Mr. MACY. I wouldn't call them subsidies; some of them were doing work under contract for the Government, but this was not a predominant feature of the sample.

Mr. WALLHAUSER. All right, Mr. Chairman.

Mr. DAVIS. I announced at the opening-all members were not here at that time—that we were going to dispense with Mr. Macy's testimony in 30 minutes. Now that 30 minutes will be up at 10:40, and I want to give everyone an opportunity to ask questions of Mr. Macy, but we are going to have to let him go at 10:40. I would like to conduct this hearing this morning so that every member could ask at least the most important question on his list, and I want to do that, but we have asked Mr. Staats to come here, and we want to begin his testimony at 10:40.

With that statement we will proceed.

Mr. Addabbo?

Mr. ADDABBO. No further questions.
Mr. DAVIS. Mr. Udall?

Mr. UDALL. I am aware of the desire of the Chair to expedite the hearing, and I will be very brief.

First, Mr. Macy, let me say that I am impressed with the tremendous study that has gone into this problem, and the efforts of your Commission and others to bring some sense to this patchwork Federal pay structure that we have, and I hope, regardless of what final action is taken by the committee, that at least we will achieve some long-range objective study, indicating an annual review of salary adjustments, so we don't have patchwork attention to particular areas and problems as we go along.

The argument that was made here a little earlier that we have in the past given the "Indians" too many pay raises and not the "chiefs," is one which is going around, and which will be the center of much of the controversy and discussions of this committee. I can see that if you continually give the $10,000 man and the $5,000 man a $500 increase each time, that sooner or later a disparity develops.

I am not fully satisfied in my own mind whether this is what the case has been, whether the case has been fully made, and I wonder if you could make available to me so I could get it into the record a table that would show the history of a couple of typical cases?

Here is what I would like: I would like three horizontal columns showing first, say, a GS-5 employee: the second horizontal would be the corresponding postal grade of GS-5, whatever this may be, and the third column horizontally would be, say, a GS-12, something in the upper, the "chief" bracket.

Then I would like four vertical columns, starting with 1946, showing the pay that the GS-5, the postal man, and the GS-12 were making in 1946. Then in the second column I would like the present pay structure so we can see how far they have come in the postwar period, and the third column, what you would propose under the administration's pay reform bill for these three people. And then in the fourth column, what your computations and studies show that private industry would be doing for comparable positions.

I think this would give me the ammunition to resolve in my own mind whether we have the disparity between the "chiefs and the Indians" that has been discussed.

Mr. MACY. I would be happy to do that. Perhaps you would like to have that for the record, Mr. Chairman.

Mr. DAVIS. Yes. Without objection, we will ask you to place that

in the record.

U.S. CIVIL SERVICE COMMISSION,
Washington, D.C., May 16, 1962.

Hon. Toм MURRAY,

Chairman, Committee on Post Office and Civil Service,
House of Representatives, House Office Building.

DEAR MR. CHAIRMAN: In response to the request initiated by Mr. Udall at the May 8 hearing of your committee on the President's pay reform proposal, we have prepared the enclosed tabulation. To make the tabulation more meaningful we have included some information in addition to that requested.

Sincerely yours,

JOHN W. MACY, Jr., Chairman.

Illustrative Federal salaries, 1946, present, and proposed by President and private enterprise pay for equivalent work levels, based on Bureau of Labor Statistics 1961 report of natinonal average salaries

1 This represents a composite of national average rates reported by BLS for a number of occupations at a work level equivalent to the indicated GS grade. Each average embraces pay of people who have served many years in their jobs as well as those who have just started. Many are paid more and many less than this average. Therefore, it should be related to the average rate within the Classification Act proposed range for the particular grade.

2 Like some of the rates at the upper end of the pay scale, the national average rate for private industry levels equal to GS-5 stands somewhat above the pay line represented by the President's salary reform proposal. The rates reported by BLS for this level represent a heavier proportion of jobs of the professional entrance level type for which industry often sets special rates, without an adequate balancing by rates of other jobs. Hence the pay line in the President's proposal does not rely on the job averages reported for this level but on broadly representative grade averages and on consistent internal alinement. The proposed salary range for this level, however, encompasses the national grade average within its limits. 33 additional longevity rates in 1st-class post offices only.

PFS-4 range not directly tied to BLS-reported national averages but linked to GS-5.

Mr. UDALL. Perhaps you could also give us-do you have at hand the total payroll for the Federal Government now?

Mr. MACY. The total payroll for the Federal Government now annually runs about $13 billion.

Mr. UDALL. One other thing. The pay schedule proposed here under the President's proposal. In some of the upper brackets I notice pay schedules of $26,000 and $27,000 for some of these grades.

Would you have any comment to make on the fact and I recognize that this is a sensitive subject in the summer and fall of even numbered years with the Congressmen-that it is proposed that civil servants be paid $4,000 or $5,000 more than the Members of Congress, who, some of us feel, have rather severe responsibilities, too?

Mr. MACY. Mr. Udall, I would be happy to. The President in his message of February 20 transmitting the proposal, commented on this point, indicating that he was not recommending in this proposal ad

justment for salaries at the Cabinet and immediate sub-Cabinet level, because of his belief that those salaries were related to salaries of Members of Congress.

He did comment that he felt that salary levels in both cases were inadequate, and invited joint legislative-executive action to consider what should be the proper adjustment at the top level in keeping with what is proposed at the top of the schedule in this legislative presentation.

Mr. UDALL. One final question.

In my experience the locality where a person is employed, in Federal service or otherwise, has a great deal of bearing on the relative purchasing power of a particular salary. I know that a $10,000 salary in Yuma, Ariz., is the equivalent of $14,000 or $15,000 in New York City in terms of standard of living and purchasing power.

What does the administration's proposal do-what does the present pay structure do with regard to difference as to cost of living in different localities, particularly the metropolitan areas as against rural areas?

Mr. MACY. In studying this entire matter, we gave a great deal of consideration to the distinction between local and national rates. We came up with the conclusion that since in all of these pay schedules. there had been traditionally nationwide rates, and in view of the fact that to an increasing extent there are national rates from about the grade 7 level on up, that it was desirable to continue with the national rates.

We also would have serious administrative problems in considering the establishment of local areas, if local areas were going to be used, because we have 40,000 different post offices; we have several thousand social security offices in other locations, so writing the boundaries for such areas would be exceedingly difficult, and so we have concluded that it is in the national interest to continue national rates for these particular jobs.

Mr. UDALL. Having robbed the other members of most of the remaining time, Mr. Chairman, I will stop. I didn't intend to go as long as I did.

Mr. DAVIS. I realize it is difficult to cut off in the midst of something. Mr. MACY. I apologize for my long answers.

Mr. UDALL. It wasn't the witness' fault; it was mine.

Mr. DAVIS. We will just consider it to be nobody's fault.

Mr. CORBETT. Or everybody's.

Mr. DAVIS. Mr. Macy, we are going to ask you to come back at some later time, and I do want, and I know the chairman wants, every member to have full opportunity to ask questions and express his views, and with that in mind, we will excuse you at this time with the understanding that you will come back at some later time to be set. Mr. MACY. Thank you, Mr. Chairman. I would welcome that opportunity. I want to make sure that all questions are answered. Mr. DAVIS. We appreciate your information very much. The next witness will be the Honorable Elmer E. Staats, Deputy Director of the Budget, and in view of the fact that Mr. Staats is a native of the State represented so ably by our colleague, Mr. Ells

worth, I am going to ask Mr. Ellsworth to present Mr. Staats to the committee.

Mr. ELLSWORTH. Thank you, Mr. Chairman.

It is a real pleasure and privilege and a high honor for me to be able to present Mr. Staats to you this morning, Mr. Chairman and members of the committee. He is a native of the great State of Kansas, a portion of which I have the honor to represent. Although he hasn't lived there for a long time, we claim him. And Mr. Staats, of course, is one of the distinguished and really outstanding civil servants in our Nation's Government and has been for years and years, without regard to what administration was in power.

He is recognized as one of the really outstanding scholars and writers in public administration, and contributes to learned journals all the time, and in addition to that, is the very, very effective and wellrecognized and well-liked and respected Deputy Director of our Bureau of the Budget. And besides that, he is a very nice man, and he has been a friend of my father's for years.

And as I said, it's a real honor and privilege for me to be able to introduce him to you and the members of the committee this morning. It is a pleasure to have you appear before the committee this morning, Mr. Staats, and it is a privilege for me to be here on the committee to welcome you.

Mr. DAVIS. Thank you, Mr. Ellsworth, and I would say that the members of the committee, through previous contacts with Mr. Staats, feel that he is no stranger to any of us, and all of us, I am sure, can concur in the remarks which were made regarding him.

Mr. Staats, we are very glad to have you with us this morning.
I believe you have a prepared statement.

STATEMENT OF HON. ELMER B. STAATS, DEPUTY DIRECTOR OF THE BUREAU OF THE BUDGET

Mr. STAATS. I do have, Mr. Chairman.

Before I start I would like to express my appreciation for these very generous remarks on the part of Mr. Ellsworth, and I appreciate it more than I can say. And I might say that I still claim the State of Kansas. I am very, very proud and happy to be a native of that State, and a graduate of two of its institutions. So I appreciate very much his remarks, as well as those which you have just made.

Mr. Chairman, I would like to say that I have a fairly long statement here. In deference to the time of the committee, and the fact that Mr. Macy has already given you quite a lot of background on the proposal that is before the Congress, I would like to skip over and start on page 3

Mr. DAVIS. You may present your statement in any way you see fit. If you would like to skip about in it, or highlight it, that will be perfectly agreeable, and after you have completed your statement, then the members will ask such questions

Mr. JOHANSEN. May I ask, Mr. Chairman, that the statement in full be incorporated in the record.

Mr. DAVIS. Yes.

Without objection, it will be incorporated in full.

(The prepared statement of Mr. Staats follows:)

PREPARED STATEMENT OF ELMER B. STAATS, DEPUTY DIRECTOR OF THE BUREAU OF THE BUDGET

Mr. Chairman and members of the committee, the Bureau of the Budget appreciates this opportunity to appear before this committee in support of H.R. 10480 which is the administration's salary reform bill transmitted to the Congress by the President with his message on salary increases for Federal employees of February 20, 1962.

This bill is one of many pay proposals now pending with this committee. The bill is analyzed and explained in full detail in the "Statement of Purpose and Justification" which was also transmitted with the President's message and by a "Summary Analysis of the President's Proposal" issued as a committee print in March 1962. Your committee has had a detailed statement from the chairman of the Civil Service Commission. In this statement, therefore, I will not review in detail the bill itself or its background. Instead, I will discuss briefly some of the major points which have been raised about the President's proposal. In summary, the President's proposal provides:

1. That every position in the career service shall be paid on the basis of the value of the services rendered.

2. That the value of the services of every position shall be determined by the standard of the average salary paid by private enterprise for a comparable level of work.

3. That the average salary paid by private enterprise for each level of work shall be based on the annual surveys of private-enterprise salaries made by the Bureau of Labor Statistics and which are specifically designed for this purpose. 4. That the salary structures of the major Federal pay systems be reformed in the following respects:

(a) The differences in salaries between successive work levels shall adequately reflect the differences in the difficulty and responsibility of the work required, and the salary differences between successive grades shall constitute a logical pattern.

(b) The relative value of within-grade steps shall be uniform for all grades in the structure. Each step increase shall be appropriate financial recognition of the increasing value of the service rendered and an adequate reward for sustained faithful performance on the job, and the number of within-grade steps shall be appropriate for the typical career progression patterns.

(c) The rules for use of within-grade rates shall permit adequate administrative flexibility in meeting the needs of the Government regarding recruitment, retention, and motivation of employees.

5. That the major salary systems shall be coordinated to insure equity in pay treatment throughout the Federal Government.

6. That the President shall report annually the current average salaries paid by private enterprise together with such recommendations for changes in Federal salary rates and structures as he finds appropriate.

The President has proposed the adoption of two fundamental pay principles or standards: (1) That there shall be equal pay for substantially equal work and differences in pay shall be maintained in keeping with differences in work and performance; and (2) that Federal salary rates shall be comparable with private enterprise salary rates for the same levels of work. The first principle is stated in the Classification Act and in the Postal Field Service Compensation Act and it is well accepted in most public and private pay systems in the United States. The President's salary reform plan provides new means for carrying out this principle, and uses it as the basis for establishing definite interrelationships among the several Federal statutory pay systems and for recitifying pay distinctions and for providing more realistic rules for executive branch use of the statutory salary rates. This principle of equal pay for equal work has also been used in translating private-enterprise salary rates into comparable Federal salary rates. This second principle--that Federal rates should be comparable with those in private enterprise for the same work levels has been widely used in Federal blue-collar wage fixing and in other areas of Federal pay administration. Applying this principle to the four statutory systems covered by the President's proposal is eminently equitable and sound, and is the cornerstone of the President's salary reform proposal.