Jameson 1 Shifting the Understanding of Revolving Door Lobbyists John Jameson University of Massachusetts Amherst Abstract: The revolving door, defined as the exchange of personnel between a regulator and the regulated industry, is both under-studied and engulfed in excessive speculation. To combat this, I constructed a database of the revolving door connections held by in-house lobbyists active in four unique sectors of the economy: finance, energy, pharmaceuticals, and telecommunications. After constructing revolving door ratios for each lobbyist, I compare different levels of revolving door “contamination” across sectors. I also compare the contaminated ratios of the top 20 organizations and the smaller remaining organizations from each sector. Larger organizations have more resources at their disposal to attract top talent. Therefore, large organizations should be more contaminated than small organizations, as the connections gained from the revolving door are highly sought after by the firms and organizations that hire lobbyists. Yet my findings show that the larger firms are not more contaminated than the smaller firms, which indicates that our current understanding of the revolving door lacks necessary complexity. Upon examining the common sources of contamination for each sector, I am able to conclude that organizations do not blindly seek lobbyists with any revolving door connections, but instead favor lobbyists with connections in areas deemed key to a sector’s prosperity.
Transcript
Jameson
1
Shifting the Understanding of Revolving
Door Lobbyists
John Jameson University of Massachusetts Amherst
Abstract: The revolving door, defined as the exchange of personnel between a regulator and the regulated industry, is both under-studied and engulfed in excessive speculation. To combat this, I constructed a database of the revolving door connections held by in-house lobbyists active in four unique sectors of the economy: finance, energy, pharmaceuticals, and telecommunications. After constructing revolving door ratios for each lobbyist, I compare different levels of revolving door “contamination” across sectors. I also compare the contaminated ratios of the top 20 organizations and the smaller remaining organizations from each sector. Larger organizations have more resources at their disposal to attract top talent. Therefore, large organizations should be more contaminated than small organizations, as the connections gained from the revolving door are highly sought after by the firms and organizations that hire lobbyists. Yet my findings show that the larger firms are not more contaminated than the smaller firms, which indicates that our current understanding of the revolving door lacks necessary complexity. Upon examining the common sources of contamination for each sector, I am able to conclude that organizations do not blindly seek lobbyists with any revolving door connections, but instead favor lobbyists with connections in areas deemed key to a sector’s prosperity.
Jameson
2
Introduction The revolving door, or the exchange of workers between a regulated industry and
its regulator, is an under-studied yet widely discussed phenomenon of modern
regulatory policymaking. News outlets1 and political pundits denigrate the revolving door
as another tool to be used by corporations to get their way. Some cite it as an example
of a wealthy ruling elite that can travel freely between corporate boardrooms and
regulatory agencies. And yet others insist that the revolving door facilitates better
policymaking by including private sector expertise into the debate over complicated
regulations. Some blame the revolving door for facilitating a lax regulatory climate that
lead to the 2008 global financial crisis, stating that the revolving door runs rampant
among lawmakers. Without further study, the revolving door will remain ambiguous and
misunderstood. This project seeks to fill in portions of our knowledge about the revolving
door and add to the existing literature. I examine the revolving door as it pertains to
lobbyists; I have constructed a database containing employment history data on over
three thousand lobbyists, which I will use to examine the scope of revolving door
contamination as it relates to lobbyists and certain sectors of the economy. I will add
nuance to our understanding of how revolving door connections are valued, and by
whom they are valued. This paper will begin with an examination of the existing
literature on the revolving door, and will then proceed to a description of the ins and outs
of my data. I will then present my findings before finally stating conclusions drawn from
the data.
Background Literature In 1979, Gormley (Gormley 1979) performed the first in-depth examination of the
revolving door. He studied the impact of private sector working experience on regulators
at the United States Federal Communications Commission (henceforth the FCC). To 1 1 The New York Times, for example, features stories on the revolving door so often that they have created a category for it on a section of their website: http://dealbook.nytimes.com/category/series/revolving-door/ 2 This may at first seem counter-intuitive but Gormley considered the “broadcast
Jameson
3
test the revolving door hypothesis, Gormley gathered non-unanimous voting data on
rule creation, rule changes, notices of inquiries, and other decisions from FCC
commissioners from 1974 to 1976. His information is accurate – he gathered them from
the minutes of FCC meetings. In that two-year period, there was no turnover of
commissioners; Gormley also gathered the occupational history of all seven FCC
commissioners, so he could determine who had worked in the industry (broadcasting)
and who had not. To test the effect of the revolving door, he applied bloc analysis and
Guttman scaling. Bloc analysis tests for voting blocs, the theory being that former
broadcasters would be like-minded and therefore vote concurrently. Guttman scaling
requires Gormley to characterize votes as having a political direction (whether the vote
is pro- or anti-broadcasting); this allows him to test the effect of individual values held by
commissioners, and attribute voting patterns to characteristics like political party
affiliation (Republican or Democrat) or previous employment within the regulated
industry. Using all of the votes undertaken at the FCC, the results from the bloc analysis
do not confirm the revolving door hypothesis. In other words, the two commissioners
who were former broadcasters did not tend to vote in a bloc on all issues put to a vote at
the FCC. But, the results change when the scope is narrowed by using only the votes
that apply specifically to broadcasting, showing that the two revolving door FCC
commissioners form a voting bloc with two other (non revolving door) FCC
commissioners. In fact, each revolving door commissioner voted more similarly with a
non revolving door commissioner than they did with each other. Therefore, according to
Gormley, this outcome partially supports the revolving door hypothesis. Yet the inclusion
of two additional (non revolving door) commissioners in the voting bloc suggests that
there may be other factors influencing regulator votes other than the revolving door.
Support for the revolving door does not stop there: using Guttman scaling, Gormley
found that the two former broadcasters to be more likely to support the broadcasting
industry’s position than other commissioners. Applying Guttman scaling forced Gormley
to Identify three subsets of votes where the position of the broadcasting industry was
clear: broadcast license renewals, broadcast program content regulation, and cable
television. A commissioner was considered “pro-broadcasting” if their vote coincided
Jameson
4
with the wishes of the broadcasting industry within the three subsets. Specifically, a
commissioner was pro-broadcasting if they: 1) voted to support the renewal of an
organization’s license in spite of complaints or abuses, 2) voted to loosen program
content restriction and regulation, and 3) voted in a direction that was unfavorable to the
cable television industry or to a specific cable operator2. In all three areas, the two FCC
commissioners that were former broadcasters were more likely to support the
broadcasting industry’s position, thus providing support for the revolving door
hypothesis. Yet Gormley notes two points: the former broadcasters only narrowly
supported broadcasting against cable television (53.2% of the time), and the differences
between the “pro” commissioners and the rest of the commissioners are enhanced by
the fact that Gormley is only counting non-unanimous votes. Additionally, he found that
party identification predicted vote behavior better than occupational background3.
Nonetheless, this does not detract from Gormley’s revolving door findings: it has been
long established that political party affiliations play a role in regulatory policymaking, but
the impact of prior employment is less known. The main takeaway from Gormley’s
research is that the revolving door has some kind of effect on regulation, as work history
in broadcasting caused FCC commissioners to be more accepting of the interests of the
industry but the full effects are ambiguous, as other factors like political party also have
a strong effect on support for broadcasting industry positions.
Cohen (Cohen 1986) advances Gormley’s FCC revolving door work further by
expanding the dataset and including more nuanced measures of the effect of the
revolving door. He expanded the dataset beyond two years by gathering voting records
on non-unanimous FCC votes from 1955 to 1974, which included votes from 28
commissioners (increased from Gormley’s seven). Mirroring Gormley, Cohen also
considered all votes as a decision that did or did not support the broadcasting industry
position. Cohen moves one step beyond Gormley by gathering more in-depth data on 2 This may at first seem counter-intuitive but Gormley considered the “broadcast industry” to be just organizations transmitting via radio, whose direct competitor would therefore be cable television. 3 Republican commissioners were much more likely than Democratic commissioners to support the broadcasting industry in all three aforementioned areas.
Jameson
5
specific characteristics about each commissioner, including both pre- and post-FCC
employment data instead of just pre-FCC employment data. This new data coupled with
his larger sample of commissioners allowed him to include controls to better understand
the factors that affect a regulator’s support of the broadcasting industry. Cohen
recognizes that there are two sides of the revolving door: the “entrance” side and the
“exit” side. On the one hand, the “entrance” side suggests that regulators that come
from the regulated industry are more likely to support that industry as a regulator.
According to Cohen, the “exit” side suggests, on the other hand, that the lure of a
lucrative job in the industry after spending time as a regulator will lead the regulator to
support the industry4. Cohen designed his study based on his database containing
2,064 votes from 20-year period. From this set, he randomly sampled 10 votes from
each year to compare, which allows for more complete and even assessment of
commissioner behavior as the earlier years had fewer votes than the later years. Similar
to Gormley, Cohen scored the votes of each commissioner on a binary scale: 1
representing industry support, 0 representing nonsupport. He also maintains Gormley’s
scoring criteria: pro-broadcasting votes support license renewal, loosen content
restrictions, and go against the cable industry. Cohen once again expands on Gormley’s
data by collecting pre- and post-employment data from the FCC, the Who’s Who series,
and The New York Times. Cohen creates four hypotheses total, which are broken
evenly into two types: temporal and revolving door. Cohen’s four hypotheses (from p.
693-695):
Hypothesis 1: FCC Commissioners previously employed in the regulated
industry will be more supportive of the broadcast industry.
Hypothesis 2: In their first year, FCC commissioners with industry experience
will support the broadcast industry more than those without industry experience,
but by the second year, the difference in industry support will narrow
4 It is worth noting that Cohen cites a lack of empirical support for the exit hypothesis – Eckert (Eckert 1981) reports that only 20% of regulators find direct employment in the regulated industry and Quirk (Quirk 2014) finds (via interviews) that regulators do not feel like their level of support will affect their chances at a job in the industry.
Jameson
6
Hypothesis 3: Regulators employed in the regulated industry after their term in
office ends will be more supportive of the regulated industry while in office than
those who do not secure such employment.
Hypothesis 4: In a commissioner’s last year on a regulatory body, the
commissioner’s support for the regulated industry will increase.
Cohen’s “entrance” hypothesis results are clear: regulator prior experience plays a role
in industry support, thus confirming the revolving door hypothesis. Commissioners with
prior experience in the broadcasting industry are 14% more supportive of the industry
than commissioners without that experience. Also, post-FCC broadcast employment
impacts commissioner support of industry, but in the opposite direction that Cohen
would lead one to assume: commissioners that secure industry jobs post-FCC are less
supportive (more stringent) of the industry during their term than commissioners who do
not secure industry jobs. Further, commissioners in their last year of employment at the
FCC seem to posture to increase their attractiveness to the industry: final year
commissioners increased their industry support by 11%. Strangely, the final year
posturing effect is more pronounced for those hired by the industry than those who are
not: those who would go on to get hired were supportive 63.9% of the time in their final
year, whereas those who did not go on to get hired were supportive 51.9% of the time.
These last two findings paint a strange picture: for a regulator to be an ideal candidate
for hire by the industry, they should spend almost their entire career against the
industry, except the last year where they should begin to support the industry more.
Using the variables based on the aforementioned hypotheses, Cohen finds that only
three variables are statistically significant: pre-FCC industry employment, post-FCC
industry employment, and last year on the FCC. He then makes his results more
rigorous by including controls for other explanations for his outcomes. He controls for
political party, geographically linked ideology, presidential impacts, and congressional
impacts, and finds that including the control variables changes the outcome of
significant variables. The significant variables now include: post-FCC employment, last
Jameson
7
year on the FCC, and the party of the appointing president.5 This is a large shift – the
pre-FCC employment variable is replaced entirely by the presidential party variable
because Democratic presidents in the dataset did not appoint a single commissioner
with previous broadcast experience. The main takeaway from Cohen’s study is that
more studies of the revolving door are needed in other areas in order to make broad
statements about regulatory agency decision-making. The revolving door may not have
an extremely large influence on FCC decisions, but this conclusion is far from the idea
that the revolving door is irrelevant or inapplicable to regulatory policymaking. It is
possible that the FCC is uniquely influenced by presidential appointments (the control
variable that replaced the “entrance” revolving door variable), as the selection of FCC
commissioners is not a politically salient issue when compared to selection of Federal
Reserve Chairmen or the heads of other major regulatory agencies.
The Revolving Door is often cited as a mechanism that influences lawmaking and
regulatory policymaking. Some, like Baker (Baker 2010), contend that the revolving door
increases the influence of private sector actors, which leads to regulatory capture (when
combined with other factors). Baker emphasizes his notion of regulatory capture in the
through four causal mechanisms: lobbying, the degree of political salience, institutional
design/revolving doors, and intellectual capture. In financial regulation, Baker points to
the revolving door between private banks like Goldman Sachs to regulatory agencies,
like the United States Treasury (the Treasury) or the Federal Reserve Bank of the
United States (the Fed). Baker specifically mentions the presence of a “Wall Street –
Washington” corridor, referring to the frequent movement of executives back and fourth
between the two areas. This exchange of workers, according to Baker, can have a
colonizing effect on regulatory agencies and can provide dysfunctional incentive
structures for regulators. Baker cites a piece by Makkai and Braithwaite (Makkai and
Braithwaite 1992) who contend that regulators are encouraged to pass industry-friendly
regulations through implicit promises of future careers in the industry, but support for
that idea in general is shaky at best as shown in part by the aforementioned piece by 5 ‘Conservative coalition’ vote success in the House is also statistically significant, but Cohen states that, “This result may be spurious” (p. 703).
Jameson
8
Cohen. Baker cites Johnson’s (Johnson 2009) work detailing how the flow of
professionals from the public to private sector allows for the formation of a belief
system. This belief system idea, sometimes referred to as financialization, contends that
what is good for Wall Street will also be good for the US (like large financial institutions
and freer capital markets) which according to Baker, causes overly lenient regulations.
Baker’s piece is useful insofar that it succinctly summarizes possible reasons for
concern surrounding the revolving door.
Blanes i Vidal, Draca, and Fons-Rosen (Vidal, Draca, and Fons-Rosen 2012)
study the impact of the revolving door on the careers of congressional staffers turned
lobbyists. They note the direct connection between revenue production from former
staffers and the politicians for whom they previously served – they find that on average,
lobbyists connected to a US senator suffers a 24% drop in generated revenue when
their previous employer leaves the Senate. This effect is stronger for lobbyists who
previously served under a congressman on an important committee6. Blanes i Vidal et
al. note that the connection between revenue generation and a lobbyist’s former boss is
stronger for those that served in the Senate – being connected to a serving senator is
associated with 23% higher revenue, whereas connection to a serving representative is
only associated with 9% higher revenue generation. There is also evidence that ex-
staffers are less likely to work in the lobbying industry after their connected senators exit
Congress – being connected to a serving senator is associated with 27% higher
likelihood of working as a lobbyist. Blanes i Vidal et al. provide crucial empirical
evidence of the value of personal (revolving door) connections in the lobbying industry.
These personal connections allow the lobbyists with them to be more effective (as they
are generating more revenue) when certain politicians are in power. This piece of
information is crucial to understanding how the revolving door works for financial
regulation.
McKay (McKay 2012) examines the role of money in lobbying and influencing
policy outcomes. She wants to know how money affects policymaking – does more 6Vidal et al. consider the Senate Finance and Appropriations Committee and House Ways and Means Committee important congressional committees.
Jameson
9
money mean more lobbying success? Specifically, do wealthier groups achieve more
lobbying success than less wealthy groups? To answer this question, McKay combines
data on lobbyist resources and policy outcomes with existing data from interviews with
lobbyists conducted from 1977-1982. She finds that financial wealth has little to do with
a group’s policy success; what is far more important, is how the group spends the
money. Spending money on increasing lobbying intensity (measured via more time
spent in Washington DC, more lobbyists working on an issue, etc.) is correlated with
greater lobbying success. She also states that experienced lobbyists with prior
connections are a factor in more successful lobbying – these connections and
experience can be acquired through the revolving door. But greater financial wealth
does not always lead to greater lobbying intensity. The main takeaway from McKay,
with respect to studying the revolving door, is that money alone does not buy lobbying
success, but how money is spent does affect a group’s ability to influence policy.
Reading in between the lines, McKay insinuates that spending money to increase
lobbying intensity for lobbyists with experience and connections on Capitol Hill
(revolving door lobbyists) is the best way to affect policy change.
The revolving door does not only impact regulations – the private sector is also
affected by the revolving door. Shive and Forster (Shive and Forster 2013) study these
private sector impacts. They compile a dataset of regulators from any of the six financial
regulatory institutions: the Federal Reserve (Fed), the Securities and Exchange
Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the
Commodity Futures Trading Commission (CFTC), the Office of the Comptroller of the
Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). Shive and
Forster focus on regulators that leave their institution through the revolving door to work
at a private firm. Their findings are crucial: firms that hire revolving door regulators see a
positive 0.9% return on hiring announcement day, and their stock volatility is 5% lower
in the quarter following the revolving door hire. Financial firms are also twice as likely to
hire a regulator from the body that directly regulates it. In other words, private firms
become more profitable and more stable when they hire a revolving door regulator, and
these firms seek out workers that previously regulated them. Shive and Forster find that
Jameson
10
the most consistent determinant of hire by a financial firm is the revolving-door
employee’s length of employment at the regulator – in other words, more experienced
and presumably connected regulators are more desirable to firms. This information is
crucial to our understanding of the revolving door: it establishes quantifiable ways in
which private firms benefit from the revolving door.
Research Methods The data for this project was compiled from the subscription-based online
lobbying database lobbyists.info7. The website contains information on over 28,000
federal lobbyists, over 2,400 lobbying firms, and over 12,000 corporations and
associations. The data can be accessed in a number of ways: one can search for
lobbyists by bill or bill sponsor, by legislative area, or by the industry in which a lobbyist
is active. The lobbyist information in the database is segregated; when one searches for
lobbyists by the aforementioned methods, the results only include in-house lobbyists,
not lobbyists employed by lobbying firms. There is an option for searching for lobbying
firm lobbyists, but it is separate from the main searches. I gathered the lobbying data
manually8, so the project moved slowly. I gathered the lobbyists’ name, the organization
that he or she lobbied on behalf of, the sector they were found in, and their professional
employment experience (if listed). Lobbyists.info is not a comprehensive source for
employment history – there are many lobbyists that list their name and organization
only. In the interest of brevity, I could not gather background information on every single
lobbyist in the database. I reduced the size of the sample in two ways: first, I only
gathered data on in-house lobbyists, and second I only searched for lobbyists active in
one of four sectors of the economy. The four sectors are: finance, energy,
pharmaceuticals, and telecommunications. I am mainly interested in financial sector
7 www.lobbyists.info 8 I would enter the data displayed on the website into a separate excel spreadsheet organization-by-organization, lobbyist-by-lobbyist.
Jameson
11
lobbyists, but in order for my study to be broadly applicable and to accurately represent
the greater lobbying industry, additional and diverse sectors are required. These four
sectors are distinct, representing different sections of the economy, although they share
certain features. The energy industry, like the financial industry, is important to the
health and functioning of the rest of the larger economy, as economic productivity
requires both capital and energy. The pharmaceutical industry, like the financial
industry, is very seriously complex. The science behind cutting-edge medicines and
research is beyond the scope of the average person, similar to the complexity and scale
of modern financial instruments and derivatives. The telecommunications industry is
similar to finance in that it generates an enormous amount of revenue, yet it is
concentrated in a relatively small number of firms9. These similarities will allow me to
draw relative conclusions about revolving door lobbyists across sectors.
It is important to acknowledge both the strengths and limitations of my data. The
lobbyists.info website allows one to search for industry-specific lobbyists based on a
large number of vague, pre-defined search terms. Please see Figure 1 for a description
of the search terms used in this study with their corresponding sector.
9 According to the US Census Bureau, in 1992 roughly the top 7% of cable and broadcasting companies (ranked by revenue) were responsible for over 70% of the sector’s total revenue (United States Census Bureau 1992). The story is similar for finance: the top 1.8% of Securities Industry companies are responsible for over 58% of the sector’s total revenue (United States Census Bureau 1992).
Jameson
12
Figure 1 – Sector Search Terms
When the website is queried using these sector keywords, only organizations and
associations are returned as results. Therefore, it is important to stress that my data
only contains information on in-house lobbyists, not lobbying firms. Each
organization/association had workers listed in one of two separate tabs: in-house
government relations personnel and other key personnel. I gathered my lobbyist info
from the in-house government relations personnel tab only – the “other key personnel”
tab listed people in leadership positions like CEO, CFO, CLO, etc. who are obviously
not involved in the day to day activities of lobbyists and are therefore outside the scope
of this project. On my first round of data gathering I only collected information on
lobbyists that had background data – I did not gather information (names, organizations,
sector, etc.) on lobbyists without professional working experience listed on
lobbyists.info. But information on the lobbyists without listed working experience is
important also – it weights the data I was able to gather on lobbyists with background
information and allows for a more complete picture of the revolving door lobbyists’
universe. Thankfully, lobbyists.info has a bulk download feature that will gather the
Finance Energy Pharmaceuticals Telecommunications
Banking/credit-&-finance/savings-&-loan Energy
Pharmaceutical-Industry
Telecommunications/Internet/Cable
Banking/finance/investments
Energy/electricity Pharmacology
Investments/securities-industry Coal
GasGasolineNuclear-EnergyPetroleum-Industry
Fuels-see-coal,-gas,-oil,-petroleum
Jameson
13
names and organizations of lobbyists listed by sector. Working backgrounds are not
included in the bulk download, but they are not needed in my case because I have the
working history of every lobbyist listed in the sectors already. However, bulk
downloading is not a perfect solution: it is impossible to differentiate which “tab”
someone belongs to (the “in-house government relations personnel” or the “other key
personnel” tab) when a bulk download is performed. In the bulk download spreadsheet
there is a binary variable representing the Lobbying Disclosure Act (LDA) – a “Y”
signifies that the information provided for that lobbyist was gleaned from an LDA, and an
“N” signifies that the information provided was gotten from elsewhere. The Lobbying
Disclosure Act mandates that lobbyists provide their contact information, their client’s
contact information, and a statement about the general issue area that they will be
lobbying on to the Clerk of the House of Representatives and the Secretary of the
Senate. The LDA is mandatory for all in-house lobbying efforts costing more than
$12,500 per economic quarter, therefore most people with a “Y” in the LDA column are
also listed on the lobbyists.info site under the “in-house government relations personnel”
tab. But unfortunately, not everyone listed under the “in-house government relations
personnel” tab disclosed his or her information via an LDA. It is impossible to tell how
the lobbyists.info site categorizes someone as a lobbyist who did not disclose their
information via an LDA. This makes it impossible for me to get the optimal sample of
people: only lobbyists, or those listed as “in-house government relations personnel”.
This is less than preferred, but is not excessively detrimental to the validity of my data.
In order to account for these differences, I deploy sector-based measures of the
revolving door using three different “weighting” groups of lobbyists: 1) just the lobbyists
that had background information (the “information group”), 2) the same as the first group
with the addition of all bulk downloaded lobbyists that disclosed via an LDA (the “LDA
group”), and 3) all personnel listed on the lobbyists.info site which includes non-
lobbyists from the “other key personnel” tab (the “all group). I also compare revolving
door contamination measures of the top 20 largest firms (ranked by their number of in-
house lobbyists) against the rest of the sector across all three weighting groups. It is
worth noting that my data does not capture the comprehensive working background of
Jameson
14
every currently active lobbyist – the lobbyists.info site, and therefore also my data, is
reliant upon the disclosure of lobbyist data via LDAs, interviews, or public online
profiles10. Obviously, it would be best if my data included the background of every active
lobbyist, but that is currently unfeasible and unrealistic.
This study focuses on the revolving door, or the exchange of professionals
between the regulated industry and their regulator. Therefore, the working history of the
3,544 lobbyists in my data is not useful in the raw – certain jobs represent
“contamination” via the revolving door, and certain jobs do not. In order for the data to
reflect that, I must categorize some jobs as representing “contamination”. First, I coded
the job of every lobbyist into one of the following broad categories (please see Figure 2).
Figure 2 – Coding Categories
10 LinkedIn profiles were common. Also, many organizations have small bios of their executive level staff on their websites – usually including a picture and professional working experience.
House Senate International JudicialGov't4Agency Interest4Group Military Political4PartyFirm Lobbyist PR4Firm State4Gov'tCampaign Consulting University White4HouseOther
Jameson
15
Then, I coded each category into one of two groups: private sector or public sector.
After that, I broke down the public sector jobs further, many of which are in the following
categories: State Gov’t, the White House, Gov’t Agency, Senate, or House. In order to
establish a measure of revolving door “contamination”, I coded each job as directly
relevant to one of my four sectors, if applicable. A job is directly relevant to a sector if it
had regulatory power over that sector. Lobbyists that have worked these jobs are
considered “contaminated” by the revolving door. The State Gov’t jobs11 are irrelevant
for the purposes of a federal lobbyist, as none of these jobs are directly germane to one
of the four sectors. Therefore, no State Gov’t jobs are considered contaminated. Many
of the White House positions are also too general to classify as relevant to finance,
energy, pharmaceuticals, or telecommunications12. The remaining jobs in the House of
Representatives, the Senate, and Government Agencies were all coded with respect to
the four sectors. Specifically, if a government agency were a regulator responsible for
one of the four industries (like the Securities and Exchange Commission and finance), it
would be coded as contaminated for that industry. Many lobbyists were previously
staffers for elected officials in the Senate and House – I treated these jobs as
contaminated if the elected official held a position on a committee relevant to the
industry that the staffer would later go on to lobby in. For example, if a staffer’s
congressperson is a member of the House Financial Services committee, that staffer
would be revolving door “contaminated” for the financial sector. Please see Figure 3 for
an explanation of how each committee was coded, and why they were coded that way.
11 These consisted almost entirely of tenure in state legislatures. 12 Many had vague titles like “Senior White House Staff” or “Senior White House Legislative Correspondent”
House&Transportation&Subcommittee&on&Water&Resources&and&Environment Energy Jurisdiction&over&the&EPAHouse&Ways&and&Means&Subcommittee&on&Health Pharma
House&Committee&on&Natural&Resources Energy Jurisdiction&over&energy&agenciesSenate&Appropriations&Subcommittee&on&Agriculture,&Rural&Development,&Food&and&Drug&Administration,&and&Related&Agencies Pharma Jurisdiction&over&the&FDASenate&Appropriations&Subcommittee&on&Energy&and&Water&Development Energy Jurisdiction&over&the&Department&of&Energy
Senate&Appropriations&Subcommittee&on&Energy&and&Water&Development Energy
Senate&Environment&and&Public&Works&Subcommittee&on&Oversight Energy Jurisdiction&over&the&EPASenate&Finance&Committee Finance SelfRexplanatorySenate&Finance&Subcommittee&on&Energy,&Natural&Resources,&and&Infrastructure Energy,&Finance Responsible&for&energy&and&finance&policiesSenate&Finance&Subcommittee&on&Health&Care Pharma Has&jurisdiction&over&health&care&Senate&Subcommittee&on&Energy,&Science,&and&Technology Energy
House&Committee&on&Science,&Space&and&Technology Energy Jurisdiction&over&the&EPA,&DEP,&etc.
Jameson
17
Once every job has been coded, I am able to construct ratios of an individual’s
“contaminated” jobs to their “clean”13 jobs, along with the ratio of non-contaminated
public sector jobs to contaminated jobs for each individual. The “contaminated to clean”
ratio is a good approximation of the revolving door as it compares all the available
information on a lobbyist’s jobs to their number of contaminated jobs. A higher ratio here
suggests a greater presence of the revolving door in a sector. The ratio of public sector
jobs to contaminated jobs, when aggregated by sector, shows how often a lobbyist
works contaminated public sector jobs. A higher number here indicates that connected
regulation-related workers will tend to move directly to become lobbyists at a higher
rate; they may be more affected by the pull of the “exit” side of the revolving door as
discussed by Gormley and Cohen, as they waste less time in non-revolving-door-
relevant public jobs before becoming a lobbyist. Individual level ratios are aggregated
and sorted by sector, and are compared using the three weighting groups mentioned
earlier (the “information” group, the “LDA” group, and the “all” group).
Findings My data includes the professional working background of 3,546 lobbyists. There
are also 2,320 lobbyists that have disclosed via an LDA, and a total of 13,221 people in
my database including the bulk downloaded “other key personnel”. All of these lobbyists
come from one of 1,613 organizations. Please see Figure 4 for a sector-specific
breakdown of the number of lobbyists and organizations in each group, and Figures 5
and 6 for a graphical representation of the organizations per sector and the rate of listed
previous employment per sector. Figure 4 – Sector Breakdown of various Lobbyist groups
Information Group14
LDA Group All Group Organizations
13 A “clean” job is one that is not contaminated or related to the revolving door. 14 These are the lobbyists that I was able to find information on in the lobbyists.info database.
Jameson
18
Finance 793 749 4924 634
Energy 1460 883 4944 619
Pharmaceuticals 713 411 1713 161
Telecommunications 580 277 1640 199
Figure 5 – Sector Breakdown of all organizations in data
Organization Breakdown
Finance
Energy
Pharma
Telecom
Jameson
19
Figure 6 – Sector Breakdown of Lobbyists with listed work experience
It is evident that both the financial sector and the energy sector are quite large,
containing more lobbyists and more organizations than the pharmaceutical sector and
the telecommunications sector. Financial lobbyists disclosed their information via an
LDA at a much higher rate than lobbyists from any other sector. Also, there is less
“noise” in the pharmaceuticals and telecommunications groups – there are fewer
organizations and lobbyists listed yet they have a higher proportion of employment
history data. This implies that there are more non-revolving-door-relevant organizations
and lobbyists in finance and energy. Non-relevant organizations and lobbyists indicate
smaller organizations, which must contract out 100% of their lobbying, as they can not
afford in-house lobbyists. These smaller organizations are a function of the nature of the
finance and energy sectors compared against the telecommunications and
pharmaceutical sectors: there are many small banks or local utility providers, yet there
are very few small drug manufacturers or Internet providers.
Raw figures are interesting, but they are not the point of this study. There are two
revolving door contamination variables representing two different ratios: the first is a
Previous Employment Information
Finance
Energy
Pharma
Telecom
Jameson
20
ratio of contaminated jobs to non-contaminated jobs15, and the second is a ratio of
contaminated jobs to public sector jobs. These ratios change depending on which of the
three weighting groups is used. Examining the ratios for only the lobbyists with
employment history listed neglects the varying size of each sector. In order to account
for this, I have ratios calculated for each of my three groups – the information group, the
LDA group, and the all group. The LDA group partially represents the total amount of
lobbyists in each sector. Representation is partial because lobbyists.info lists some
people as lobbyists even though they have not disclosed their information with an LDA.
Lobbyists.info does not divulge how they determine that these non-LDA people are in
fact lobbyists. The all group fixes the gap in the LDA group by including everyone, even
lobbyists that did not disclose with an LDA. Unfortunately, the all group also contains
many non-lobbying related personnel, which will distort results for sectors with more
organizations (finance, energy). The top 20 group controls for the distortion of sectors
due to their size, as only the 20 largest organizations from each sector are included. As
you can see in Figure 7, there is a wide distribution in the number of lobbyists per
organizations, so the top 20 groups are distinct from the rest.
15 Non-contaminated jobs are both private sector jobs and public sector jobs that are not related to the sector that a lobbyist currently works in.
Jameson
21
Figure 7 – Distribution of the # of lobbyists per sector
Larger organizations should have more revolving door contamination than the smaller
organizations outside of the top 20. As Vidal et al. have shown lobbyists with personal
connections gained from revolving doors are more valuable than unconnected lobbyists.
These lobbyists are paid higher salaries for their services, which is something that
larger organizations are more able to afford than many smaller firms. Larger firms will
also be able to recruit lobbyists more effectively, due to their size and the notion that
better paying jobs at these organizations are more prestigious. Additionally, many
smaller firms contract out their lobbying to lobbying firms, which reduces their
contamination ratios in my data. Please see Figure 8 for a table containing the top 20
organizations in each sector.
050
00
500
0 20 40 60 80 0 20 40 60 80
Energy Finance
Pharma Telecom
Freq
uenc
y
(sum) kountGraphs by sector
Jameson
22
Figure 8 – Top 20 Organizations/Associations
The contaminated ratios for the lobbyists in the “information” group are highest
for the financial sector. Please see Figure 9 for a graph representing the contamination
ratios for the lobbyists with professional working experiences listed in my data. The blue
variable, “contaminatedtoclean”, represents the ratio of contaminated revolving door
jobs to all “clean” jobs, or all private jobs and public jobs not directly relevant to the area
in which a lobbyist is active. The red variable, “contaminatedratio”, represents the ratio
of contaminated public sector jobs to non-contaminated public sector jobs. Figure 9 – Contamination including just lobbyists with working history listed
When comparing lobbying data disclosed by sector, finance has the highest levels of
revolving door contamination measured against all jobs and public sector jobs, though
the energy sector and the pharmaceutical sector are not far behind. Using this group,
there is little differentiation between the 20 largest firms and the rest of the industry for
all sectors – the bulk of the energy industry is slightly less contaminated than the top
firms, and the same goes for the pharmaceutical industry albeit to a slightly lesser
degree. This is surprising because the top firms should be able to attract more for the
lobbyists that have revolving door connections than the smaller firms can with higher
salaries and prestige, yet that is not supported by the data. The gap between the
contamination variables for the bulk of the pharmaceutical industry is strange – a low
0.0
5.1
.15
Energy Finance Pharma Telecom Energy Finance Pharma Telecom
Everyone Else 20 Largest Firms
mean of contaminatedtoclean mean of contaminatedratioGraphs by top20
Jameson
24
“contaminatedratio” measure yet relatively high “contaminatedtoclean” measure
indicates that lobbyists for smaller pharmaceutical firms are less likely to work in non-
contaminated public sector jobs when compared to their “top 20” counterparts.
These ratios differ when you include more than just lobbyists with listed
professional work experience. When all lobbyists that have filed an LDA are included in
the study, the financial sector appears much less contaminated. Please see Figure 10
for a graph representing the contaminated ratios for each sector including lobbyists
without background information that have filed an LDA. Figure 10 – Contamination including LDA lobbyists
The reduction of revolving door contamination in finance is surprising, as is the
continued prominence of contamination in the pharmaceutical industry. Again, it is odd
that the top 20 firms are, for the most part, less contaminated than the rest of their
respective sectors.
0.0
5.1
.15
Energy Finance Pharma Telecom Energy Finance Pharma Telecom
Everyone Else 20 Largest Firms
mean of contaminatedtoclean mean of contaminatedratioGraphs by top20
Jameson
25
These measures change once again when all available data is used. Please see
Figure 11 for the average contaminated ratios of each sector when including data on
both lobbyists and “other key personnel”. Figure 11 – Contamination including all data
This is the only group where the 20 largest firms are all more contaminated than the rest
of the industry, but these results are misleading. The lobbyists.info database includes
organizations that contract their lobbying out to lobbyist firms, but information on the
revolving door contamination of lobbying firms is not included here. There are numerous
organizations that do this contracting, most of which are smaller. These small firms
contract out their lobbying because they are not large enough to afford in house
lobbyists; therefore, all that is listed for these companies in the database is “other key
personnel”. There are many of these small firms who list “other key personnel” with zero
chance of having a revolving door lobbyist because they do not have any lobbyists on
0.0
2.0
4.0
6
Energy Finance Pharma Telecom Energy Finance Pharma Telecom
Everyone Else 20 Largest Firms
mean of contaminatedtoclean mean of contaminatedratioGraphs by top20
Jameson
26
staff at all. When these “other key personnel” are included, their lack of working history
data artificially deflates the average contaminated ratios for each sector.
The sources for revolving door contamination are the House, the Senate, and
various government regulatory agencies. Each sector has a differing amount of
contamination from each source. These sources matter – they reveal a sector’s
preferences, as top firms will want as many revolving door lobbyists as possible from
the sources that they intend to lobby. Please see Figure 12 for a graph of contamination
from the House, Figure 13 for a graph of contamination from the Senate, and Figure 14
for a graph of contamination from an agency, all weighted by the “all” group. Figure 12 – Contamination from House (All)
0.1
.2.3
Energy Finance Pharma Telecom Energy Finance Pharma Telecom
Everyone Else 20 Largest Firms
mean of contaminatedtoclean mean of contaminatedratioGraphs by top20
Jameson
27
Figure 13 – Contamination from Senate (All)
Figure 14 – Contamination from Agency (all)
0.1
.2.3
.4
Energy Finance Pharma Telecom Energy Finance Pharma Telecom
Everyone Else 20 Largest Firms
mean of contaminatedtoclean mean of contaminatedratioGraphs by top20
0.2
.4.6
Energy Finance Pharma Telecom Energy Finance Pharma Telecom
Everyone Else 20 Largest Firms
mean of contaminatedtoclean mean of contaminatedratioGraphs by top20
Jameson
28
The differences in these three graphs are striking. First, it is interesting to note that
these are the only graphs where the red “contaminatedratio” variable is sometimes
larger than the blue “contaminatedtoclean” variable. These larger red bars indicate that
lobbyists from the Senate or a regulatory agency spend little time in other public sector
jobs. More importantly, this data shows the differing sector preferences for revolving
door contamination. Top financial firms place a premium on former government
regulators, yet top energy related organizations have seemingly no interest in former
regulators. Top pharmaceutical organizations clearly covet lobbyists with backgrounds
in the Senate, while top energy firms desire connections in the House.
Conclusion The data presented in this study holds crucial implications for our understanding
of the revolving door. There is no doubt that legislative revolving door lobbyists are
valued for their connections and that this value is expressed as higher salaries paid by
organizations for lobbyists with those connections (Vidal, Draca, and Fons-Rosen
2012). But this is an incomplete description; organizations do not desire just any
revolving door connections. My data, which includes legislative as well as other
sources of revolving door contamination, supports a more nuanced understanding of
the dynamics of the revolving door. If organizations valued all revolving door
connections equally, then the data would show that the top 20 firms in each sector are
much more contaminated by the revolving door than the smaller firms, as the top firms
are better able to recruit these lobbyists with higher salaries, better benefits, and a
sense of prestige. My data shows that quite often, smaller firms have the same or a
greater amount of revolving door contamination. In addition, my data shows that a
sector’s demand for revolving door connections is not broad and unfocused, as is often
conjectured. There is overwhelming demand from top financial organizations for
regulatory agency-based revolving door connections, whereas there is very little
demand for the same types of connections from top energy companies. Understanding
this variation is important – we should not think of all revolving door connections as
equal, as clearly firms do not. Top financial firms value agency-based revolving door
Jameson
29
connections because their regulatory agencies are simultaneously powerful and
collegial. On one hand, agencies like the Securities and Exchange Commission (SEC)
and the Federal Reserve (Fed) wield great power over the financial sector, yet they
also seek input from the industry when creating new laws16. Conversely, Congress
rarely passes financial laws as they are too complex and they are more wary of being
seen as too friendly towards bankers. Even the Dodd-Frank Act, Congress’s hallmark
piece of financial legislation, focused on changes to be undertaken by regulatory
agencies17. Therefore it makes sense that top financial firms would prefer agency
connections: the agencies play the largest role in shaping their regulatory environment
and they provide opportunity for influence. The case for the energy sector is completely
opposite: the EPA is notorious for butting heads with their industry, even as some
critics complain that the agency no longer has teeth. In addition, Congress can, and
does, pass standalone energy related legislation18. Why would the energy sector
bother trying to influence an ineffective, uncooperative agency when they could spend
that time and money lobbying Congress, which is both effective and open to influence?
Wide, generalized conclusions about the revolving door understate the variation in
revolving door demand from various organizations in different sectors of the economy.
In order to further expand our knowledge of the revolving door, future research
could focus on the relationship between a firm or organization’s level of lobbying
success and their level of revolving door contamination. Do larger firms need more
revolving door connections to be successful, or do they just have them because they
are able to get them? Are smaller firms more effective at lobbying than larger firms if
16 For example, the SEC actually invites people and organizations to comment on proposed rule changes. You can submit comments very easily, right on their website: https://www.sec.gov/rules/submitcomments.htm 17 Congress delegated changes to be made to the agencies instead of directly making changes themselves – why waste time lobbying Congress then if the agencies will be the ones to implement the final rules? 18 Examples: H.R. 527(113th) is a passed bill finalizing the privatization of the Federal helium reserve, H.R. 678(113th) authorized many federal facilities for hydropower development, and H.R. 5057(113th) provided exemptions for certain power supplies from efficiency standards.
Jameson
30
they both have similar revolving door contamination levels? Qualitative research on
firm or organization’s attitudes towards the revolving door would also be fascinating. Do
top financial organizations internally acknowledge that they target agency-related
revolving door lobbyists? Finally, further study is required on lobbyists that are
members of lobbying firms, which are not included at all in my data or analysis.
