gressmen, our judiciary, and our top-ranking policymaking civil servants. Commonsense indicates that we must attract capable men and hold them in service. I am convinced that this can be accomplished only if the compensation is realistic. I therefore strongly favor a revision of salaries in the top echelons of our administration ***??

G. Keith Funston, president, New York Stock Exchange

"We cannot hope to solve the numerous complex problems facing our country today unless men and women of outstanding ability continue to be attracted to high-level positions in the Federal Government. Consequently, Government salaries at top echelon levels must be sufficient to allow talented individuals to accept these positions without undue financial sacrifice on their part."

C. R. Smith, president, American Airlines

"It is unfair, both to the individuals concerned and to our country to require competent men and women to make substantial financial sacrifices in order to serve in our Government. Our country is neither poor nor niggardly. We can afford to pay for the reasonable worth of services given to the Government and should do so, as a matter of basic and continuing policy. By doing this, we will make it easier for good citizens to serve and we will reasonably insure better government."

T.S. Petersen, director, Standard Oil Co. of California

"Increased salaries for Cabinet officers and Members of Congress are in order. Such action should be followed by increasing salarly levels for other appointive and executive positions so that they would be attractive to top-qualified men throughout the country. I believe it is false economy to continue these low salaries. Our Government needs top performance in the management of its affairs." Sidney J. Weinberg, partner, Goldman, Sachs & Co.

"Low pay in Federal Government service is a tremendous handicap in securing the right and best men for career service. I have learned, while in Government, to have a profound respect for the civil servants in our Government. I wholeheartedly endorse the Randall report on Federal compensation. In order to raise the salaries to Federal workers it must first start at the top, such as for Cabinet members, Senators and Congressmen, and the judiciary. These salaries are pitifully low for the high responsibilities they carry ***”

The CHAIRMAN. The next hearing will be Thursday at 9 o'clock. The hearing is recessed.

(Whereupon, at 10 a.m., the hearing recessed to reconvene at 9 a.m., Thursday, May 7, 1964.)

FEDERAL PAY LEGISLATION

THURSDAY, MAY 7, 1964

U.S. SENATE,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.C. The committee met at 9 a.m., pursuant to recess, in room 6206, New Senate Office Building, Senator Olin D. Johnston (chairman of the committee) presiding.

Present: Senators Johnston, Yarborough, Carlson, and Fong.

Also present: William P. Gulledge, staff director and counsel: Richard Fuller, professional staff member; David Minton, staff member; and Frank A. Paschal, minority clerk.

The CHAIRMAN. The committee will come to order.

This hearing is convened so that the committee may continue to hear testimony on Federal pay adjustment legislation.

Announcement of today's hearing was made Monday, May 4, of which this is a continuation. I appreciate our witnesses appearing at this somewhat early hour, which is made necessary by the present debate now going on in the Senate.

The date for further hearings on this legislation will be announced for next Monday at the same hour, 9 o'clock.

Our first witness today is the Honorable Elmer B. Staats, Deputy Director, Bureau of the Budget. And our second scheduled witness is the Honorable Richard J. Murphy, Assistant Postmaster General, Bureau of Personnel.

Will you proceed, Mr. Staats, as you see fit?

STATEMENT OF HON. ELMER B. STAATS, DEPUTY DIRECTOR, BUREAU OF THE BUDGET; ACCOMPANIED BY ROGER W. JONES, SPECIAL ASSISTANT TO THE DIRECTOR

Mr. STAATS. Thank you, Mr. Chairman. I have with me this morning Mr. Roger Jones, who is no stranger to this committee, who has been working very closely with Mr. Gordon and me and with Mr. Macy on this matter.

On behalf of the Bureau of the Budget, I thank the committee for giving me the opportunity to stress the President's view that enactment of pay legislation at this session of Congress to use his words"reaches into the very essence of urgency if this Government means to retain excellence and quality." As he stated in a recent press conference, it is one of five measures to which he attaches the highest legislative priority for this session. On a separate occasion in remarks to the American Society of Newspaper Editors, the President stated that "*** this Government suffers the harsh and ir

retrievable loss" when Government officials "*** must quit to find higher incomes in private industry."

This position of the President is the backdrop against which I should like to present several important considerations in the case for substantial adjustments in Federal civilian pay.

First, in the Federal Salary Reform Act of 1962, the Congress and the executive branch committed themselves to the principle of maintaining career pay at levels comparable with pay received in private enterprise. President Kennedy recommended such action over a year ago, but the legislative schedule has not yet permitted final action to be taken. All of the facts which support the need for a prompt comparability adjustment are before the Congress, and these have been effectively summarized to this committee in testimony by the Chairman of the Civil Service Commission. Failure to take action will undercut the principle, and the promise, of maintaining comparability. It will also, unless action is taken soon, renew demand for flat percentage increases for postal and other career workers. We believe that the history of pay legislation between 1946 and 1960 demonstrated to the Congress and the executive branch the shortcomings of the old approach. It produced results that were more costly, less equitable, and less rational than action under the comparability approach.

Second, and perhaps even greater than the need for adjustment in career salaries, is the need for establishment of a rationalized salary structure in top positions in the executive branch, and the concur rent establishment of sound interrelationships among executive, legislative, and judicial pay schedules. Federal top salary rates have remained unchanged since 1955-56.

The President has made public several instances of the loss to the Government of highly capable officers because they no longer can afford to use up their personal savings to maintain themselves in Federal service. I should like to quote the report of the President's Advisory Panel on Federal Salary Systems on this point:

Giving up a high income to accept a lesser income in a Federal office has been a common experience in the history of our country. We believe, however, that such action should not require the individual to draw down his personal resources in large amounts in order to support himself and his family while in office. The sacrifice must be of an order which many, not just a few, are prepared to make, and it should be no greater in a Federal position than in any other form of public service. Furthermore, there are many able young men who have accumulated no reserves to help them maintain themselves in public office. It is particularly important that inadequate pay scales neither deny our country their services nor create the kind of economic pressure of family responsibility which cuts their service short when they do accept public office.

But the argument is not only an argument of need and the obvious equity of paying executives of the Government salaries adequate to recruit and retain topflight men and women. More important is the fact that the loss of such people impedes efficient and economical management of the Government, and impairs efforts to strengthen professional, technical, and administrative leadership needed to step up the productivity of Federal workers everywhere. Furthermore, the present unduly low scale of executive pay depresses unreasonably the rates we can pay in the higher grade career positions, causing losses at those levels and creating a discouraging outlook to the young men and women we need to attract for careers in Federal service.

It has been the responsibility of the Bureau of the Budget to work closely on a day-to-day basis with President Johnson in his unremitting drive for greater efficiency, better productivity, and improved management in the executive branch. Efforts to reduce costs and increase efficiency will continue. We must rely heavily on top management to find the ways to make these savings. The recent hearings on manpower utilization by the House committee brought this out clearly. I know at firsthand the impressive management results which come from competent, enthusiastic, dedicated service at the executive levels of our Government, both by political officers and by top career people. Judged by the standards which prevail generally in the private economy and in an increasingly large number of State and local governments, these officers deserve higher pay. We do not seek now, nor do we ever expect, pay for the higher Federal levels which would equal pay for similar levels of responsibility in private enterprise. But we do believe that the Federal Government and the American taxpayers are the losers when our salary scales make it impossible for men and women to come into policy positions in Federal service, or to remain long when they do come. Similarly, we are concered when we lose our top career people because of an unrealistic ceiling on their pay. An investment of $5 or $6 million in pay adjustments for the top officers in executive agencies (the present House bill would cost about $3 million), and similar amounts to adjust pay for Members of Congress and the Judiciary, is a minutely small price to pay for the results which will come. The boost to morale and the incentive to achieve which will follow pay increases will be measured both in budgetary results and in improved program efficiency.

The Chairman of the Civil Service Commission, in his statements to the committee, outlines clearly the inequities and the chaos which our present salary structure continues to produce. I should like to underscore his testimony. The Bureau of the Budget is deeply concerned that there are at least 190 top executive positions (mostly Presidential appointees) whose pay is now the same as or lower than their subordinates in grades GS-18 or GS-17. We find equally regrettable similar anomalies between grade GS-15 and higher positions under the Classification Act structure.

I have stressed that we do not expect top salaries in the Federal Government to equal or even approach those paid in private enterprise. But we think they should not be out of line with pay in other kinds of public service. The comparison between Federal executive salaries and those now prevailing in our State and local governments, in the colleges and universities, and in other semipublic organizations such as nonprofit institutions shows how far behind the Federal Government has fallen.

The report of the President's Advisory Panel on Federal Salary Systems tabulates 902 positions in State and local governments for Governors, mayors, and city managers, administrative and professional personnel, officers of public corporations, and judges who receive salaries of $25,000 to $60,000 a year. Similarly, there are 23 local school superintendents and 89 officers of public universities who draw salaries of $25,000 or more, and over 500 principal officers in colleges and universities, public and private, who have salaries in excess of $20,000 a year. Finally, as mentioned by the Chairman of the