Mr. MURPHY. I would like to say also, Mr. Chairman, that the Post Office Department absorbed $66 million of the increase voted by the Congress last year for the postal field service. That is a rather large degree of absorption. I believe it is almost unprecedented for postal field service. This year we are proposing to establish an absorption of $57 million more of the increase that has already been voted by the Congress, and that also is a very large increase. I understand by Mr. Staat's testimony of Tuesday, that the President has set aside in his budget message some $200 million to cover the cost of this proposed bill that we are now discussing. Of that $200 million I would imagine, based on past experience, that around $50 million of it would be allocated to the Post Office Department to cover our share of these proposed increases in the postal field service schedule. That would leave about $7 to $9 million that we would not be able to meet through our anticipated absorption.

The cost of Mr. Udall's bill, insofar as the postal service is concerned, is approximately $118 million, and that is including about $512 to $6 million for the fourth-class office schedule.

Mr. Chairman, I think that is all I have to offer at this time. I will be happy to attempt to answer any questions the committee might. have on the bill.

Thank you very much for the opportunity to testify.

The CHAIRMAN. Mr. Dulski.

Mr. DULSKI. I am sorry I was not here to hear your full testimony, but I will have an opportunity to read it. Have you reviewed H.R. 7881, which I sponsored?

Mr. MURPHY. Yes, sir, we have looked at your bill. I think that was also the bill Mr. Olsen and Mr. Wallhauser sponsored.

Mr. DULSKI. That is correct.

Mr. MURPHY. We have taken a look at it, Mr. Dulski. We have noted in this connection we are always 2 years behind and this bill makes an adjustment projecting it 2 years.

Mr. DULSKI. What is the objection of the administration to this bill? Mr. MURPHY. Earlier in my testimony I did make a very frank statement about the 2-year timelag, and said this was a problem of serious concern to us, and that we are doing everything possible now to come up with a formula to shorten that timelag. It is there. I recognize it is there, the administration recognizes it is there.

However, we would, I think, Mr. Dulski, object to your bill on these grounds. First of all, we don't really have adequate data beyond the figures we are now presenting. Therefore, any kind of a bill which is beyond the data that was gathered in the early part of 1962 is really based on projection. It is based on speculation. It is based on the average of what has happened in preceding years. While it may be a good guess, and it may be an educated guess, it is nonetheless not based on the survey of the Bureau of Labor Statistics.

Secondly, I believe your bill, above PFS-9, shaves off the amount of the adjustment of the President, the adjustment the President advocates in his bill. I think in order to be consistent, were you to go ahead and were you to vote for the larger increases in the first nine levels, based on the projected increase of roughly 3 percent a year, you would also have to be equally consistent and vote the same increases for people above level 9. I personally think once again

this is in dangerous ground, because it is based on speculation and not on the actual survey itself. We in the Post Office Department feel it is so important in this first year to try to make our findings on what the BLS shows and not to make too many other adjustments. We have, frankly, recognized the problem you have called attention to, Mr. Dulski. I think it is a valid one and we hope to be able to present to this committee in the next go-round a formula and solution for taking care of that particular problem.

Incidentally, Mr. Dulski, your staff got together an estimated cost of your bill, and they have come up with an estimate of $325 million, compared to $118 million for our particular survey. Our survey provides roughly 3 percent at the lower grades. I think your bill provides around 9 percent at the lower grades, so therefore, it is roughly three times as great an overall cost. A 1-percent increase in the postal field service schedule under conditions now current means a $36 million addition to our annual operating costs.

Mr. DULSKI. Thank you very much.

The CHAIRMAN. Are there other questions?

Mr. Corbett.

Mr. CORBETT. Mr. Chairman and Mr. Murphy, in this schedule which was just passed around here and I of course haven't had time to study it thoroughly-in looking at your PFS-6 and 7, you have five longevity steps for 6 and only three for 7, which means that the final increase out here would be smaller for the level 7's than anywhere else up and down the line, and that is right at the place where they take on their supervisory duties.

Mr. MURPHY. The first level supervision, generally.

Mr. CORBETT. I wonder why?

Mr. MURPHY. This schedule didn't turn out the way we proposed it last year. It was changed a little bit in the final process. We had actually proposed some more steps. I think we had additional steps for the first couple grades last year. That was shaved off. That was dropped and we had an additional step for level 7 last year. That was also cut off.

Mr. CORBETT. In your proposal you have the top in 7 only $220 more than the final top in 6.

Mr. MURPHY. Yes, sir.

Mr. CORBETT. That, apparently, is the smallest differential any

where on the scale.

Mr. MURPHY. I think one of the reasons for that, Congressman Corbett, is the fact that, as you will recall, last year we tried to equate the various pay schedules as much as possible, and we tried to treat the people in the postal field service schedule as much like we were treating the people in the class-act schedule as it was possible to do. Now, as you will recall, here in PFS-7 and above we are treating our people the same as they are in the class act in terms of the number of steps involved.

There are seven basic steps and there are three additional steps that are provided in order to take care of what used to be called longevities, under the postal field service schedule.

The reason for that is that we are here trying to keep in balance with the class act. But the Congress last year did add some additional steps down in the first couple levels, in recognition of the fact that

most of the employees in the postal field service, especially in the clerkcarrier level spend practically their whole life in that level, and therefore, they did give them some additional steps.

Mr. CORBETT. That part is all right, but here between 5 and 6 you have about $595 differential, and between 7 and 8 you have $645 differential.

In this one where you get your first taste of increased responsibilities, you only have a $220 increase.

Is the business of keeping this in harmony with the GS levels more important than taking care of the individual?

Mr. MURPHY. No, I don't think it is more important, Congressman, but I do think that wherever we can get equality of treatment between various schedules, it is a highly desirable thing to bring about.

Mr. CORBETT. That is what I was saying. We are not getting equality of treatment; we are getting inequality.

Mr. MURPHY. Of course in the PFS schedule, if a man is promoted, he is guaranteed a minimum increase of at least two steps. If he is promoted three grades, from level 4 to level 7, he gets a minimum increase equal to at least three steps.

In addition, the waiting period beyond 7 is 3 years for each increase, so I don't really think there is a great disparity in the treatment that we accord the supervisor on level 7, as compared to the people in the class act.

I agree that there is a disparity in treatment there between the people in level 7 and the people in the first six grades, but the Congress did decide in its wisdom last year that additional steps should be provided in those levels and we had advocated that we try to keep the treatment between the class act and the PFS schedule as constant as possible.

Mr. CORBETT. Maybe you should take a new look at that.

Mr. MURPHY. I would be very happy to do that, Congressman Corbett, and give you a response.

The CHAIRMAN. Any further questions? Mr. Gross.

Mr. GROSS. In your statement you say:

We can all stop searching for pay data on jobs in industry exactly like letter carriers or distribution clerks because we have concluded that searching for such jobs is a futile exercise.

Yet you say:

Increases at PFS-9 and below average 3.1 percent because comparability was fairly well achieved in the lower levels last year and the 3 percent addition just about represents what has happened in private enterprise since the last survey.

I am a little confused. I do not quite understand.

Mr. MURPHY. I will try to explain it, Congressman, as best I can. The comparability formula that was adopted by the Congress last year does not envision that there should be an exact matching of job for job in all levels. For example, it does not say that we ought to take a letter carrier or a postal distribution clerk and try to match that job exactly with a job like one in private industry because we just do not think it exists. However, it does say we should attempt to match comparable levels of skill, and by taking various jobs in the Classification Act schedule which are most like or in most cases are most identical to those jobs that are also found in private industry,

and by linking our schedule with the Classification Act schedule at three points, it is possible for us to draw a comparability pay line which would enable us to match comparable levels of skill but not exactly comparable jobs. That is the point that I had in mind.

The act adopted by the Congress last year does not say that every job in the Government ought to be paid exactly what its exact job counterpart is paid in private industry. It says that every job in the Government ought to be paid at the comparable level of skill in private industry. This is based on careful matching of job descriptions between Government jobs and jobs found in private industry, and then for those areas where it is very difficult to match exact jobs, such as the Foreign Service schedule, for which no exact counterpart exists in private industry, or the clerk-carrier level, we do that through linkage and through drawing a comparability pay line.

Mr. GROSS. To boil it down, if I may perhaps it is an oversimplification-it becomes a proposition of specifications.

Mr. MURPHY. Yes, sir; it becomes a proposition of matching those jobs where we can find almost exactly comparable jobs and those levels of skill, and then drawing a pay line through those matching points in order to give us the kind of projection that would keep our people in the clerk-carrier level or other levels where you could not match exact jobs, in the same relationship to the other jobs that we can match.

Mr. GROSS. How is the regional setup functioning today?

Mr. MURPHY. I think, sir, it is functioning fairly well. We are short of personnel. We have a deficit of some 200 positions, I think, that we have to find a way of financing in the current year, due to our appropriations situation. Aside from a little shortage of manpower, I think it is functioning fairly well, sir.

Mr. CORBETT. Will the regional setup as against the older centralized setup cost a great deal more?

Mr. MURPHY. It is the view of the Department, Congressman Corbett, that it would not. It is the view of the Department that we are such a big operation, in so many areas, that to try to run it completely as a centralized operation is a very difficult task indeed.

Mr. CORBETT. This I agree with 100 percent, but my question is, "Was not the setting up of these regions and the creation of all these new high-level jobs an expensive action?"

Mr. MURPHY. I do not think the amount of expense was too great, sir, over what existed before, compared to what we needed in order to do the same kind of job. Because regions were new it was necessary to staff them completely. A number of the people who were in headquarters were moved out of headquarters when the regional offices were created, and put out into the regions. Also, additional people were hired in the regions. To that extent you are correct in your comment. However, we feel

Mr. CORBETT. I ask strictly for information, because at one stage I recall they sent many of the regional officers out into a lesser field in order to give them something to do.

Mr. MURPHY. I think they had, sir, before the regional offices, some district offices, especially in the transportation service, and they were combined into the regional offices when they were established, as well as people moved from headquarters into the regions. We had a study