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Mr. JOHANSEN. I note in your statement you say that the Government must avoid the sort of competition in labor markets that could itself bring pressures for upward wage adjustments by private industry. That is a new line of approach that I have not encountered in these hearings.

Also you say these increases in the other bills would, in areas of the country where the Federal Government is a major factor in local labor markets, invite competitive wage increases in private employment.

I wonder if you can pinpoint in what categories of Federal employment, and at what levels of Federal employment, you feel the pay increases in the other bills would create this sort of competition that would bring pressures for increases in private industry?

Mr. FOWLER. I do not think I could pinpoint it by areas, sir. It would be my impression that some of the proposals before the committee would have that effect, particularly at the lower salary levels. Mr. JOHANSEN. In other words, you feel the pay increases that are

osed in another bill for postal employees would be of such a character as to create a pressure and demand for pay increases in private industry. Is that correct?

Mr. FOWLER. I would not like to particularize without some further examination, but I think I prefer to stand with the general statement that the other bills before you would, in some cases, in areas of the country where the Federal Government is a major factor, invite competitive increases in private employment, I think particularly in the lower brackets.

Mr. JOHANSEN. I am sure of this—that some of the witnesses who will appear subsequently in support of some of these increases would be most insistent in particularizing because it seems to me that the generalization is an extremely sweeping one and is meaningless unless it is particularized.

Mr. FOWLER. I will try to supply additional information for the committee on this point.

(The information referred to follows:)

Bookkeeping machine operator.
Typist..

Do.
Accounting clerk

GS-2
GS-2.
GS-3
GS-3.

$3,500 3, 500 3, 760 3, 760

$4, 445 4, 445 4, 705 4, 705

$3,337 3, 128 3, 650 3,572

$3,337 2, 946 3,519 3, 650

$3, 233 3, 102 3, 624 3, 572

$3,024 2, 711 3, 363 3, 285

$3, 154 3,024 3, 493 3, 702

$3,050 3, 233 3, 598 3, 415

Average private enterprise salaries and present Classification Act salary ranges for 4 clerical positions in 6 cities

Present Classification

Act salary range :

Average salary in private enterprise

Position

Classifica-
tion Act

grade
equivalent

Entrance

rate

Maximum

rate

Boston

Dallas

Minneapolis- Oklahoma
St. Paul

City

Richmond

Salk Lake

City

1 Based on findings of Bureau of Labor Statistics surveys in late 1961 or early 1962.
2 Including longevity rates.
NOTE.-The above examples illustrate locations where raising Government pay for
the lower grades much higher would serve as an incentive for competitive increases in

private business salaries. Note that the prevailing average private-enterprise rate in
each of these instances is lower than the entrance salary for comparable Government
jobs under the current pay schedule,

Mr. JOHANSEN. Do you think that problem would exist with respect to the $1,000, $2,000, and $3,000 a year increases in some of the higher levels! Is that not going to invite competition?

Mr. FOWLER. I doubt that because I think that the record is probably quite clear that at the higher bracket levels the comparability with salary scales for comparable work in the private sector is much higher than that in the Federal service--much higher.

Mr. JOHANSEN. Let me give a hypothetical question here. Supposing we go to a $30,000 a year salary for Members of Congress that I hear about. Is it your judgment that would not be reflected in pressures for higher salaries in the private sector?

Mr. FOWLER. I do not have any experience that would enable me to make very much of a judgment on that.

However, I do not think the increase in salaries for Congressmen would have any real impact on salaries of others. I just do not think the two are importantly enough related.

Mr. Gross. Were you in private business before you came to Government?

Mr. FOWLER. I am a lawyer, sir, and have been for the greater part of the time since World War II except for one period of service during the Korean war with the administration.

Mr. JOHANSEN. Let me make the observation that I am sure it will create some political pressures at home if we have a $30,000 a year salary for Members of Congress.

Mr. FOWLER. That might well be.
Mr. JOHANSEN. We do have to live with that sort of a pressure too.
Mr. FOWLER. It might make the competition much more intense.

Mr. JOHANSEN. I am not worrying about the competition. I am worrying about the fact that the American people, with a $300 billion deficit, are not going to stomach very well a $30,000 a year salary for Congressmen, and I do not think they should.

Mr. FOWLER. Ás I said to Congressman Gross, I did not come here today to get into that question. I will just have to leave it with the comments made in the President's message.

Mr. JOHANSEN. I realize the gentleman does not want to discuss that. I submit if we add the two supergrades proposed in the administration bill, you would inevitably be making proposals for Cabinet officers and for Federal judges and for Members of Congress.

Let me ask you another question. Is it not your judgment if we make these very substantial increases in the higher levels, is that not going to accentuate the pressures for increases—maybe not this year. maybe not next year, maybe not in the third year, but thereafter?

I am sure we will not wait for the fourth year for substantial increases all the way up the scale.

Mr. FOWLER. That would depend on how well-established policies and principles that are contained in the President's proposals become accepted by Congress and the public.

I think if the principles and policies that are contained in the administration's proposals are adopted and accepted by the Congress, I believe they will be accepted and supported by the public. Mr. JOHANSEN. What about the employee groups ?

Mr. FOWLER. I think while the pressures might become stronger from the employee groups, the pressures to resist increases that would

be out of line with the policies set forth in the bill would likewise become stronger and perhaps counterbalance the increase in pressures from the employee groups.

I think what is involved in this particular legislation, sir, is a feeling that the whole system of Federal compensation must become more deeply ingrained in a series of policies and principles rather than be responsive merely to pressures.

Mr. JOHANSEN. Going back to this matter of possible competition with the labor market, is this not one of the things that might very well result from the fact that with regard to Federal and classified postal employees we are dealing with them on a nationwide pay raise basis, so there is no relationship between the rates for employees in those categories and the area prevailing rates that you have for the bluecollar personnel. So in certain areas, increases are going to put Federal employees, not only on a par, but ahead of the prevailing rates in private enterprise. Is that not a very real part of the problem?

Mr. FOWLER. That may well be.

I think this is implicit in the statement contained in my earlier remarks, that this must be watched for and avoided.

Mr. JOHANSEN. It cannot be avoided if we do it on a blanket, acrossthe-Nation basis. It is inherent that it is there.

Mr. Gross. Mr. Fowler, this bill that you are here testifying in behalf of this morning provides some with increases of $6,000 a year, and at the bottom of the totem pole, $40 a year, over a 3-year period, or a $120 total.

Do you think that is equitable?

Mr. FOWLER. That depends upon the situation to which those particular increases in those levels are addressed.

It is my understanding it is not only equitable, but highly desirable in terms of the comparability factor between people in the Federal service performing a given type of work and the compensation they receive with people in the private sector. The element of equity we are looking at really is the equity as between the Federal employee and the person in the private sector performing a comparable type of work. That is the inequity we are trying to cure.

Mr. Gross. Let's keep these at the top of the list on a steak diet and those on the bottom of the list on a hot-dog diet.

Mr. JOHANSEN. Let me pose one other question.

If the administration bill is adopted, there is no question as to the added financial obligation which, over the 3 years, and after the 3 years, that will be assumed and incurred by the Federal Government. Is that correct?

Mr. FOWLER. That is right.

Mr. JOHANSEN. But there is a very real question as to what the status of the revenues is going to be at the end of 3 years so there is a very real question as to whether we are going to be able to pay the bill other than by more deficit financing. Is that not true?

Mr. FOWLER. That would depend on what the outlays are for other phases of the budget. It would not necessarily follow that the budget for 1964 would necessarily be an unbalanced budget because of this particular bill. Compensating reductions in other phases of Federal activities

Mr. JOHANSEN. Does the witness honestly foresee any compensating reductions?

Mr. FOWLER. In fiscal year 1964?

It would depend upon what the revenue outlook would be for fiscal year 1964 whether or not compensating reductions would be necessary in order to bring in a balanced budget.

Mr. JOHANSEN. Compensating reductions might be necessary in order to have a balanced budget, but does that fact in any way assure that there will be those compensating reductions!

In there anything in the fiscal record of the last few years, or the current year, that justifies the expectation!

Mr. FOWLER. I think the very budget that was presented in January, which was presented as a balanced budget containing a limited allocation of $224 million to take care of the first stage of this proposal, is the best evidence before you that the President has a desire and objective as expressed in this budget to achieve this pay reform within a balanced budget.

Mr. JOHANSEN. That balanced budget is an “iffy" one.

Mr. FOWLER. As all budgets are that are forecast 18 months before the end of the fiscal year.

Mr. JOHANSEN. The obligations for fiscal years 1962-63 are not "iffy."

Nr. FOWLER. That is right.

Mr. WALLHAUSER. Mr. Secretary, you say the Federal Government can never expect to provide salaries equal to those paid for comparable responsibilities in private life?

Mr. FOWLER. Yes.

Mr. WALLHAUSER. Therefore, it becomes a matter of degree, does it not, as to how high you want to raise the salaries?

Mr. FOWLER. I think that is right.

Mr. WALLHAUSER. This, of course, is an arbitrary figure, is it not? This can be $6,000; it can be $4,000; it can be any amount. Therefore, do you not think that this committee must very carefully look at these recommendations to see on what they have been based to give them credence ?

Mr. FOWLER. I do indeed. I think the studies that are underlying these recommendations indicate for a position of a given quality or character in the private sector, the salary range is $37,000, whereas, in the Government it is $18,000. This kind of information ought to be very thoroughly and adequately tested and appraised.

Mr. WALLHAUSER. So we must not accept the administration's recommendations?

Mr. FOWLER. It is my understanding that a very careful and workmanlike job has been done, that you have available men from the private sector who have had long experience. I understand the committee will have Mr. Folsom to testify before it, who is the treasurer of the Eastern Kodak Co., and was under Secretary of the Treasury in the last administration. I think the judgment of men of that sort will help.

Mr. WALLHAUSER. Plus our own responsibility and the knowledge of those of us who have been in private enterprise and have had as much experience as some of the men you mention.

Mr. FOWLER. Yes.

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