justments to reach comparability he recommended a grade 18 single rate of $24,500.

Because of the establishment of the ceiling of $20,000 the gap of $4,500 resulted at that particular point.

Chart IIB carries us to the next stage, which is a comparison of the pay line as determined from the Bureau of Labor Statistics data for 1961 and 1962. I should point out with respect to this chart and the preceding and following charts that the rates that are set forth here at each grade are the fourth rates.

This is the rate that is used in comparing the Bureau of Labor Statistics data with the salary levels within the Federal service. This is the most populous of the rates within the Federal service and represents a period of service within the grade totaling approximately 4 years.

You will note here that the difference between the two lines is roughly 3 percent. This is the increase that has taken place between the two surveys in the private enterprise sample from which data was obtained.

The gap is $130 at grade 3. It gradually rises up to a gap of $585 at grade 15. Then again employing the projections for grades 16, 17, and 18 the gap is $860 at grade 18.

Chart IIC brings us directly to the proposals in the President's report. The solid line illustrates the fourth rates of the President's proposals for all grade levels through 17.

The President in this year's proposal, as in the 1962 proposal, does not recommend more than a single rate for grade 18 and the single rate, as indicated in here, is $25,500.

This raises the single rate from the $20,000 point presently in schedule II. Here again I think there are three other points that deserve mention.

You will note in the lower left-hand corner that grades 1 and 2 are approximately on the dotted line which represents schedule II. Therefore, no increase would be indicated if comparability were to be obtained. The gap begins at grade 3 with $85 on an annual basis, roughly a 2-percent increase.

The gap increases to $165 at grade 5, which is 3.2 percent. It is also 3.2 percent and $205 at grade 7. The third point once again points out the catchup feature that is involved from grades 9 and up, so that the gap becomes $325 at grade 9 or 4.2 percent and by the time it reaches grade 15 the gap is $1,660 or 9.6 percent.

The overall increase, Mr. Chairman, from schedule II to the proposed salary line is 4.7 percent for the Classification Act and an average dollar increase annually of $322.

These three illustrations are based entirely on the Classification Act rates, but I should point out that the other three systems are linked to the same lines at certain specific points and therefore are treated in the same fashion.

I have pointed up in each chart the problem of the upper three grades. I have mentioned the fact that we do not have survey data with respect to the upper three grades, but we have obtained some information in order to determine the comparability of the rates we have projected with certain jobs of a comparable content in private industry, so that chart III illustrates the results of that survey.

$60,000

$50,000

$40,000

CHART II. UPPER CAREER PAY IN 19 LARGE CORPORATIONS*
POSITIONS EQUIVALENT TO TOP GS GRADES

$30,000

The survey was an effort to sample, to check, and to compare the top career jobs in the Federal service with top jobs below the corporate officer level in 19 corporations.

The background of this survey goes back to 1960 when my predecessor, Roger Jones, initiated a survey with some 21 companies to obtain this data.

In the past year the Commission staff has secured information from 19 of these 21 companies. In each instance the jobs with which comparison was made were carefully checked by an outside group to be absolutely certain that the content was the same as the content of Federal jobs at the same level.

You will then see on this chart that grade 16 in the present schedule, schedule I in the Salary Reform Act, provides a range of from $16,000 to $18,000.

The President's proposal would raise that range to $19,735 to $24,975. The comparison with industry shows that there the range runs from $22,500 to $32,500 with the middle rate at $28,000.

I don't need to go into the details for 17 and 18. I draw the conclusion from this chart that the extension of the line by the mathematecal device produces rates at grades 16, 17, and 18 that are still substantially below the rates paid for comparable work in these corporations, and that therefore these can be described as comparatively modest, even though they do constitute significant increases.

I think it is important to point out that even though these increases are large, the total cost for them is relatively small in relation to the total cost. The cost for the adjustments presented here and in the

previous tables for grades 15, 16, 17, and 18, for the period from January through June 1964 would be $13,911,000 out of a total cost for the same period of all of the adjustments of $254 million.

Senator YARBOROUGH. Pardon me, Mr. Chairman. May I ask a question?

The CHAIRMAN. Proceed, Senator.

Senator YARBOROUGH. With respect to that increase in cost, did you say, $13.5 million for the first 6 months of 1964, the GS-15 and above GS-15, would that be all of the levels shown on chart III here?

Mr. MACY. Yes. It would be all plus grade 15. In other words, I am including the top four grades.

Senator YARBOROUGH. Grade 15 and all the grades shown on chart III, and the total cost of that for 6 months would be?

Mr. MACY. $13,911,000.

Senator YARBOROUGH. For the first 6 months of 1964. Thank you. Mr. MACY. It is clear from this discussion that there is a serious problem arising with respect to the $20,000 ceiling that is incorporated in the Salary Reform Act at the present time.

The removal of that ceiling, because it relates directly to executive pay, points up the necessity for consideration of executive pay in relation to any pursuit of comparability this year.

Senator CARLSON. Mr. Chairman, may I inquire?
The CHAIRMAN. Proceed.

Senator CARLSON. I would like to inquire about your last statement, Mr. Macy, in regard to the $20,000 ceiling. Chart IIC which I have before me is depicted as closing the gap in the President's proposal and I notice that is $25,500. Is the President recommending that the top grade go to $25,500?

Mr. MACY. Yes, sir. This would be the adjusted single rate for grade 18 based upon the comparability line. You will notice back on chart IIC that the line flatens out between GS-17 and GS-18 because there is no fourth step for GS-18. It is a single step.

If there were a fourth step it would follow up to the corner of the chart there at $28,000.

Senator CARLSON. Did not the President on April 29 in his message to the Congress state that we should retain the $20,000 ceiling?

Mr. MACY. His statement on April 29 was that unless there was an adjustment of executive pay rates the $20,000 ceiling would have to be retained, but he recommended to the Congress that the upward adjustments of executive pay rates as well in order to permit the proper functioning of the comparability principle for grades 16, 17, and 18 as I have illustrated in chart IIC.

Senator CARLSON. Do I understand from that then that, regardless of whether there is any change in the executive pay schedule, the ceiling be increased in grade 18 under this proposal to $25,500, regardless of any increase in executive salaries?

Mr. MACY. No. If there is no increase in executive salaries, if the present schedule is retained whereby a Cabinet secretary's salary is $25,000 and the assistant secretary level is $20,000, the recommendation would be that comparability be applied but the ceiling retained. I think this is illustrated, Senator Carlson, in my chart IV, because it shows the $20.000 cutoff as applied under the present schedule. You will see that there the rate for grade 18 in the first column is at

32-98464 4

ARRAY OF SALARIES PAID TO PRINCIPAL FULL-TIME EXECUTIVES OF 17 Large TAX-EXEMPT FOUNDATIONS, BY TITLE OF OFFICER

1 Multiple officers of some foundations account for the difference in count between number of foundations and number of officers.

• Includes secretary-treasurer, where combined title is used.

Includes variants of title of director.

Source: Statistics Division, Internal Revenue Service, May 1963.

NONPROFIT CONTRACTORS

Salaries of $22,800 or more paid to executives and other staff of nonprofit contractors of governmental research and development work

Source: Contracting-out study made by the Bureau of the Budget and Civil Service Commission, covering 14 nonprofit contractors.

Source: Annual Report, 1962. Board of Governors, Federal Reserve System.

FARM CREDIT BANKS

Officers of Farm Credit banks with salary range the maximum of which is $20,000

Source: Letter from Gov. R. B. Tootell, Farm Credit Administration, Apr. 4, 1963.