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basis grade 1 would start at $3,520, and you would range up to $26,400 for grade 18.

Senator Fong. And do you have the salary costs for the various grades?

Mr. JONES. We have the entire salary table reduced to the 1963 private enterprise rates.

Senator Fong. Do you have that?
Mr. JONES. I have that; yes.

Senator Fong. How much would we be increasing the total salary bill, if we restored the 1963 ?

Mr. JONES. If you went all the way to 1963 ?
Senator Fong. Yes.

Mr. Jones. The additional costs of the 1963 comparability would be very substantial. The 1963 comparability has an annual cost of about $900 million over the rates in effect since January 1964.

Senator Fong. That is over and above the $533 million ?

Mr. JONES. No; this would be in lieu of that. If you applied the 1963 comparability, the cost would run a little more than $900 million as opposed to the $544 million in the President's budget, which rests on a modified comparability as indicated in the bill.

Mr. STAATS. You understand, Senator Fong, that the 1965 budget was a repetition of the recommendations, generally, for the 1964 budget. Therefore, our bill was based on 1962 comparability, and we have not formally made a recommendation to the Congress with respect to the 1963 comparability line.

Senator Fong. In your recommendation of $544 million, which was the amount set down in the budget to take care of the increase in salary, approximately how much of the $544 million is ascribed to just the judges, just the Members of Congress and the men who are in the higher executive positions ?

Mr. STAATS. I believe all that is set out in the statement which Mr. Macy is supplying the committee.

Senator FONG. I have the figure of $12 million in relation to $533 million. Now, in relation to $544 million, what would that be!

Mr. JONES. The same.

Mr. STAATS. I think what Senator Fong has in mind is the cost of the bill that the administration supported which had the higher levels in it.

Senator Fong. Yes.

Mr. STAATS. For the executive schedule, I know the difference in the cost was the difference between $2.8 and about $6 million.

Senator FONG. Would you say that the ratio is about only 212 or 3 percent of the total amount, somewhere around there? Mr. STAATS. On the overall ?

Senator Fong. On the overall. That is, the amount set aside for the legislative, the judiciary, and the executive, the aggregate amount set aside for these three groups of people.

Mr. STAATS. Of the cost of the pay bill? It is less than that. You are thinking about the legislative employees and the judicial employees?

Senator Fong. Not the employees. I am talking about the legislative, the judges, and the top executives. You see, that is where you are having the trouble. You are not willing to give them the increases

which the committee recommended, the Randall Committee, and the other committees, and therefore you depress the higher GS levels.

Mr. STAATS. For the Members of the Congress under H.R. 11049, the cost is $4.1 million; for the executives it is $2.8 million; and for the judges, it is $4.9 million, so that the cost there is between $11 and $12 million out of the total net cost of $533 million.

So, applied against the gross, it is about $11 million out of about $600 million.

Senator Fong. That would be a little over 2 percent.
Mr. STAATS. That is right.
Senator FONG. Thank you.

The CHAIRMAN. I wonder if you ever looked into the fact why private enterprise pays such large salaries to their officers. Is it because the officers are large stockholders?

Mr. STAATS. We do not know the full extent of fringe benefits in private industry. There have been many studies made of this, but this has been very difficult to obtain, partly because it changes so fast. But all of the reports we have, the reports of the corporations, U.S. News & World Report, for example, 2 weeks ago, had à listing of top corporation salaries paid last year. There were very substantial increases, not only in the absolute amounts, but in terms of fringe benefits.

The CHAIRMAN. Did you inquire, also, whether or not they owned stock in the company and are drawing stock dividends? I think it would be well to look into that fact, for this reason: You know there is a very high corporation tax. So it is quite possible that there is a tendency, especially in the presidents and vice presidents and those having stock in the company, to run their salaries up high in order to let the Government pay for it?

Mr. STAATS. Mr. Chairman, there has been a lot of discussion on this point, as to whether these salaries are unnecessarily high. But we have not attempted to make a judgment on that point in our analysis, largely for the reason I mentioned in our statement.

We do not content that Government, for these high positions, should compete with private industry.

y. If industry feels that they have to compete and pay these higher salaries, that is one matter. But we are not contending that we have to pay Cabinet officers at the level of General Motors or any such large corporation.

Our effort is to make it possible for people with this kind of experience and ability to work for Government. We do not say for a moment that we have to compete with industry. But we do not feel, with the present scales, with the increase in cost of living and in competition with these higher salaries outside, both private and public, that we can continue to manage these programs on an economical and efficient basis unless we can do something about these higher salaries.

The CHAIRMAN. We did, in the last income tax bill, reduce somewhat the corporation tax, but not enough to affect this particular thing I am talking about very much. But it will do some good.

Mr. STAATS. My personal opinion is that you are correct on that.

The CHAIRMAN. I recognize the senior Senator from Texas. We are certainly glad to have him back here after a fine victory.

Senator Y ARBOROUGH. Thank you, Mr. Chairman. It is a pleasure to get back and support this pay raise bill, for which I have been for so long.

Mr. CHAIRMAN. I agree with this sentence that Mr. Staats quoted from the New York Times, “Yet the biggest single cause of waste, in Government or in private industry, is inefficient management.”

I agree that that is correct. But even with efficient management, you have to have qualified personnel right along down the line to be able to get the work out. I think the importance of these general schedules should not be overlooked in this salary raise bill, from the standpoint of morale. That is particularly true with the postal service people who quit, the difficulty of recruiting without increases in pay. And I think they are both important.

Mr. Staats. We are saying that both are important, also, Senator. We have stressed in our statement here today the need for adjustment in these higher salaries not only from the standpoint that this is critical for the management of these programs, but this is the area where the controversy has been directed.

I think comparability and adjustments for the lower grades is well accepted, and I think the problem, if we have a problem, is with these higher salaries.

Senator YARBOROUGH. I have a sentence of my own, Mr. Staats. I am sure I did not originate it. I do not know the source. "There is no efficient unmanaged business.” I think that

goes

for Government and politics and everything else. You cannot just put a bunch of people in there and say, "Do this," without efficient management. It will not run. It does not matter whether it is Government, politics, business, or a charitable enterprise. There is no unmanaged efficient business.

Mr. Staats. Which is certainly borne out with all our experience in Government.

Senator YARBOROUGH. I have no further questions.
The CHAIRMAN. Senator Carlson.

Senator Carlson. Mr. Chairman, I appreciate very much Mr. Staats' coming up here. I would like to announce that Mr. Staats is a former Kansan and we are very proud of his eminent career in Government. It is always a pleasure to work with him and to have his valuable counsel. 'Again, I say that I think that we are fortunate to have you as Deputy Director of

the Budget. I think I should state to these gentlemen that I left Geneva, Switzerland, at 2:15 yesterday afternoon to appear here this morning. I regret that I did miss the earlier part of your statement.

Mr. Jones, what is your title?
Mr. JONES. I am Special Assistant to the Director of the Budget.

Senator CARLSON. I would say, knowing your past services, they could not have a better one. I appreciate your being up here. I do hope when we get into executive session on this bill that we will have the privilege of at least having you up here. I think it is probably asking too much to have the Budget Director come up to an executive session, but I do know Mr. Jones will be quite helpful.

This bill is to establish some sort of comparability between private pay and Government pay. I notice, Mr. Staats, that you state that we do not seek

now,

do we ever expect pay for the higher Federal levels which would equal pay for similar levels of responsibility in private enterprise.

nor

on this?

Now, Congress has approved comparability. How much less is this in comparability, in view of this statement here. What is your thought

Mr. STAATS. I think I should make this a bit clearer than I have. The comparability principle extended to the career positions. And we have in our analysis presented comparability data only through grade 15.

The Bureau of Labor Statistics surveys do not attempt to go beyond grade 15, so the comparability strictly applied goes only to those levels. Above that level, we have attempted for the three top career grades, that is grade 16, 17, and 18, to adjust those in a relationship to the top of grade 15.

And then the executive pay scales, of course, are beyond that. What I was attempting to say here in this statement is that for the executive pay scales, we do not attempt to compete or equate with the salaries paid in the large private organizations in private industries.

But we do feel that this comparability principle should be strictly applied through these career grades, where we can obtain the necessary data to relate Government responsibilities to those outside of Government.

So that we have, as Roger Jones mentioned, a few minutes ago, in this bill, in the House bill, at the lower levels, comparability on the 1963 data, roughly. For the intermediate levels, it is about 1962.

But for the higher career grades, we are back at about 1961. So that we do not have strict comparability in the House bill. We understand that. We appreciate it.

But, essentially, what we have before the Congress this year is the bill that was recommended by President Kennedy in his 1964 budget. So our hope is, and our plan would be, that over a period of time we would be able to achieve comparability at all of these career levels.

One of the reasons we have not been able to, and I think quite understandably, in the absence of some adjustment in the executive levels, is it has been difficult to move these top career grades up without overlapping considerably the schedules at the executive levels.

Senator CARLSON. Can a member of this committee make a definite statement that from grade 15 and down the comparability rule has been followed ?

Mr. STAATS. You cannot say that in this bill; no, sir.

Senator CARLSON. There are various grades where the comparability differentiates between one grade and another?

Mr. STAATS. I would rather Mr. Jones answered that question.

Mr. JoNEs. To take your question, Senator, in the bill that is in the House now, grade 15 has a range from $16,460 to the top longevity step of $21,590. If we had full 1963 comparability, that range would be from $17,750 to $23,060.

Senator CARLSON. Now, then, follow that on down. Do you have a table showing the comparability of the various grades from 15 on down?

Mr. Jones. It will be relatively simple to put it in the text. Yes.

Senator CARLSON. I think it would be helpful if we had it in the record, Mr. Chairman, to see each grade.

The CHAIRMAN. Will you please furnish that for the record ?
Mr. Jones. Yes, sir.

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1...

(Subsequently, the following information and tables were submitted :)

The Federal comparability pay line consists of a set of rates (one for each grade of a salary schedule) which have been fitted to the average private enterprise rates for the same levels of work and are equated with the fourth step of the Classification Act schedule. The following tables-one for the Classification Act and one for the postal field service-present comparisons of the fourth step rates of current pay schedules (which became effective in January 1964) and of the proposed schedules (H.R. 11049) with hitherto published comparability pay line rates for 1961, 1962, and with a preliminary 1963 pay line also computed at the fourth step rate.

The current rates (schedule II) were derived from the 1961 pay line. Note that rates for GS-4, GS-5, GS-6, and GS-7 under the Classification Act schedule and rates for PFS-1 through PFS-9 are identical with the 1961 pay line. Rates for GS-1, GS-2, and GS-3 are somewhat higher than 1961 comparability because Congress felt that these grades should have larger pay increases than comparability indicated. Rates for GS-8 and above and for PFS-10 and above are below 1961 comparability by increasing amounts as a result of the compression caused by the $20,000 ceiling.

The 1962 pay lines for both the Classification Act and the postal field service are the rates recommended by President Kennedy to be effective in January 1964. The H.R. 11049 rates constitute a revision of the 1962 pay line made by the House committee. Specifically, the committee added 3 percent to the five lowest grades in each pay system and cut back the upper grades by increasing amounts as had been done with the 1961 pay line.

The 1963 pay line was derived on the same basis as the 1962 pay line. It has not been approved by the Bureau of the Budget or the Civil Service Commission. Nor has it been discussed with employee organizations as provided in the Salary Reform Act of 1962. It will be useful as an unofficial, arithmetical basis, however, for indicating the relationship of rates ided by H.R. 11049 with respect to comparability.

It will be noted that the rates provided for the lower grades of both schedules are virtually identical with the 1963 pay line. Rates above GS-5 and PFS-4 are decreasing smaller percentages of comparability. In fact, for GS-12 and above and PFS-15 and above the rates provided by H.R. 11049 are actually below 1961 comparability.

Classification ActComparison-4th step rates of current (schedule II) and

proposed (H.R. 11049) salary schedules with comparability pay lines for 1961, 1962, 1963

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1 In October 1962, incumbents in this grade were given an extra within-grade step worth 3.3 percent. : Employees in this grade received no pay increase in January 1964. Single rate.

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