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the draft bill, present comprehensively the specific features of the proposal and the facts on which they rest. Consequently I shall now merely summarize and reemphasize certain key features.

CONFORMANCE WITH REQUIREMENTS OF LAW

One fundamental consideration is that the salary adjustments proposed by the President are called for by existing law and have been developed in strict accordance with existing statutory provisions.

As basic policy, the 1962 act requires that Federal salary fixing shall be based upon the principles that

(a) There shall be equal pay for substantially equal work, and pay distinctions shall be maintained in keeping with work and performance distinctions; and

(b) Federal salary rates shall be comparable with private enterprise salary rates for the same levels of work.

To give effect to this prescribed salary policy, the act calls for

A report to the President, by agencies he designates, comparing Federal statutory salary rates with private enterprise rates for the same levels of work, as determined on the basis of annual surveys by the Bureau of Labor Statistics.

A report to Congress, by the President, after seeking the views of employee organizations in a manner he deems appropriate; the report to provide the comparison of Federal and private enterprise salary rates and any recommendations the President deems advisable.

The salary adjustments that the President has recommended for January 1964 conform with the policy and procedure prescribed by law.

BUREAU OF LABOR STATISTICS SURVEY

In late 1962, the Bureau of Labor Statistics reported national average salary rates for 75 position classes. Although serving industry and other users equally well, these work levels match our Federal Classification Act grades in the range from GS-1 through GS-15. The averages were based on data collected in 80 metropolitan areas, so chosen as to be representative of all U.S. metropolitan areas. For professional and administrative occupations, the averages are based on data collected from about 1,750 establishments. Clerical and drafting job averages reflect data from 4,700 establishments. The survey covers only establishments having 250 or more employees.

The complete survey report has been published as Department of Labor Bulletin No. 1346, October 1962, “National Survey of Professional, Administrative, Technical, and Clerical Pay, Winter 1961–62."

DESIGNATION OF AGENTS OF THE PRESIDENT

As required by the 1962 act, Federal salaries have been compared with private enterprise levels determined on the basis of the Bureau of Labor Statistics survey report of 1962. The President, in Executive Order 11073 and as authorized by the Salary Reform Act, designated the Director of the Bureau of the Budget and the Chairman of the Civil Service Commission as the agents who were to make and report to him the annual comparisons, with their recommendations as to salary schedules and other salary matters.

The order also directed that they provide employee organizations with Bureau of Labor Statistics findings and the methods and results of their comparison of Federal salary schedules with survey findings, establish means for receiving and considering the views of employee organizations, and transmit the views of the organizations to the President.

COMPARISON OF FEDERAL AND PRIVATE ENTERPRISE SALARIES

For purposes of comparing Federal and private enterprise salary levels, staff members at the Civil Service Commission and Budget Bureau first combined into a "grade average” the national average salaries reported for every job category that matched a particular Classification Act grade. A few of the averages had to be discarded because the jobs surveyed did not represent a sufficiently large proportion of Classification Act occupations in the grades concerned.

A consistent, logical Classification Act "pay line” was then derived from the grade averages, fitting to them as closely as possible while giving proper consideration to logical internal alinement. This pay line was then extended beyond grade GS-15 by projection of the same salary alinement relationship used below that grade. The resulting GS-16, GS-17, and GS-18 rates were tested against the Commission's 1962 updating of earlier studies of salaries of comparable executive and technical positions with equivalent responsibilities in 19 very large private corporations. This study found the middle rate for positions equivalent to GS-16, 17, and 18 much higher than those arrived at by a simple projection, culminating in a $44,500 rate for jobs equal to Federal grade 18. These private industry jobs were below the level of corporate officers of these firms. The study's results therefore show that the much lower rates arrived at by projecting the pay line based on BLS data were certainly on the conservative side.

The Classification Act pay line thus derived continued to reveal a gap between current Federal and private enterprise salaries at most grades. The gap increases as it proceeds from lower to higher level positions.

At a few illustrative grade levels, the gap between the fourth rates of the Classification Act already scheduled to go into effect in January 1964 (which is called schedule II) and the pay line based on the Bureau of Labor Statistics 1962 report of private enterprise salaries looks like this:

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The Federal salary gap at grade GS-3 amounts to $85; at GS-7, $205; at GS-12, $695, and at GS-15, $1,660.

RECOMMENDED CLASSIFICATION ACT SALARY SCHEDULE

As in previous schedules, the private enterprise pay line rate at each GS grade level is used as the fourth rate for the Classification Act grade. The fourth rate is appropriate for this puropse because

BLS reports average salaries (including salaries of people with both long and short service in each job category); and

The fourth rate of the grade best represents similar average rates of Classification Act employees. The complete Classification Act schedule was developed from the fourth rates, using the within-grade structural features of an entry rate and nine increases of 313 percent each.

The resulting schedule, modified to avoid rates lower than those already provided in schedule II for grades GS-1 and GS-2 and with curtailed ranges and a single rate of $25,500 at the top, is shown in section 101(a) of H.R. 7552. The President has recommended that this schedule be made effective in January 1964, in place of schedule II of the Salary Reform Act.

RECOMMENDED SCHEDULES FOR OTHER STATUTORY SYSTEMS

Salary schedules for other statutory systems were developed in accordance with the requirement of the Federal Salary Reform Act that “Salary levels for the several Federal statutory salary systems shall be interrelated.” Salary schedules for the postal field service, medical-dental-nurse positions in the Veterans' Administration, and the Foreign Service were derived by linking the salary schedules with those of the Classification Act at certain key points (for example, PFS-4, with GS-5, PFS-11 with GS-11, and PFS-20 with GS-17) and developing rates for other levels in accordance with the internal alinement suited to the particular services. This is the same approach that was followed in developing the schedules that are now in the Federal Salary Reform Act.

In making the comparison of Federal with private enterprise salaries and developing the schedules, the Secretary of State, the Postmaster General, and the Administrator of Veterans' Affairs were consulted and concurred.

CONSULTATION WITH EMPLOYEE ORGANIZATIONS

Also in accordance with provisions of the Salary Reform Act and Executive Order 11073, the Director of the Bureau of the Budget and the Chairman of the Civil Service Commission met with representatives of employee organizations and presented them with findings of the Bureau of Labor Statistics and the methods and results of comparing Federal salaries with those findings. After providing an opportunity for their study we received and considered the views of the organizations and transmitted them in full to the President, in appendix C of the joint annual report. This report was transmitted to Congress with the President's message.

TIMELAG PROBLEM

The principal issue raised by employee organizations was the interval between the time at which the Bureau of Labor Statistics collects salary information in private firms and the date on which Federal schedules based on this information take effect. During a cycle in which private enterprise pay levels have been climbing, this is a matter of very grave concern, not only for employees but for all

of us who are engaged in administering the provisions of the Salary Reform Act. Making the comparability principle effective calls for reducing this time gap to the minimum period feasible.

Because of budgetary considerations, the administration and the Congress phased the initial achievement of comparability over a period ending in January 1964. The schedules in the act for January 1964 reflect data for the most part gathered by the Bureau of Labor Štatistics early in 1961. This was the latest survey available when the law was enacted. The schedules in H.R. 7552, now reommended by the President, to become effective in January 1964, are based on private enterprise salary data collected for the most part early in 1962. Completion of the initial catching-up process thus leaves a timelag of nearly 2 years between private enterprise and Federal salaries. The time

gap is a problem that we must overcome before we can say that the comparability principle has been made effective. The Director of the Bureau of the Budget and I are having a staff study made of all possible methods of reducing the gap. Before completion of the next annual salary review later this year, based on the Bureau of Labor Statistics 1963 report, we shall provide employee organizations with the results of this study and seek to reach agreement on a feasible process involving a minimum period of time between survey and salary. I feel certain that we shall be able to develop a plan for substantially reducing this timelag.

UPPER LEVELS OF SCHEDULES

One of the most important features of this bill covers the proposed salaries for professional and managerial positions. A top rate of $25,500 is proposed for the Classification Act, Foreign Service, and Veterans Administration medical-dental schedules. Salary rates proposed provide full comparability with 1962 private enterprise salary findings for the range of grades GS-1 through GS-15, but the rates above that while not fully comparable provide a substantial improvement over the present scales.

Pending action on the entire top executive pay problem, the 1964 schedules in the Salary Reform Act provided no increases for grades GS-16, GS-17, and GS-18, and held below 1961 comparability levels the rates for all grades above GS-7. It is because of this feature of the act that the administration's present proposals must again call for larger percentage increases for the higher than for the lower grades. The present proposals, therefore, make up for the upper grade increases that had been deferred in the 1964 schedules of the act, as well as the rise in private enterprise salaries between the 1961 and 1962 Bureau of Labor Statistics reports.

Proposals on top executive salaries will shortly be placed before Congress. They are supported by a report of the Advisory Panel on Federal Salary Systems composed of distinguished leaders in American life. The administration is greatly concerned about the salary problem at these top levels of Government.

In the meantime, the top rates of the proposed statutory schedules conflict with those currently prescribed for high-ranking Federal executives, notably the Secretaries of Cabinet departments who now receive $25,000 a year. H.R. 7552 takes account of relationships with existing Federal executive pay scales by providing that proposed rates above $20,000 in all four statutory schedules would not go into effect until adjustments are made in top executive pay, at which time they would take effect automatically. Thus, for the schedules proposed in H.R. 7552 to become fully in effect, action on top executive pay is essential.

From the standpoint of the longrun capabilities of the career civil service, I am especially concerned about the upper rates of the statutory schedules. Salaries at these levels not only are critical in recruiting and retaining competent individuals at the grades concerned; they are also sometimes the determinant in whether a bright, ambitious graduate elects a Federal rather than another career. I feel quite safe in stating that the thoughtful undergraduate today is fully aware that, if he works equally hard in the two fields, he can anticipate reaching a $40,000 rate of compensation during a career in industry with as much assurance as he can anticipate attaining a $20,000 salary in the Federal service.

Salaries recommended for the highest grades are modest compared with those paid by large corporations. I have mentioned the Commission's special study of pay rates in a few very large firms for positions, below officer level, equivalent in responsibility to Federal positions in grades GS-16, GS-17, and GS-18. The middle rate for positions equivalent to GS-16 was $28,000, or $10,000 above the top Federal rate for the grade. For private firm positions equivalent to GS-17, the middle rate of $35,500 was $15,500 above the Federal top of the grade. At GS-18, the corporation middle pay of $44,500 was more than twice the Federal $20,000.

Lest it be thought that higher Federal career salaries may be getting out of line with those at other levels of government in this country, I should like to mention a few illustrations of State and local pay higher than Federal career salaries. These examples are based on a limited study by Civil Service Commission staff. To make direct comparisons possible, the study included estimating the Classification Act grade which would be appropriate for the responsibilities of State and local positions looked into.

(Information furnished subsequently follows:)

IDENTIFICATION OF POSITIONS CITED IN STATE AND LOCAL GOVERNMENTS Specific titles of positions in State and local government referred to in statement of John W. Macy, Jr., Chairman of the Civil Service Commission, before the Committee on Post Office and Civil Service of the House of Representatives

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