increase of 83.8 cents per hour, or 38.7 percent. Many employees received increases over $1 per hour.

The CHAIRMAN. This is the same kind of setting we found ourselves in with the Chairman of the Civil Service Commission yesterday. We are stressing the percentage. What was the level at which it began? In other words, what were they receiving in reaching a jump of 83.8 cents per hour, or 38.7 percent? See, somebody starting from 1 cent an hour could have a fantastic percentage increase in pay and still starve to death.

Mr. KELLEY. That is correct, Mr. Chairman. The only reason for this particular insert was to disabuse earlier testimony furnished your committee that these special increases were included in the percents of increase that I earlier reported to you for fiscal years 1969, 1970, and 1971. We recognize that the mechanism for increasing the rates and the resulting increases in rates of pay for laundry, food service and custodial employees were by special arrangement to meet a special need but those increased amounts were not reflected in the percentage increases of 9.2 percent, 8 percent and 8 percent for fiscal years 1969, 1970, and 1971, respectively.

The CHAIRMAN. I think it might help then to clarify the record here if we could insert at this point in the record what it is those employees were in fact being paid, at what rate, before we start interpreting the percentages there.

Mr. KELLEY. We have no objection to providing that information for the record. It is not relevant to the point we are making, however. The CHAIRMAN. I think it would be relevant to some of those reading the record after the record hearing closes so that they can keep that also in perspective.

Mr. KELLEY. All right.

(The aforementioned material follows:)

Agency pay practices differed prior to July 1, 1968, when the Coordinated Federal Wage System implementation began. Veterans Administration and Department of Defense laundry worker rates were somewhat different until the transitional adjustment of April 1969 was made and uniform rates applied. The following two tabulations show the separate Veterans Administration and Department of Defense rate changes and cents per hour and percentage increases that resulted in April 1969. These rates were further increased in April 1970 and April 1971 as a part of the on-going Coordinated Federal Wage System. VETERANS' ADMINISTRATION LAUNDRY WORKER RATE CHANGES, CHICAGO, ILL.

Revised grades result from merging jobs from a 10-grade laundry classification plan to the regular 15-grade system.

1 Revised grades result from merging jobs from a 10-grade laundry classification plan to the regular 15-grade system.

The CHAIRMAN. Go on with another example of extra wage gains. Mr. KELLEY. Turning to the next page of my statement

The CHAIRMAN. If you want

Mr. KELLEY. If you wish for me to skip that point, fine.

The CHAIRMAN. It would be just as well and provide for the record that same relative data in regard to the Missouri case.

Mr. KELLEY. Fine.

(The aforementioned material follows:)

The Army-Air Force Wage Board, over a long period of time, conducted surveys of the Warrensburg-Sedalia, Missouri locality. The last schedule of rates produced by this agency wage system, prior to coverage under the Coordinated Federal Wage System, was placed into effect in December 1968. The Warrensburg-Sedalia wage area was abolished and incorporated into the Kansas City wage area. The Coordinated Federal Wage System was implemented for this area in January 1970. The following table shows the rate changes that occurred in January 1970 for step 2 employees in the non-supervisory grades at Whiteman Air Force Base located in the Warrensburg-Sedalia vicinity.

Note: Overall average increase-0.833 cents per hour; 25.5 percent.

Mr. KELLEY. In certain areas there have been dramatic increases. From July 1968, through December 1970, significant increases resulted for the following areas:

Even the lowest paying areas received fair adjustments-Montgomery, Ala., received increases totalling 16 percent, $0.46 per hour; and Orlando, Fla., received a 20-percent average increase, $0.63, through the 22-year period. None of these six areas qualified for the so-called "Monroney" rates which import wage data gathered from outside the basic wage area in disregard of the prevailing rate principle.

The five bills before this committee actually present three basic sets of provisions. S. 315, the chairman's bill, and S. 1086, Senator Spong's bill, while similar, vary in several important aspects. S. 231, Senator Moss' bill, is practically identical in content with S. 422 (Senator Burdick's) and S. 511 (Senator Harris').

All of these bills have certain principles with which we are in accord. We agree that there should be equal pay for substantially equal work; that the system should provide relative differences in pay when there are recognizable differences in duties, responsibilities, and qualification requirements among positions; that the level of nonsupervisory rates of pay should be maintained in line with prevailing levels of comparable work; and that the level of rates of pay should be maintained to attract and retain qualified employees. These same principles and policies are the bedrock of the Coordinated Federal Wage System now in effect.

These bills, however, have in common a number of provisions that are contrary to acceptable wage administration practices or are in conflict with the prevailing rate principle.

First, the bills provide for additional step rates for each grade of the wage schedule. Proposals include a 4-step plan with a 12-percent pay range within each grade (S. 315); a 5-step plan with a 16-percent range (S. 1086); and a 10-step plan with a 30-percent range (S. 231, S. 422, S. 511). We object to these proposals. I call your attention to the following extract from Bureau of Labor Statistics Bulletin 1660.91 (1969-1970) which shows the extent of single rate pay plans in industry.

The record will show that these are for 10 different labor markets: Philadelphia, Pa.; Pittsburgh, Pa.; Louisville, Ky.; Memphis, Tenn.; Richmond, Va.; Savannah, Ga.; Minneapolis-St. Paul, Minn.; Portland, Oreg.; San Francisco-Oakland, Calif.; and Spokane, Wash.

Mr. MINTON. Mr. Kelley, this is a point that needs clarification. What does this data really mean? This committee has not had information to interpret this kind of statistical data. For instance, what industries are included in this kind of information? What are these

rates? If you have a single rate, for instance, as you say in Philadelphia, of all industries, 55-percent pay a single rate, what is that rate? Is that the journeyman rate? Is that higher than, or substantially higher than, the rate at which the Federal Wage Board System eventually arrives at?

Secondly, when you say "firms with formal rate policies paying single rates," say in Detroit, Mich., we have a hundred firms and 99 of them pay a single rate. The only one that does not pay a single rate is the Ford Motor Co., which employs 500,000 workers. That is a hypothetical example but what does this mean? Is this all of them? Is this every kind of industry and one big employer actually has five steps or two steps or no steps or whatever it may be?

I wonder whether you could submit for the record, or if you could discuss extemporaneously, the meaning of this in terms of its impact on employment and the economy of these areas?

The CHAIRMAN. I would think in the interest of fairness that you might want to sort those out for the record and then conclude from them perhaps. It can be very complicated, we appreciate that fact. Whatever your preference is, Mr. Secretary.

Mr. KELLEY. Well, Mr. Chairman, first we will provide for the record a definition of the firms whose pay practices are reflected in these statistics, and to the extent it is available we will also furnish for the record, although you didn't ask me to, trends indicating whether trends of industries and trends of manufacturing industries are for fewer or for more step grades in their pay schedules.

As to the further question implied in your comment, the whole point of this is to show that with respect to the whole range of companies, industrial concerns and manufacturing concerns, that the tendency is for the majority of them to pay single rates of pay.

The CHAIRMAN. That is, the majority of them in numbers or the majority you see again in the area wide jobs picture? In other words, if there were a major employer that was not included, that could be a distortion of the prevailing procedure in that particular community and that was the reason I said this may get more complicated.

Mr. KELLEY. This purports to show only a percentage of the actual number, and obviously the numbers of employees employed by any one of those firms may vary widely. It is not a weighted average, it is a straight average.

We will provide such clarifying information for the record as is obtainable.

(The following material was subsequently supplied for the record :) The cited Bureau of Labor Statistics Bulletin 1660.91 (1969-1970) shows a tabulation of ten labor market areas and data reflecting industry employment, the number of plant workers with formal rate plans and the number covered by single rate plans. The All Industry grouping includes manufacturing, public utilities, wholesale trade, retail trade, finance and services firms. Separate data are reflected for manufacturing firms. Incidentally, these data are those that are being updated by the Bureau of Labor Statistics and which will be furnished to the Committee in the near future by the Civil Service Commission as commented on by Mr. Jacobson during Chairman Hampton's testimony on April 29, 1971, before this Committee.

Mr. KELLEY. You will note from this table that the prevailing practice is to pay nonsupervisory trade and craft employees single rates. Add to these single rate data the firms paying two or three rates, and it is clear by any measurement that the present three-step plan of the Federal Government is on the liberal side of industry practice.

The number of step rates and the amounts of the increment between step rates established for the Coordinated Federal Wage System are a reasonable reflection of these findings on industrial pay practices. The majority of Federal blue-collar employees (76 percent) have advanced to the third or top step of the grade they occupy which places them 4 percent above the second step rate established in the Coordinated Federal Wage System as the prevailing rate. The bills proposing four- and five-step plans similarly designate the second step as the prevailing rate. This means that those in these proposed higher rates would be paid above the prevailing rate-the greater the number of wage steps, the greater the difference between the prevailing rate and the rate paid.

Some industries have rate ranges but our surveys reveal that employees don't cluster around the central point of the ranges. Rather, over a period of time, they tend to ascend to the top step. This results in these top rates being used to develop the prevailing or second step rate in the Government's step plan. It is obvious that the present pay system is generous and any extra steps would raise Government rates substantially above prevailing industry rates.

Therefore, the bills would have the effect of paying the majority of employees at rates from 8 to 20 percent above average prevailing rates. In the case of a 10-step plan, with the fourth step the prevailing rate, the first wage step (presumably the entry pay level) would be too low to be competitive, and the upper step rates would substantially exceed prevailing rates.