FEDERAL EMPLOYEES SALARY ACT OF 1963

THURSDAY, AUGUST 22, 1963

HOUSE OF REPRESENTATIVES,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.C.

The committee met at 10:15 a.m., in room 215, Cannon House Office Building, Hon. Tom Murray (committee chairman) presiding. The CHAIRMAN. The committee will come to order.

Hearings will be resumed on the proposed legislation to adjust rates of compensation.

The first witness will be Hon. Richard J. Murphy, Assistant Postmaster General, Bureau of Personnel, Post Office Department.

Mr. Murphy, you may introduce the associates who accompany you. STATEMENT OF HON. RICHARD J. MURPHY, ASSISTANT POSTMASTER GENERAL, BUREAU OF PERSONNEL, POST OFFICE DEPARTMENT; ACCOMPANIED BY LOUIS J. DOYLE, GENERAL COUNSEL, POST OFFICE DEPARTMENT; HERBERT BLOCK, DIRECTOR, COMPENSATION DIVISION, BUREAU OF PERSONNEL; JOHN D. SWYGERT, DIRECTOR, INSTALLATIONS MANAGEMENT DIVISION, BUREAU OF OPERATIONS; ANNE FLORY, ASSISTANT DIRECTOR, COMPENSATION DIVISION, BUREAU OF PERSONNEL; ADAM G. WENCHEL, OFFICE OF GENERAL COUNSEL, POST OFFICE DEPARTMENT

Mr. MURPHY. I am pleased to have here with me Mr. Louis Doyle, General Counsel of the Department; Mr. Adam Wenchel, the Associate General Counsel, and Mrs. Anne Flory, the Assistant Director of Compensation Division; Mr. John Swygert of the Postal Installations Management Division of the Bureau of Operations; and Dr. Herbert Block, Director, Compensation Division of the Department. The CHAIRMAN. You may proceed in your own style. Mr. MURPHY. Thank you very much, indeed.

First of all, Mr. Chairman and members of the committee, allow me to express my appreciation for the opportunity of appearing before you this morning to give you our views on H.R. 7552, particularly as its provisions relate to employees in the Post Office Department.

H.R. 7552 is one of many bills now pending before this committee which embodies the administration's recommended pay adjustments transmitted to the Congress by the President with his message of April 29, 1963. The Chairman of the Civil Service Commission and the Deputy Director of the Bureau of Budget have appeared before

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you to speak in favor of adjustments to the basic salary schedules over and above those provided in the Salary Reform Act of 1962 (Public Law 87-793) to be effective January 1964. They have indicated to you the technical basis for their findings which justify the need to increase rates of pay in the Classification Act schedules and, through "linkage" rates of pay in the Postal Field Service schedules.

Insofar as we in the Post Office Department are concerned we earnestly hope the new schedules recommended by the President will be accepted by this committee and by Congress, for it is the first real test of whether comparability of pay with private industry will be achieved and continued as Federal policy and action, or whether we will once again retreat to the use of such questionable bases for pay as: "proper standard of living;" or rates of pay of unique job; or the "cost of living;" or flat rate equal dollar increases to all, et cetera. Every pay change is fraught with compromises for it is the result of averages and adjustments. The important thing, however, is that there should at least be an objective, systematic approach to the goal. The goal of comparability I believe is unassailable the means of achieving that goal must be equally unassailable. I believe we now have the foundation for continuing rational pay system. We wholeheartedly support the recommendations in H.R. 7552 on pay adjust

ments.

I believe it is well at this point to refresh everyone's recollection as to just how pay is proposed to be set for the postal field service. I am advised that in the past when previous administrations appeared before this committee to discuss postal pay it was the custom on the one hand for the administration to stoutly proclaim that letter carriers, clerks, and others were quite well paid, and on the other hand, employee organizations contended the opposite. Each group marshaled information to justify its stand, and then left this committee the tremendous task of trying to sift facts from fancy and to arrive at a just pay rate for postal employees.

The comparability system first used for the Salary Reform Act of 1962 and now again before this committee in its first major test has as its major asset the presentation of pay requirements in terms of principles and a system for carrying out those principles. Pay data is obtained and computed by the highly respected and impartial Bureau of Labor Statistics. Pay data is not obtained to prove a point or to make out a case, but to provide information on which sound judgments can be made as to what the pay line for various statutory pay systems ought to be. 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. Instead, the Salary Reform Act of 1962 has set a pattern which we believe is eminently sound. The pattern is to use the pay line developed for the Classification Act from data obtained by the Bureau of Labor Statistics to serve as the basis for constructing the postal field service pay line. The technique for relating the two pay lines together has been termed "linkage." By that phrase we mean tying the two systems together at key points. As you will recall, the points of linkage are-

PFS-4 is the clerk level where we have the overwhelming employees, which is equal to GS-5; and

PFS-11 is equated to GS-11, and PFS 20 is equated to GS-17. PFS-20 is the top rate of our 15 regional directors in the regions and that is equivalent to the GS-17 rate.

The linkage system is simply a process of picking up the pay line of the Classification Act at these three points and then computing, arithmetically rates for all other levels: PFS 1, 2, 3, et cetera. If you examine the pay schedules in H.R. 7552 you will find that the pay rates for PFS-4 are exactly like GS-5, for PFS-11 exactly like GS-11 and for PFS-20 exactly like GS-17. There is one difference in PFS-4. PFS-4 has 12 pay steps whereas GS-5 has only 10 pay steps. These extra steps have been established in law to recognize the fact that postal clerks and carriers typically spend their entire careers in this one pay level.

For the postal field service the proposed pay adjustments range from a 3.1 percent increase to a 26.6 percent increase over schedule II to be effective January 1964. 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. Above PFS-9 the percent of increase goes up sharply because of the $20,000 ceiling placed on salaries by Congress last year. In addition PFS 18, 19, and 20 are not even provided with an increase in schedule II of Public Law 87-793. Top pay for PFS-20 under the President's proposal would be $25,445.

We recognize that the pay adjustments we are speaking of have been based on findings of the Bureau of Labor Statistics conducted during their 1961-62 surveys of private enterprise. The data is no longer current, but it is the only genuine factual basis we have on which we can make objective recommendations.

The time gap between surveys and legislative action needs to be closed. We in the executive branch recognize the need for closing the gap. And I feel confident we will have recommendations along this line to offer to the committee the next time we appear before it. I am advised that special attention is being given to this matter by the Civil Service Commission and the Bureau of the Budget. I think a frank recognition of this timelag problem is necessary on everyone's part. I do urge, however, that we proceed on the basis of the factual data we have before us today and not proceed on the basis of conjecture as to what might have happened to wages in the private economy since the last wage survey by the Bureau of the Labor Statistics. Any sort of procedure is based on speculation. We don't have the full and adequate facts.

H.R. 7552 contains a number of significant changes in postal pay administration. These changes related to (1) the use of "revenue units" in lieu of dollars of receipts for class of office and the assignment of postmaster positions to salary levels, (2) a new base for paying postmasters of the fourth class, and (3) a new fee system in the delivery of special delivery mail. Actually, Mr. Chairman, the majority of my testimony does relate to these three provisions, because they are the provisions that are the most different about our schedules.

Even though they relate primarily to pay administration, I want to spend a little time on them, because they might be a little confusing, especially in regard to the revenue unit system for determining class of office.

(1) REVENUE UNITS

Since the earliest days of postal operations the volume of business done has been measured in terms of the dollars of revenue received. Until 1955 receipts were the sole basis for setting postmaster salaries and even for determining the number of employees to be authorized in a particular unit and the salaries of many supervisors. Years ago receipts were a fair basis for such decisions. But with the changing complexion of mail transactions and new operational uses for post offices, it became clear that a measuring device other than receipts, per se, was needed. In 1955 Congress enacted the Postal Field Service Compensation Act which eliminated receipts as the sole factor for setting salaries of postmasters in all but the fourth-class post offices. In that law Congress added as additional factors: Total complement of employees to accomplish the work of the post office, number of delivery routes, number of stations and branches, and number of Government vehicles. Receipts, however, continued as an important feature.

In 1958, Congress passed the Postal Policy Act (Public Law 85426) which raised postal rates in most categories. As you will recall that was the measure which increased the cost of mailing a first-class letter from 3 to 4 cents. Increasing postal rates automatically increases receipts. In order to avoid a situation whereby many postmasters would have their office raised in class or their salaries raised pay level because of an "unearned" increase in receipts, the Postal Policy Act also included a receipts adjustment clause (sec. 211, Public Law 85-426).

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That proviso does two things. First, it requires the Postmaster General annually to adjust or discount the receipts achieved by a patricular post office by a factor which would recognize the increase in receipts due solely to increases in postal rates. For example, actual receipts for calendar year 1959 were adjusted to 82 percent for offices of the first and fourth classes, and to 81 percent for offices of the second and third classes. In 1962 actual receipts were adjusted to 81 percent in first-class offices, 80.4 percent in second-class offices, 80.5 percent in third-class offices, and 82.4 percent in fourth-class offices.

The purpose of this receipts adjustment or discounting provision is to avoid promoting a postmaster because of "unearned" revenues. The second feature of the section is a "savings" clause. It does not permit reduction in class or in compensation of the postmaster below the level attained as of July 1, 1958, if reduction can be avoided by giving the office full undiscounted credit for postal receipts. If the question is a question of reduction, we don't discount the postal

revenues.

The application of section 211, Public Law 85-426 appears to be simple. It would be, except for changes changes in the particular office causing it to go up in receipts one year and down the next; changes in the mix of mail and transactions unrelated to receipts; and increases in postal revenues again in 1962. As you recall, last