Ask The Advisor: Congress' 2012 Salary

Ask The Advisor: Congress’ 2012 Salary

Q: Did Members of Congress receive a COLA this year? If so did they get more than the 3.6% that seniors received? Is it true they don’t pay into Social Security?

A: Congress did not receive any automatic pay adjustment this year. With so many Americans (including seniors) suffering from long-term financial set backs, and so many workers out of jobs, lawmakers wisely opted to forego a raise. They last received a pay raise in January 2009. At the time their salary was increased 2.8% to $174,000 from $169,300. While the recession was taking a bite out of Americans’ income, the pay of Members of Congress grew by $8,800 from the time the recession began at the end of December 2007 through 2009, according to the Congressional Research Service. Over the decade 2000 through 2009, Congress gave themselves a total of 9 pay hikes, raising their salaries a total of $37,300 from $136,700 in 1999 to the $174,000 that they receive in 2012. Legislation passed in 1989 established the current formula used to automatically adjust the Congressional pay increase that they refer to as a “cost-of-living adjustment” (COLA).

The payraise goes into effect automatically unless denied by legislation, or adjusted by a provision of law that prevents Congress from receiving a percentage of pay increase that would be greater than any payraise received by the General Schedule to federal workers. When Congress passed legislation in December of 2010 that froze the pay of federal workers through December 31, 2012, they effectively froze their own pay as well. No similar provision of law, however, prevents Congress from receiving a bigger COLA than seniors. The adjustment for Congress is not determined like the COLA for seniors, which is based on changes in consumer prices. Instead the Congressional COLA is based on changes in private sector wages and salaries as measured by the Employment Cost Index. Members of Congress were originally scheduled to receive a pay adjustment in January 2010, of 2.1%, and in 2011 of 0.9% had legislation not prohibited it.

Social Security recipients, on the other hand, wouldn’t have received anything during that period because the price inflation, as measured by the government’s Consumer Price Index for Workers (CPI-W), fell and was not high enough for a COLA to be payable at all until January of this year. The projected Congressional COLA for 2013 is 1.1% and that would equal an extra $1,900 if it takes effect, resulting in an annual salary of $175,900. The Congressional Budget Office (CBO) recently projected that seniors would receive a 1.3% COLA in 2013. If the CBO is correct, the COLA would only raise average annual Social Security benefits about $189, from $13,200 in 2012 to $13,389 in 2013. There’s a widespread misconception that Members of Congress don’t pay into Social Security. That’s not true. They do — but not on all of their salary.

Legislation passed in 1983 required all Members of Congress to pay into Social Security. That said, like all high-income workers, they only pay Social Security up to the maximum taxable wage, which in 2012 is $110,100. Thus Members of Congress pay no Social Security taxes on the additional $63,900 they receive as salary. Since Members of Congress are high-income earners, they are also in line for the maximum tax break due to the payroll tax cut extension. The payroll tax rate has temporarily been cut by 2%, meaning Members of Congress will save $2,002 in 2012.

Sources: “Salaries of Members of Congress,” Ida A. Brudnick, Congressional Research Service, February 1, 2012.