Monday, 9 February 2009

Local body politicians and pay rates

Over at Homepaddock it is noted that several mayors seem to think they deserve a pay rise:
Oh dear, if there’s a phrase that politicians should never utter it’s “we deserve a pay rise” and to be fair, the mayors interviewed by the Southland Times didn’t put it in exactly those words.

Queenstown-Lakes mayor Clive Geddes said:

“My own view, not speaking for myself but speaking for the councils and community chairs in this district, is that their remuneration is significantly below the effort and contribution they make.”

Central Otago mayor Malcolm Macpherson said:

. . . in my view people who do the sort of work that rural authority mayors do are pretty much underpaid as it is.

And Southland District mayor Frana Cardno said:

. . . Our councillors earn a pathetic amount that wouldn’t even cover the costs of them leaving their work for the day . . .

I suspect they all have a point, that council pay is less than fair compensation for the time and effort good councillors put into their work.
I would say this is wrong. If it were right, then no one would stand in the local body elections. After all, people will only stand if they think that the return, in whatever form, makes taking on the job worthwhile. And as people are doing these jobs at the current pay rate it can't be too low. In fact as there are normally more than one candidate for these positions it appears there is an excess demand, perhaps the pay rate is way too high. We should lower it!!


homepaddock said...

By saying the pay isn't fair compensation isn't an argument that councillors should get more (or even don't get enough).

I'm not averse to paying them per se but don't think it's the time for them to get more; and if they're doing the job for the money they're not the right people to be doing it.

Matt Nolan said...

"After all, people will only stand if they think that the return, in whatever form, makes taking on the job worthwhile"

Indeed - but this could be used as an argument for paying them more.

If we payed more, we would get a better pool of potential candidates for the job - if we believed that the quality of the candidate really influenced outcomes (steep assumption I know ;) ) then there could be a justification for increasing wages.

In all truth, we need some sort of market pricing for their wage - how much are people willing to pay their local officials :)

Paul Walker said...

Matt: That's basically a efficiency wage argument but while a higher wage may get a a higher quality of person to stand there are two problems with political markets which economic markets don't have. 1) the selection mechanism, ie voting, is not as good at selecting for quality, just look at our current politicians and 2) in economic markets, after you have observed a worker and seen he is of low quality you can fire him. This is a lot more difficult in political markets. At best you can only do it at an election, which could be many years away. Also the quality of observation is lower in political markets than other markets.

Matt Nolan said...

Hi Paul,

I wouldn't quite call it the same as efficiency wage argument - as I'm not stating that pay actually influences the marginal product of a hired worker.

I agree with your critiques of the political market as well - I was just trying to illustrate a possible counter argument.

As I said in my previous comment - it would be preferable if we could get some market pricing going ;)