and the detachment and disconnect of state political leaders from the problems of average voters.

Since the financial crisis and great recession of 2007-08, the real median household income of average Pennsylvanians has stagnated, and even declined.

But while average Pennsylvanians were economically stuck in place, the salaries of state officials continued to grow, pegged to generous automatic cost-of-living-adjustments (COLAs).

The disparity is not only unseemly and worrisome.

The widening gulf between the suffering of average Pennsylvanians and the gold-plated compensation plans of state political leaders certainly is contributing to the rise of anger candidate Donald Trump.

According to the U.S. Census Bureau’s American Community Survey, the real median household income in Pennsylvania peaked at $55,764 in 2008. As of 2014, the last year data was available, household income was $2,530 lower (-4.54%) than in 2008.

Per capita, or individual, income of the average Pennsylvanian has also stagnated, and even declined during the same period.

Real per capita income in Pennsylvania peaked at $29,997 in 2008, and as of 2014 was $777 (or 2.59%) lower, reports the Census Bureau.

As a chart made from the Census Bureau data shows, the household income of average Pennsylvanians has flatlined. If this were a patient in a hospital, he’d be dead.

Almost a decade into the Great Recession, the average Pennsylvanian is stuck, and is unable to move ahead.

The census data suggests that an entire generation of Pennsylvanians is at risk of being economically left behind.

That’s because the income of average Pennsylvanians, in real terms, has declined, while the cost of living has increased.

How do we know that the cost of living has increased in Pennsylvania?

Every year since 1995, with the notable exception of 2015, the state’s elected officials have received automatic cost-of-living (COLA) increases in their salaries, based on the consumer price index, or CPI, as reported in Pennsylvania, New Jersey, Delaware and Maryland.

The governor’s mandated salary, for one example, has automatically increased from $174,914 in 2009, to $190,823 in 2014, or $15,909, according to the Pennsylvania Bulletin. That’s a healthy nine percent increase.

And the salaries of lawmakers and judges have also automatically increased.

A member of the state General Assembly who received a base salary of $78,314 in 2009, for example, took home $84,012 in 2015. That’s an increase of $5,698, or seven percent.

It goes without saying legislators in leadership positions and judges got similar raises, even while their institutions were racked by corruption and scandal.

In 2014-15, GOP Senate President pro tem Joe Scarnati and Speaker of the House Mike Turzai each took in a cool $133,219, or more than a hundred thousand dollars in salary than the average Pennsylvanian.

So there’s a very real disconnect between the state political leadership and the citizens they propose to represent.

Enter Trump

Throw in an anger misdirected at immigrants, and a suspicion that the U.S. is losing its standing in the world, and you have a potent explanation for the grassroots support for Republican outsider Donald Trump.

One Pennsylvanian who supports Trump, John Peterson, of Blakeslee PA, explains it this way on a Trump facebook page:

“Yes he’s a bit of an ass, yes he’s an egomaniac, but we don’t care. The country is a mess because politicians suck, the Republican Party is two-faced & gutless, and illegals are everywhere. We want it all fixed! We don’t care that Trump is crude, we don’t care that he insults people, we don’t care that he had been friendly with Hillary, we don’t care that he has changed positions, we don’t care that he’s been married 3 times, we don’t care that he fights with Megan Kelly and Rosie O’Donnell, we don’t care that he doesn’t know the name of some Muslin terrorist. This country is weak, bankrupt, our enemies are making fun of us, we are being invaded by illegals … to a point where we don’t even recognize the country we were born and raised in; ‘AND WE JUST WANT IT FIXED’ and Trump is the only guy who seems to understand what the people want. We’re sick of politicians, sick of the Democratic Party, Republican Party, and sick of illegals. We just want this thing fixed.”

The dirty little secret in Pennsylvania political circles is that state officials can do little to create jobs, or to raise the household income of the state’s citizens on a broad basis.

The economy and jobs are mostly affected by the federal government and its policies, state officials will candidly tell you.

In the past, seasoned political hands in Harrisburg knew not to live high off the hog in bad times, if only for appearance’s sake.

But state officials in both political parties in recent years have accepted generous cost-of-living increases to their own salaries, further insulating themselves from the economic hardships felt by their constituents, even as they’ve ignored the declining economic standing of average Pennsylvanians.

State government watchdog Eric Epstein, a longtime critic of automatic cost of living increases for state officials, says the real income of average Pennsylvanians has been frozen for a decade.

“Real buying power of working Pennsylvanians has been eroded, while the ruling class has been afforded a COLA,” Epstein says, “The average legislator makes more than a working class family of four. They make about $30,000 more than a working class family, plus perks, including per diems, cars and health insurance. How can someone in the ruling class making more than $100,000 in salary and perks relate to the problems of average Pennsylvanians?”

“House Speaker Mike Turzai has a private limousine service,” Epstein complains.

Trump deserves some credit, Epstein adds. “Donald Trump is a billionaire who you’d think has little in common with the working man. But his political genius is relating to the working class.

“Donald Trump is not an accident. Working Americans need someone to blame. They feel impotent to change their own lives. They’re stuck.

“Donald Trump is connecting to something very real. Most people in America think they’re stuck, that the system is gamed, and they can’t move up and there’s no longer economic opportunity.

“Real wages have been frozen for over a decade, and now people are availing themselves to dangerous choices. This is what happens. Pennsylvania is a kleptocracy. We’ve moved from the outrageous to the dangerous.”

And state officials don’t seem to get it.

The only thing state officials do get are champagne salaries and caviar perks, and automatic cost of living increases.

Below are some numbers.

Data sheet: Legislative Compensation Package — July 7, 2005 vs. July 7, 2015

• The base salary in July 2005 for rank and file Pennsylvania legislative members – excluding per diems, perks, PSAs, pensions and paid health insurance – was $69,648.

• Lawmakers automatically receive pay increases – or COLAs – on December 1.  The “shared sacrifice” budget of 2014 allows legislators to keep their COLAs, per diems and “seasonal per diems.”

• The base salary of lawmakers in 2015 increased to $85,356. The annual salary does not include the cost for health care, parking, per diems, perks, PSAs, pensions and health insurance.

• Retired lawmakers are entitled to lifetime health care for themselves and their spouses.

• Retired legislators are reimbursed  for their monthly Medicare payment. When a lawmaker turns age 65, he or she is entitled to Medicare (there are exceptions, not listed here).  They sign up through Social Security and the payment, currently at $104.90, is deducted directly from their Social Security check every month.  The  $104.90 is adjusted upwards if the recipient has income in retirement over $85,000-single and $170,000-joint (there are four different brackets).

Meanwhile:

• The median household income for Pennsylvania in 2005 was $53,143, and per capita income was just under $30,000.

• The median household income for Pennsylvania in 2013 was $52,007 or a three-year decrease of -1.24%, and the per capita income was $28,647 for a three year increase of 1.66%.

• The 2012 state budget included $1.7 million in health care subsidies for legislators’ prescription medicine and dental benefits.

Lawmakers pay 1% of their salaries toward health benefits. House members and their families cost taxpayers between $4,543 to $20,420 for health care per member, per year. State senators and their families’ costs range from $6,969 to $19,311. (“The Pennsylvania Independent,” July 3, 2012).

• The “per diem” is an undocumented reimbursement lawmakers receive — in addition to their salary — for food and lodging. If a per diem is taken on a session day or for a committee meeting, taxes are not taken out. If a legislator receives a per diem for a non-session day, taxes are taken out.

• Some legislators have used per diems to purchase second homes.

• The per diem rate was $141 in 2006.

• The current state reimbursement rate is $159 from September through May. The  actual per diem reimbursements can float to $163 in the summer months.

• State lawmakers in 2013 charged taxpayers for 14,822 per diems totaling $2.1 million, according to an Allentown Morning Call report.

• “All told, the state’s 253 full-time lawmakers charged taxpayers $13.8 million in reimbursable expenses, including the per diems, between Jan. 1 and Dec. 31, 2013, a Morning Call analysis of spending records shows.” (Source: The Morning Call, Steve Esack and Eugene Tauber, November 17, 2014).

• The legislature’s actual budget in 2004-2005 was $340.9 million. The legislature’s slush fund stood at $135 million, and these tax dollars were used to pay for “unvouchered expenses.”

So the legislature had  $475.9 million at their disposal in 2005.

• In 2014, the legislature spent $313.4 million after Governor Corbett cut $65 million from the legislature’s $337.6 million budget. The legislature is pursuing restitution from Commonwealth Court by suing to recoup $72.2 million.

• Governor Tom Wolf has committed to increase legislative funding by 21% for a $329 appropriation in 2015-2016. Depending on the outcome of budget negotiations and the Commonwealth Court ruling, the legislature will be allocated $329 million and possibly have as much as $401.2 million on hand, and still have a surplus of $161 million.

• The legislature’s non-lapsing slush funds grew from $154 million to $161 million over the last year, and increased by $26 million since 2005.

–Source: Eric Epstein, Rock the Capital