This principle is already stated in the current Classification Act and other Federal salary statutes. Making it effective fulfills the requisite of equity among Federal employees and constitutes the reform of pay structure and rules.

The establishment of salary schedules should result from the joint application of the two principles.

Executive branch role

To achieve reform and to maintain sound pay systems with proper controls, the executive must assess needs regularly and develop proposals for salary adjustments and for other improvements in salary systems.

THE COMPARABILITY PRINCIPLE

The principle of basing Federal salaries on private enterprise rates is sound.

It provides a logical and factual standard of judgment.
It insures equity and more nearly competitive rates.

It encompasses other legitimate pay factors such as cost of living, standard of living, and productivity as those factors are resolved into the "going rate" over bargaining tables throughout the economy.

The principle has wide acceptance.

The Federal Government first adopted it 100 years ago for navy yard workers, and has since applied it to all Federal workers in trades and crafts, to TVA, and to Government work contractors through the Walsh-Healey and Davis-Bacon Acts.

It is used by corporations, by many State and local governments, and by some other national governments.

It is feasible to apply the principle.

The BLS national survey of professional, administrative, technical, and clerical pay provides annually the requisite data on private enterprise pay.

There are technically valid and established methods for translating the BLS data into Federal salary levels equivalent to those of private industry.

THE INTERNAL ALINEMENT PRINCIPLE

The internal alinement principle is now in force as to equal pay for equal work, but pay distinctions frequently fall short of work and performance distinctions. Federal salary structures require improvement in this respect.

Differences between salary scales at successive grade levels should reflect the position classification or other alinement plan. Under the Classification Act, for example, positions are classified in work zones of uniform size from GS-1 through GS-11 and zones of doubled magnitude from GS-11 through GS-18; salary intervals between grades should follow the same general pattern.

Within-grade step increases reward and encourage improved performance. Step increases

Should be of sufficient size to be felt as material incentives.

Should come more rapidly in the first years in a grade, when performance should improve most; and should come less rapidly in later years when the aim is to motivate continued good performance.

Should cover the term of most careers in a given grade. Policy in use of rates should permit flexibility in their application within pay schedules, including

Hiring above the entry rate when the individual's qualifications

warrant.

Extra step increases for extra competence.

Upward adjustment of salary ranges when necessary to enable the Government to attract and hold well-qualified personnel in shortage occupations and in rare instances of exceptionally high pay areas.

EXECUTIVE ROLE IN PAY

The President's role in pay stems from his responsibility as Chief Executive and under statute:

As Chief Executive he must assess the pay requirements for competent operation of the Government.

He must be concerned with equity for the Government employee who lacks the means available to the private enterprise employee for achieving such equity.

He has been enjoined to action by section 1102 of the Classifica

tion Act of 1949.

He must see to the execution of salary legislation enacted by Congress.

EXECUTIVE

BRANCH SALARY REVIEWS AND

RECOMMENDATIONS

In order to support the President in his responsibilities for initiating salary adjustments and improvements in statutory systems, the executive branch must carry out certain functions:

Compare Federal salary levels with salaries in private enterprise as reported each year by the Bureau of Labor Statistics. Consider the need for revisions in salary structures and policies in the light of current programs, activities, and problems. Consult with employee representatives. Recommend appropriate salary action.

Staff functions in salary matters are now performed as a joint activity of the Civil Service Commission and the Bureau of the Budget as a part of their current staff responsibilities to the President.

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II. SETTING FEDERAL SALARIES AT PRIVATE ENTERPRISE LEVELS

DEVELOPING FEDERAL SALARY SCHEDULES AT PRIVATE ENTERPRISE

LEVELS

There are three major steps in developing a Classification Act salary schedule at levels comparable with salaries in private firms.

BLS surveys private enterprise rates and reports national averages.

A Classification Act pay line is fitted to the grade averages of rates reported by BLS.

A Classification Act pay schedule is constructed upon this pay line.

Salary schedules for other statutory systems are derived by linking key levels of those systems with appropriate Classification Act grades.

BUREAU OF LABOR STATISTICS SURVEY

The BLS surveys annually, as a part of its community wage survey program, salary rates paid in private enterprise for 70 professional, administrative, technical, and clerical jobs.

Jobs surveyed

Consist of work which is essentially the same in Government and industry.

Occur frequently in both Government and industry.

Are representative of grades GS-1 through GS-15 of the Classification Act.

Salary information is collected in

Eighty metropolitan areas, selected to be representative of all U.S. metropolitan areas.

All industries which are major employers of the occupations surveyed: Manufacturing, public utilities, wholesale and retail trade, finance, and some service industries.

Establishments with 250 or more employees, selected to be representative of industries and areas:

Clerical and technical data collected from 6,000 establishments.

Professional and administrative data collected from 1,600 establishments.

TRANSLATION OF BLS

DATA INTO A

CLASSIFICATION ACT PRIVATE

ENTERPRISE EQUIVALENT PAY LINE

National average rates for jobs matching each Classification Act grade were combined into a grade average. screened out of consideration

Some BLS data was

For grades where jobs surveyed were insufficiently representative.