on H.R. 7552, incorporating the President's proposal for adjusting statutory salaries, on August 13, 1963:

Questions were also asked during the hearing about other State and local governmental salaries in two specific States, and positions in those States known to have salaries of $25,000 or more (excluding judges and Governors) are listed below:

Mr. MACY. The Commission staff also made a quick study of what happened to the pay of those voluntarily leaving the Federal service at the beginning of 1963. A total of 229 left to accept State government positions. Of these, 61 percent received more pay, 12 percent about the same, and only 27 percent less pay.

Mr. JOHANSEN. On the 61 percent who received more pay, was that because they went to positions ranking higher than the position they left in the Federal Government, or was it an equivalent position?

Mr. MACY. The data we have is not precise enough to indicate. It could have been either situation.

Mr. JOHANSEN. If it is the former, then I would think it would minimize somewhat the import.

Mr. MACY. I would agree. I do not have the distinction as to the actual job to which they transferred.

Other provisions of H.R. 7552: A few specific improvements in current salary administration proposed by H.R. 7552 deserve mention. Free use of within-grade rates for certain positions: My letter of July 25, 1963, to the Honorable John W. McCormack, Speaker of the House of Representatives, transmitted a proposed draft of a new section 103 to be added to H.R. 7552. The new section would permit additional freedom in the use of within-grade rates for grades GS16, GS-17, and GS-18 for those critically needed engineers, scientists, and medical personnel now exempted from the statutory limits on numbers of positions in these grades. The President or an agency he designates would issue regulations coordinating agency practices.

This provision would be helpful to heads of scientific programs. The proposed flexibility would be similar to, but somewhat less complete than, the free use of salaries between the minimum of grade GS-16 and the maximum of grade GS-18 already permitted under Public Law 313 and other special statutes for many positions in the same critical occupations.

Appointment above minimum in GS-13 and higher grades: At grade GS-13 and in higher grades of the Classification Act, H.R. 7552 would authorize appointments at rates above the minimum of the grade in consideration of an individual's special qualifications or his existing salary. This parallels a provision recommended by the President in 1962 but not enacted; the earlier proposal, however, extended this authority to all grades. The current proposal would aid in recruiting at the higher grades where it would be most valuable. Conversion rules for salaries fixed under section 504: The bill would permit special salary rates set under section 504 of the Salary Reform Act to be initially adjusted on the effective date of new statutory schedules in accordance with rules of the President or an agency he designates. Section 504 now authorizes, for all four statutory systems, special salary scales set by the Commission to facilitate hiring and retaining personnel in situations where well-qualified individuals are in short supply and private enterprise salaries are especially high. Because of the difference in special scales that have been prescribed and the different dates on which this has been done in different occupations it seems impossible to prescribe a single general rule that will be fair to all employees and yet keep the Government from granting duplicate increases to some (one increase by an action under section 504; another because of an increased statutory schedule). The most practicable approach, therefore, is to permit these rates to be converted under regulatory rather than statutory rules, so that the rules can be adapted to a variety of circumstances and to unforeseen cases that may be encountered.

National Aeronautics and Space Council limitation: The bill would raise from the present $19,000 to the highest rate of GS-18 the limitation on compensation for seven positions in the National Aeronautics and Space Council. This was done last year for similar groups then subject to a $19,000 ceiling in other agencies. The seven positions concerned were omitted purely through oversight.

Reasons for enacting salary schedules in H.R. 7552 as recommended by the President: Returning to the salary schedules which are the principal feature of H.R. 7552, I believe there are three most compelling reasons for their enactment-the requirements of law, fairness to employees, and the responsibilities of Federal management. First, the schedules conform squarely with the principles and policies with which they are now by law expressly required to conform. I might also point out that a substantial deviation from these schedules-in particular, a substantial reduction in salaries for the upper half of the schedule-would be subject to question in the light of the commitment in the Salary Reform Act itself.

Second is the matter of equity. Last year the Congress by enacting the Salary Reform Act assured Federal employees that their salaries would be brought into line and kept in line with general national salary levels. That is what the act said to Federal employees, and it said this to all of them, not merely to those below grade GS-7 or below grade GS-11. Simple equity demands that this promise be carried out.

Third, but not least, is the necessity to attract and retain, through competitive salary levels, the high quality Federal career staff essential in dealing with the critical problems, nationwide in scope, springing at an ever-accelerating pace from shifting international relationships, technological developments, and social change.

Our National Government today is facing the most complex problems that man has ever experienced. In many areas of Federal endeavor, a single mistake could lead to a catastrophe in defense, public health, engineering, or other crucial field. Therefore, the Government must be staffed from bottom to top with high-quality personnel capable of contributing to solutions of these problems in the national interest. Federal salary schedules should be specifically designed to facilitate top-quality staffing at reasonable expense.

On these grounds, I urge enactment of the President's salary recommendations embodied in H.R. 7552.

I wish to thank you and the members of the committee for your interest and courtesy in hearing me this morning. I am available, with Mr. Stahl, to answer any questions you may have that will clarify this matter, or contribute any additional information that may be helpful to you in forming your judgment on this very important issue.

The CHAIRMAN. Any questions?

Mr. CORBETT. Mr. Macy, you made the statement that an executive pay recommendation will shortly be placed before Congress. What does "shortly" mean?

Mr. MACY. That is a relative term, I admit. I believe within the next week or so there will be recommendations presented.

Mr. CORBETT. I do not see how we can really even think about this problem until we have the total picture. We have to have it from top to bottom, I believe. We have to have some idea of what the total cost is going to be and that sort of thing.

On the basis of what we have before us, we are trying to fit pieces into a puzzle that has a boundary line. This does leave us in bad shape.

Mr. MACY. I agree executive salaries are a part of the total picture. They clearly constitute the upper boundary of the scale. I do believe, however, that there is benefit in considering the scales that are offered here in this bill as they reflect the first effort to comply with the comparability principles that were set forth in the statute last year.

Mr. BROYHILL. Mr. Macy, in making these comparisons of salaries in private industry, were the other forms of pay taken into consideration such as leave and retirement, et cetera ?

Mr. MACY. No; the surveys are comparisons of base pay alone. The surveys cover the rates that are being paid by private enterprise at the same levels.

Your question is clearly relevant. The Commission and the Bureau of the Budget has studied the various patterns of fringe benefits in private enterprise. Our conclusion from the data we have collected to date is there tends to be a standoff on fringe benefits.

Mr. BROYHILL. They are comparable.

Mr. MACY. They tend to be comparable and equalized.

We do believe, however, that it is necessary to acquire additional data with respect to fringe benefits, and this is being sought through an expanded Bureau of Labor Statistics survey that will be available to us later in the year.

Mr. BROYHILL. Following through on Mr. Corbett's question about getting up the schedule for the executive pay, do you plan to submit, or have you already submitted, a breakdown of the cost of the proposed pay adjustment in each grade?

Mr. MACY. We have not submitted it, but this has been developed. The cost of H.R. 7552, in total terms, comes to approximately $500 million.

The cost, with an effective date of January 1964 for the current fiscal year is $254 million. The President included $200 million in the budget estimates to cover this, the balance to be absorbed by the agencies.

Mr. BROYHILL. This bill, H.R. 7552 would cost $500 million, but only $300 million more than if it was not enacted at all.

In other words, we have a pay increase going into effect on January 1 anyway?

Mr. MACY. That is correct.

Mr. BROYHILL. That will cost

Mr. MACY. This is over and above the schedule 2 that is in the Salary Reform Act at the present time.

Mr. BROYHILL. So this will cost $500 million more, and the President has included in his budget how much?

Mr. MACY. $200 million, which covers 6 months in this fiscal year. The large figure that I cited was a full 12-month increase in cost.

Mr. BROYHILL. I think we should explore somewhat the cost of this bill in each grade. I think that because we have always had a problem

in getting Congress to adjust the salaries of those in the upper grades on the basis as those in the lower grades.

You point out how we fail to do it in the second step of the increase that goes into effect on January 1, 1964. I believe the Congress has overlooked the fact that the cost of the increases in these grades, 15 and up, is rather negligible in comparison with the cost of the entire bill.

(Further information follows:)

Estimated cost of salary increases proposed by the President and incorporated in H.R. 7552 for Classification Act grades GS-15 and up during fiscal year 1964 (January-June 1964):

Mr. MACY. I think we should stress that point in trying to get the Congress to go ahead with the administration's recommendations in the upper grades. I believe that is causing the Federal Government more difficulty in getting good people to come into the Federal service and stay in the Federal service than any other part of the Federal schedule. I know there is not as much political sex appeal in those areas, but I think in the interest of good government and good management, Congress should stick to at least the administration's recommendation in those upper levels.

Mr. MACY. Thank you. I certainly agree.

Mr. GROSS. Mr. Macy, you make quite a pitch here for this.

I agree with my colleague from Pennsylvania, Mr. Corbett, this is an almost impossible job that has been assigned to us-to start whole pay hearings without this superduper, as I understand it, Executive Pay Act that is somewhere in the offing. I do not know where it is, or where it is going to land.

Do you think this would go to the Judiciary Committee? Would it be the administration's recommendation to send the Executive Pay Act to the Judiciary Committee?

Mr. MACY. There has been some discussion of the possibility of the Judiciary Committee considering this along with the judicial salary increase bill introduced by Congressman Celler. I agree with Mr. Corbett's view, obviously these rates must be considered in the light of executive pay.

Let me offer, Mr. Chairman, in view of this obvious gap in our presentation at this time, that I would be happy and willing to return at some later phase in your hearings to discuss the executive pay provisions once they have been introduced, and the relationship of those provisions to the legislation we are discussing here this morning. The CHAIRMAN. This committee has already considered executive pay proposals, has it not?

Mr. MACY. Yes.

I believe in 1956, which was the most recent date in which revisions were made in executive pay, they were considered by this com

mittee.

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