The Department of the Interior has 39,082 employees under the Classification Act. This pay problem affects them.

In the Department of Justice there are 28,770 and in the Department of Commerce there are 23,111 who look toward a correction of the lagging pay condition now existing.

Among the independent agencies the Veterans' Administration has 91.770 under the Classification Act and about 22,000 under the Department of Medicine and Surgery pay schedule. Here, as in other agencies, the inadequacy and inequity of pay as compared with pay outside is keenly felt. Almost all the employees in the Department of Medicine and Surgery could get better pay even in State and city hospitals.

Under the Classification Act pay system we also find 38,756 employees in the Federal Aviation Agency; 14,236 in General Services Administration; 11,310 in the National Aeronautics and Space Administration; 11,270 in Housing and Home Financy Agency; 3,644 in the Civil Service Commission; 4,922 in the General Accounting Office and 2,566 in the Library of Congress. In these agencies I have mentioned there are 967,500 employees who are paid under the Classification Act. All of these Federal employees perform a myriad of important duties in all of these departments and agencies. These duties are recognized as necessary by the legislation which created the departments and agencies under which the duties are performed.

While the 967,500 Federal employees in the departments and agencies mentioned have suffered a serious lag in their pay, the 635,536 wage board employees in these same departments and agencies have had the benefit of pay increases resulting from annual surveys. There is no equity in such a situation. Attached is a table showing the number of employees in each of the departments and agencies named who are paid under the Classification Act and the number who are paid under wage board procedures. (See exhibit A.)

There are other Federal agencies I have not mentioned where this serious problem as to inequities in the pay system exists. In all of these departments and agencies, not in just one department, the Federal pay system is in need of reform. Hundreds of thousands of Federal employees are underpaid in comparison with pay for similar duties in business and industry.

Our Nation, as it moves towards its destiny of greatness in making secure the principles on which it was founded, cannot afford to neglect any longer the pressing problem of providing a fair and equitable system of pay for all of its own employees in all of its departments and agencies.

As a man should provide for his children so a nation should provide for its employees. As a good man would try to meet the reasonable needs of all his children so a just nation should endeavor to meet the reasonable needs of all its employees in all departments and agencies.

I should like to digress at this point and say there are sound reasons for thinking that salary reform should soon be extended to the pay of Senators and the Members of the House of Representatives. The compensation of Members of Congress was last increased in 1955. Since that time heavier responsibilities of a more complex Government in an age of unpredictable dangers have been placed upon Members of Congress. At the same time their compensation has not been increased while the pay for responsible jobs in industry has rapidly

advanced. The statement of purpose and justification of a draft bill, "Federal Salary Reform Act of 1962" shows on page 3, that the salaries paid in 21 large nationwide firms for positions with responsibilities equivalent to those of Federal positions in grade 17 ranged from $27,500 to $37,500. The salary of Members of Congress is $22,500. This comparison, together with the continuous increase in the responsibilities of Members of Congress, indicates there is a serious lag in their pay and that steps should be taken toward a reasonable correction of it.

It follows also that the salaries of the Federal officials subject to the Executive Pay Act should be given serious consideration to reduce some of the existing disparity between the pay they receive and the pay for similar responsibilities outside of the Federal Government.

Returning to the pay situation under the Classification Act system, one of the obvious injustices the proposed Federal salary reform would tend to remedy is that felt by an engineer, for example, who after 15 years of faithful Federal service, finds his pay is no more than that of a recent recruit who has had no experience. This not only depressingly discourages the old employee but when the new employee begins to think about his own opportunities for advancement in the Federal service, he is likely to begin looking for a position outside of Government as soon as he can find one. Experience shows this, in fact, is what happens.

The compression represented by the ratio of the highest to the lowest salary under the Classification Act, as shown in Mr. Macy's statement, in itself discourages from entering the Federal service those who have worked hard to acquire an education which would fit them for high-level duties.

The ratio since 1939 has dropped from 8.8 to 1 until it is now 5.8 to 1. That is not the kind of pay pattern which will best enable us, in our way of life, to compete with our powerful adversaries in today's world. Besides, it is a shortsighted policy which works an injustice upon Federal employees called upon to have capabilities that were not even in demand a few years ago.

Equally discouraging to many capable employees, and unsound from any well-considered business viewpoint, is the continuing lag in percentage increases for those employees who bear the heavier responsibilities in the Government service. The fact that since 1939 the increase for GS-11 has been only 98.9 percent while the increase for GS-1 has been 152.8 percent, and the cost of living has increased 115.8 percent, not only indicates past action has been inequitable but that the wrong road has been followed. Should the Government move in this direction long enough, the pay of the GS-1 would eventually exceed the pay of the GS-11 and a messenger would be paid more than the manager of the office in which he works. A change of direction is undeniably necessary. The proposed pay reform would get us out of the rut followed in the past and put us on a better road.

Wage board employees have their pay adjusted annually in accordance with the principle of comparability. As a result classified employees, working along with wage board employees and sometimes as their supervisors, have seen the wage board employees receive increases in pay while their own pay has remained stationary. The proposed reform would tend to correct this inequity. Some recent wage board increases are shown on a table attached. (See exhibit

B.)

lents.

Another table converts the hourly increases to annual equiva(See exhibit C.)

Our affirmative endorsement in principle of the legislation proposed by the administration provokes a question as to our reasons for the two main modifications of the plan we have mentioned a higher percentage increase for the lower grades and an effective date of July 1, 1962.

It is firmly believed that a current study of pay in comparable jobs outside of Government would justify a higher percentage increase for the lower grades. This is due to the effect of the recent increase in the minimum wage and increases given wage board employees which indicate lower paying jobs in industry are periodically advancing in

pay.

We adhere to the general principle that the Federal Government should not lag behind in its pay policies. Consistent with this principle we believe that the first area in which the Federal Government should cease to lag is in the field of the lower grades. Furthermore, a decent standard of living for lower paid employees requires a higher percentage increase than that proposed. Recent studies have indicated a salary in excess of $5,000 in required for a family of four if the family is to enjoy a decent standard of living. The middle step in GS-1 is $3,500; in GS-2, $3,815; in GS-3, $4,075; in GS-4, $4,355; and in GS-5, $4,840. The fourth step in the 1963 phase for these grades would be $3,540 for GS-1; $3,855 for GS-2; $4,115 for GS-3; $4,530 for GS-4; and $5,015 for GS-5. As of June 30, 1961, the number of employees and the percentage of employees in these grades were as follows:

For ready reference there is attached a table showing the distribution of full-time employees in the general schedule grades of the Classification Act as of June 30, 1961. (See exhibit D.)

We urge an effective date no later than July 1, 1962. Months have passed since the studies showing the extent of the lag in pay were made. Time has passed during which Federal employees' pay has been inadequate. Since it is admitted that the inadequacy exists and that it should be remedied, we think steps should be taken to begin applying the remedy at an earlier date.

While our organization seeks to take a responsible position in the matter, and recognizes the view that some lapse of time may be expected before a cure of the chronic ailment may be effected, we do urge remedial action promptly, and that the size of the dose be large enough to not only halt a further development of the malady, but also sufficient to start the curative process.

These modifications which we urge are not in opposition to the pay reform plan. They are in line with it and are aimed at accelerating action in making the improvements the plan envisions. In doing

so we are conscious, as we have stated, of the budget problems involved, and we are also mindful of the energy plus time required, to overcome inertia. At the same time we would point out that time flies and that changes outside the Federal service are being made rapidly. As an example, a news item in the New York Times on February 25, 1962, referred to the bill filed in the State legislature on February 24 to increase the pay of employees of the State of New York. The news item said a pay raise last year brought salaries of 21 heads of major departments or key aids to the Governor of New York to $27,500 a year and the new bill would increase them to $28,800. The bill would also increase the salaries of the directors of various agencies and commission members for the State of New York from their present range of $17,500 to $26,000 up to a range of $18,375 to $27,300. There appears in the June 2 issue of the Saturday Evening Post a very revealing article by Don Oberdorfer entitled "Help Wanted in Washington." The following language illustrates the pay problem:

Today's pay gaps lead to ludicrous situations. Dr. Allen V. Astin, Director of the National Bureau of Standards, and a world-famous scientist, was asked last fall by a west coast consulting firm to recommend a scientific assistant for a private firm with Government contracts. Aiming for high-quality candidates, the consultants asked Astin not to bother recommending anyone making less than $20,000 a year. Astin himself earns only $18,500 after 10 years in his job. None of the 1,543 professional scientists and engineers under him make more. Astin is worried because some of his best men have been leaving.

I should like to ask at this time that the entire article be made a part of the record. (See p. 472.)

There is no denial that the costs of pay increases must be considered. They are properly referred to on page 25 of the "Statement of Purpose and Justification of a Draft Bill, 'Federal Salary Reform Act of 1962'" where the annual cost as well as the cost of the 1963 phase alone are given. We simply say there will be costs incident to any delay in the effective date of the first phase and also costs incident to the delay of waiting until 1965 for the third phase of the program. We are not prepared to say what such costs will be. We do say they will occur and that the costs of delay should be considered. Whatever they may reasonably be determined to be, they should be thought of as offsetting items in any calculation of the cost of putting the reform plan into operation at an earlier effective date at a higher percentage increase for the first phase.

We heartily endorse the principle of periodic adjustments in pay with the opportunity afforded for executive recommendations. Such adjustments can make it possible to lessen the fiscal impact in any one year. This absorption of increased costs periodically as they appear is in line with what the Federal Government is already doing in other

fiscal fields.

When a wage board survey calls for an increase in an hourly rate of pay of wage board employees the additional cost is immediately absorbed by the Federal Government.

When a scientist, engineer, or other professional employee leaves the Federal service to work at a much higher salary in a business concern with a Government contract, the Federal Government pays the increased salary through its payments to the contractor. It must also pay the cost of training a replacement.

When an electronic data processing employee or a key punch operator, who has been trained by the Federal Government, is taken away

from the Federal service by a private firm with a Government contract, the increased pay is underwritten by the Federal Government. When a contractor increases the pay of its employees who are doing work under a Government contract the Federal Government eventually pays the increased cost.

When the prices of products needed in a manufacturing process are increased by a private concern the Government pays such increased prices to the concern which has the contract with the Government. When increased farm surpluses must go into storage the Federal Government foots the bill for the increased storage cost.

Increased costs for salaries for Federal employees likewise can be absorbed by such a systematic reform as the administration has proposed and in accordance with the realistic standards which are an essential part of the reform plan. There is flexibility in the reform plan so that equitable and fair adjustments can be made as circumstances may require.

All are in agreement that something should be done about the Federal pay system. We hope that the "when" and "how much" dilemma will be resolved by the Congress forthrightly in the national interest. The basic groundwork in preparation for remedial action was initiated in the previous administration. The factual development has gone forward in recent months and now the present administration courageously proposes the Federal salary reform which the facts justify.

Eminent men outside of Government have strongly concurred in the view that action should now be taken. Justice and equity speak loudly for it.

The practical fact that the Federal Government must meet the competition with which it is faced in the personnel field is incontestable.

We appreciate, Mr. Chairman and members of the committee, the opportunity you have given us to express some of the views of the National Federation of Federal Employees on this important legislative proposal.

(Exhibits A through E follow:)

EXHIBIT A.-Table showing number of employees in certain agencies paid under Classification Act and number paid under wage board procedures