Does $787,637 sound like a reasonable salary for the public executive in a city of 38,000 people?

In 2010 a major scandal erupted when the Los Angeles Times revealed via a public records request that the Chief Administrative Officer of tiny Bell, California made over twice as much money as the Chief Executive of Los Angeles County. Bell is not an affluent area — per-capita income is roughly half the national average. Yet, other public Bell city employees were similarly overpaid.

While certainly an extreme case, this example highlights the importance of government transparency. Because elected officials and other public employees are paid through taxes on the incomes of hard-working private citizens, it is important for those citizens to know how much public employees are being paid. This allows the citizens to address any issues through the democratic process.

The Buckeye Institute has long argued for more transparency of government information, and we host transparency databases that include the salaries of many of Ohio’s public employees. In addition to our efforts, the office of Treasurer Josh Mandel has proposed that it host the state’s checkbook in a similar online database. The office of Auditor Dave Yost has a trove of financial data and information online. And DataOhio is another proposal to help citizens stay informed. The common theme is the belief that a better-informed citizenry can hold their public officials accountable.

A recent working paper from the National Bureau of Economic Research, “Does Transparency Lead to Pay Compression?”, confirms that transparency initiatives such as these actually do produce tangible positive results by helping to reduce the costs of government. Princeton researcher Alexandre Mas compared the pay of California local government employees before and after a law that required California’s cities to publish employee salaries in an online database. He found that the increased transparency reduced salaries of city managers by 8 percent, and led to a 75% increase in voluntary terminations of employment.

The government provides necessary services for all of us, but sometimes people in government abuse the use of tax dollars that citizens work so hard to earn. One of the ways they abuse tax money is through excessive compensation—that is, salaries and benefit packages that can be far higher than those in the private sector. Often compensation costs comprise over 75% of government expenditures. Transparency efforts are critical if concerned citizens are to keep public officials in line by using such information to help vote abusers out when necessary.