of the Civil Service Commission. The Committee adopted this proposal and the Chairman of the Civil Service Commission rejected it. In our view the rejection of the National Wage Policy Committee's strong recommendation on this issue by the Chairman of the Civil Service Commission was arbitrary and the reasoning specious. I may add here parenthetically that the rejection of this reasonable proposal, by the Chairman, after a long and unwarranted delay in reaching a decision, reflects in microcosm the woeful inadequacy of the present wage system as a whole.

Our organization finds that the adoption of this plan would assure that surveys would not result in the ludicrous increases of four and five cents an hour which has been the practice in the past. Employees in cities such as Chicago, Illinois, Montgomery, Alabama, and New Orleans, Louisiana, actually received increases as low as four and five cents an hour during the past year. Not only is the amount incredibly small but this paltry rise when coupled with the realization that the cost of living rose approximately 6% makes it evident that those employees in fact suffered a deep reduction in real wages.

The Civil Service Commission, in responding to this harsh fact, blithely proclaims that substantial number of employees received increases above the cost of living factor. This is as it should be since the cost of living is not meant to be the standard but rather a minimum. This minimum cost of living increase concept has proven to be the most understandable recommendation put forth by the Committee. Understandable, in that it is something that the employees and the Congress could accept as a reasonable concept. I am sure that the Congress and the President do not want to cause employees in the Federal Government to suffer because the prevailing rate system does not produce a wage rise consistent with cost of living advances. The Chairman of the Commission states that this minimum cost of living concept is inconsistent with the prevailing rate system. As previously described, no true prevailing system exists in the Federal Government. This is an illustration of the failure of the Civil Service Commission dominated wage system to adopt realistic proposals.

The Bill should provide for a ten step system, the first step at 96% of the prevailing rate, the second step at 100% of the prevailing rate and the third step at 104% of the prevailing rate, the fifth step at 112% of the prevailing rate. There will be additional steps up to and including a tenth step with a progressive 4% increment. All employees now occupying the third step would automatically advance to the fourth step and all employees now occupying the second step would automatically advance to the third step. For each successive step, beyond the third step, a waiting period of 52 calendar weeks should be established. This ten step schedule would conform with the ten step schedule now provided to those employees falling within the general schedule and other pay scales established for Federal employees.

Greater coordination with the general schedule can be provided to wage grade employees by assigning a uniform night differential at the 10% rate, now paid to general schedule employees, thereby providing appropriate incentive for blue collar employees to work the less desirable shifts. In this connection. we find that wage grade employees are receiving a percentage rate for hazardous pay which is substantially less than that paid to general schedule employees. This bill should be amended to provide that hazardous or environmental pay to wage grade employees should be no less than that prescribed for general schedule or white collar employees.

Returning to the question of the prevailing rate concept, the bill should provide that whenever the Committee finds it feasible to adopt a true prevailing rate concept, that is, one where the Government pays substantially the same rate as that found in private industry, then such true prevailing rate concept should be adopted. This is especially true in job classifications and functions that are virtually identical as between the Federal Government and private industry. The National Federation of Federal Employees recommends that the Federal Prevailing Rate Advisory Committee be composed of six representatives of employee organizations and an equal number of representatives appointed by the agency and the Civil Service Commission and that the selection of the Chairman be designated and appointed as prescribed in S. 315. Each organization representing 10,000 or more wage grade employees shall be entitled to a representative on the Federal Prevailing Rate Advisory Committee. We question the equity and fairness of establishing committee representatives on the basis of proportional representation. Something like this has been utilized in the present National Wage Policy Committee and it works to the disadvantage of organizations hav

ing a substantial interest in wage board employees. The exclusion of any organization having such interest shuts off the presentation of useful views. We find that the bill is severely inadequate in this regard and discriminatory. Placing four representatives of a single mind and affiliation on a committee of five creates serious problems and has created such problems during the history of the current National Wage Policy Committee. It will also permit greater agency participation now precluded by the limiting number of agency representatives.

The National Federation of Federal Employees believes that there should be a recognition within the bill of the corresponding system established for general schedule employees and of the importance of coordination of the two systems. Frequently, general schedule and wage grade employees work side by side under the same conditions of employment having different fringe benefits, such as night differential, hazardous pay, overtime, etc. Further the inevitable improvement in technology will accelerate the change over of positions from wage grade to the general schedule. Coordination of the two methods of payment are more significant than heretofore.

Further, the National Federation of Federal Employees recommends that the Federal Prevailing Rate Advisory Committee should concern itself with the long range needs of the Federal Pay System and the trend towards a national rate. Continuing review should be made by the committee to ascertain whether the difference in rates in the various locality areas of the country are sufficiently disparate to continue the large number of wage locality areas. It is apparent to us that there is a continuing trend towards a single rate for blue collar employees in a variety of industries. This is especially true in the aircraft mechanic and automobile production industries.

Mr. Chairman, there are in round figures about 75,000 fulltime or part-time nonappropriated fund employees in the Department of Defense and Veterans Administration who should be under the Coordinated Federal Wage System. These employees perform work on Government installations and do not presently come within an organized statutory system nor classified employees. We recommend that they be brought under the Coordinated Federal Wage System.

The injustice of the method of payment and conditions of employment particularly within the Department of Defense represents a shocking indictment of the failure on the part of the Government to deal with Post Exchange employees in a fair and responsible fashion. Their inclusion under the system would constitute a major step towards eliminating employees from the poverty pay level.

It is essential that employees occupying positions at the lower scale levels be paid at a minimum rate at no lower than the $6,000.00 annual scale. This figure was established by the Bureau of Labor Statistics last year as the minimum income required for a family of four. We realize that this is an inadequate sum, however, we are aware that many private firms fail to pay a rate comparable to that figure and in this important respect we disagree with the concept of a prevailing rate system. It is felt that employees at the lower scale levels should receive model employment pay treatment and thus lead industries to emulate the Federal Government in this significant respect.

For these reasons, we would like to see the bills expanded to include the significant policy points in the position of the National Federation of Federal Employees on the subject of wage setting in the Federal Service herein indicated. To summarize, we present them as follows:

1 The establishment of a within-grade increase and longevity system for wage board employees' having a ten-step plan comparable to the Class Act System.

2. The establishment of a 10 percent night differential for regularly scheduled nonovertime work so that the night differential rate will be more comparable with the night differentials paid to Classification Act employees.

3. The establishment of a minimum wage of $6,000.00 annually for all full time wage board and classified employees.

4. The establishment of a Federal Prevailing Rate Advisory Committee for wage grade employees comprised of an equal number (six) of agency representatives and union representatives and a full time voting Chairman selected by the President and confirmed by the Senate with a full time staff. Employee organizations representatives shall be established on the basis of one each, representing a minimum 10,000 wage grade employees.

5. The application of a true prevailing rate concept for wage grade employees, that is, equal rates of pay for the same work in the same local wage area.

6. Proper differentials for duty involving unusually severe working conditions or hazards established at a rate no less than that established for General Schedule employees.

7. Coordination of Classification Act and Wage Board pay systems including hazardous and night differential pay provisions.

8. The bringing of nonappropriated fund employees and VA Canteen employees under the Coordinated Federal Wage System.

9. The inclusion of wage and salaried employees under one overall Salary and Wage Committee with representatives on the Board of all agencies and employee organizations having substantial interest in wage or salary programs, with a minimum of six members representing the employee organizations and six representing the agencies with an impartial chairman.

10. A continuing review of all wage rates to determine the appropriateness of the adoption of a national rate concept.

We realize that these matters are large and require close and careful study. If we can secure the enactment of legislation designed to meet these problems more effectively than presently, the Congress will have earned the gratitude not only of all wage board employees but of all whom they serve.

In this connection may I say that insofar as the NFFE is concerned * * and I know that to be the view of the members of your Committee * * * the issue of over-riding importance is to get prompt and constructive action in this immensely important area.

Over the years we have done a patch and repair job on what by any fair appraisal is an inadequate jerry-built structure which now has come close to breaking down under severe stresses and strains which were not contemplated in the past. The time for a substantive step forward is indeed long overdue. For that reason we strongly urge favorable action by this Committee now.

The Congress could win the eternal gratitude of wage board employees by including within this act a provision which would prohibit the agencies and the Civil Service Commission from establishing new standards that would affect employee's grades without a corresponding change in duties and responsibilities. Specifically, the current National Wage Policy Committee's policies have caused a downgrading of approximately 10,000 jobs without any change in duties and responsibilities. Additionally, the Civil Service Commission has changed its standards so that many wage grade employees are suffering reduction in grade without any reduction in duties and responsibilities. The final bill should include a prohibition on system changes which result in downgrades.

The NFFE has been addressing itself to these problems from day to day for more than 53 years, and the recommendations which I have made to this Committee today are based upon practical experience and represent our best and most mature judgment as to a sound and proper course of action.

Mr. Chairman, I express my thanks to you and to the members of the Committee for the opportunity to state the views of the National Federation of Federal Employees.

The CHAIRMAN. We will recess these hearings right now for obvious reasons, until 2.

We have three witnesses left on the docket for today. They are, Mr. Kenneth T. Lyons, president of the National Association of Government Employees; Mr. Richard I. Wevodau, legislative director of the National Association of Post Office and General Services Maintenance Employees, and Mr. Vincent J. Paterno, president of the Association of Civilian Technicians.

We will resume at 2. If there is anybody to whom this poses an insurmountable complication, please see Dave Minton and we will try to make some other arrangements in your case. We want you to be heard.

(Whereupon, at 12:22 p.m., the committee recessed, to reconvene at 2 p.m. the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will resume its hearings.

The first witness this afternoon is Mr. Kenneth T. Lyons, president of the National Association of Government Employees.

Mr. Lyons is accompanied by Mr. Alan Whitney, executive vice president, Mr. Manuel Donabedian, national executive director, Mr. Edward Cavanaugh and Mr. Robert Mahoney.

Welcome to the committee meeting.

Mr. LYONS. Mr. Chairman, with the Chair's permission, I would like to submit in the record a few comments regarding the administration proposals for wage board legislation which were revealed on April 20th.

The CHAIRMAN. Your statement will appear in the record.

STATEMENT OF KENNETH T. LYONS, PRESIDENT, NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES; ACCOMPANIED BY ALAN WHITNEY, EXECUTIVE VICE PRESIDENT, AND EDWARD CAVANAUGH

Mr. Chairman and members of the committee: I consider it a privilege to appear before you today in behalf of those members of the National Association of Government Employees who occupy wage board positions in the Federal service, both in appropriated and nonappropriated fund activities.

Extensive testimony by numerous groups in the last session of Congress served to highlight and emphasize the special plight of the Government's nearly 700,000 wage board, or blue collar, employees.

It appears today that there is general recognition in both the House and the Senate of the need for corrective legislation.

Indeed, the leadership displayed by the chairman and members of this committee provided much of the impetus leading up to congressional approval of wage board legislation last year.

All outward signs indicate that the sense of urgency surrounding this topic in the Congress has not abated. We are further heartened by indications that the administration's position with regard to legislation in this area may be more flexible now than in the past.

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From the standpoint of the NAGE, any legislation offered up Mr. Nixon must, as a matter of equity, incorporate six basic provisions as a minimum:

1. It must establish a 10-step per grade pay schedule for wage board workers paralleling the government's statutory pay systems;

2. It must include employees of non-appropriated fund activities within the scope of its coverage;

3. It must establish uniform and fair premium payments for overtime work, second and third shift tours, and travel time;

4. It must provide for broadened and more meaningful participation in the system by recognized employee unions at the national, agency, and local levels:

5. It must establish a legal requirement that before any government agency may elect to have a wage board function provided by a private contractor, it must document and prove that a savings will result in both direct and indirect costs to the government; and, further, that the function involved will not be derogated; and

6. It must provide for retroactivity to at least January 1 of this

year.

These points, in our opinion, reflect the essential elements of a progressive and efficient wage board program.

In perhaps no other single instance is the disparity between the treatment accorded wage board workers and other categories of Federal employees more obvious and more damaging to morale than the existence of only three steps in each grade of the wage board schedule. This untenable arrangement confronts each employee with a "dead end" within a relatively short time after joining the workforce.

He may look forward to a planned career of perhaps 30 years confined to the same grade level and with no opportunity to advance within that level.

He then watches in alarm as a neighbor and coworker, occupying a general schedule position at the same activity, steadily progresses through the additional pay levels afforded by his pay system.

An employee need not master the "new math" to readily determine that the 30-percent span of a general schedule grade level, from step 1 through step 10, means substantially more income over a career than the 8-percent scope of a wage board grade's three steps.

This discriminatory treatment must be eliminated if we are to restore the faith of the blue-collar worker in his employer, and assure him of equal treatment with his brethren in the other Federal pay systems.

Regarding the need for including nonappropriated fund employees in the Government's wage board system, it would be hard to find a more mistreated category of Federal worker.

Our experience with these employees is principally confined to the Army and Air Force exchange system, and I do not balk at asserting that the pay and personnel practices of this agency can best be described as "stone age."

One need only examine the unbelievable turnover rates among Army and Air Force exchange service units to arrive at the inescapable conclusion that something is drastically wrong.

The NAGE represents such units where turnover runs between 30 and 40 percent annually. The employees leave for the simple and rational expedient of escaping from poverty.

Administration shortsightedness in opposing wage board coverage for these workers is borne out by the long-term savings that would arise from greatly lessened recruitment and training expenses if a brake were applied to the drastic problem of runaway turnover.

Among the basic ills of the present system which can be cured by expanding the unions' role and establishing a truly objective policy panel to oversee the system is the executive branch's determination to establish Federal wages for blue-collar workers by fitting a straight line to graphs of wages paid in private enterprise.

That this choice was made for aesthetic reasons is clear, for it produces pay scales which are neither consistent with economic fact nor fair to those whose livelihoods depend on them.

Our major objection to the straight line method is that changes in average wages at one pay grade may unduly affect values given by a payline at other grades.

Although these effects may be beneficial, the following hypothetical situation will demonstrate that they can also be unfairly adverse.

Suppose that a payline is to be constructed for three job classifications, and that the average private enterprise wage for job No. 1 is $3, for job No. 2 is $4, and for job No. 3 is $5.