Pay Parity — Who Really Made it Happen?


Over the past seven years, some SEC managers and employees have suffered from a fundamental misconception regarding how it was that Congress passed Pay Parity, leading to substantially higher compensation levels for SEC employees. According to their version of events, although NTEU provided some small assistance in the process, the “heavy lifting” was done by SEC management. This is revisionist history. It is important to understand what really happened so that you will appreciate the union’s vital role at the SEC.

Beginning in the late 1980s, SEC management tried, unsuccessfully, to get Congress to pass some sort of legislation that would afford the Commission the ability to raise our pay to something approaching that of the other financial regulators, such as the FDIC. Veteran employees can remember SEC managers appearing before congressional committees and testifying that the SEC budget should be increased.

Here is an excerpt from a national newspaper article published in 1988:

“S.E.C. Seeks Budget Shift Citing a mounting budgetary crisis at the Securities and Exchange Commission, the commission's chairman today suggested that the agency be removed from the Federal budget. The chairman, David S. Ruder, suggested that Congress grant the S.E.C. authority to set up a trust fund for its budget. The trust would be financed by the fees that are generated by Federal securities laws.

The S.E.C. received $249 million in fees in the 1988 fiscal year, far more than the $135 million budget that the Federal agency received from Congress. These fees are now turned over to the Treasury Department.

Mr. Ruder made the remarks before a sympathetic House Energy and Commerce investigations subcommittee headed by Representative John D. Dingell, the Michigan Democrat who is chairman of the full Committee. Mr. Dingell noted that the S.E.C. budget for 1988 was less than the appropriated budget for the musical bands of the military service.”

Since the Commission is prohibited by law from lobbying Senators and Congressmen, this sort of testimony was one of the few routes available to Commission management to bring about needed change. Nevertheless, Congress took little note of SEC testimony, and did nothing for another 13 years — while SEC management continued its fruitless quest for significantly greater funding.

A confluence of events led to Pay Parity becoming a reality in 2001. First, there was the Enron scandal. In a post-Enron world, a number of members Congress wanted to demonstrate their support for the federal regulator of the securities markets — the SEC. Second, there was the unionization of the SEC. In mid-2000, the bargaining unit employees at the SEC voted overwhelmingly to bring in the National Treasury Employees Union.

NTEU wholeheartedly endorsed Pay Parity, and acted quickly and aggressively to make it happen. NTEU has a significant lobbying presence on the Hill, unlike SEC management, and it convinced the senators and congressmen who were union-friendly to support the Pay Parity bill. Senators and Congressmen who were not union-friendly were induced to vote for the Pay Parity bill because it included a fee-reduction component for the registration of securities. Ultimately, NTEU persuaded both sides that one part of the bill wouldn’t be passed without the other. As a result, the Pay Parity bill became law. Without NTEU pushing for Pay Parity, we still would not have it. This is a lesson that we would do well to remember.

To read more in depth about the struggle to achieve pay parity, go to

“This afternoon the President signed pay parity legislation into law. This represents a significant milestone in our efforts to obtain pay parity for the hardworking employees of the Commission and is a cause for celebration. It is also a cause for recognizing the wonderful efforts of Commissioner Unger, the NTEU, and so many others who made this a reality.”

– SEC Chairman Harvey Pitt, January 16, 2002