The annual Los Alamos survey of professional scientific salaries has also become a recognized reference. For several years the Sandia Corp., has made an annual analysis of administrative exempt personnel. Salary studies like those of the Engineers Joint Council, National Science Foundation, and other professional organizations are also standard references. In some areas large municipal agencies are jointly collecting and analyzing wage and salary data on a regular basis.

Two University of California professors, C. C. Harris, Jr., and D. B. DeLoach, report their study of, "The Profit Motive: A Stimulant to Federal Administrative Efficiency," in the winter issue, 1962 of Public Administration Review, The authors suggest a plan for awards to Federal administartors for saving money as a solution to our increasing cost-of-Government dilemma.

The American Management Association conducts continuing studies of executive compensation. AMA's Executive Compensation Service seeks to inform industry as a whole in its efforts to adhere to the policy of comparability in salaries. The Service stresses that the maintenance of an equitable as well as a competitive salary structure has become a continuing management responsibility ordinarily calling for a thorough study at least once a year. K. E. Foster of System Development Corp. reports in the January-February 1963 issue of Personnel that nearly every sizable company is caught up in the vogue of wage and salary surveys, which are here to stay.

Writing in the Wall Street Journal, May 14, 1963, Alfred L. Malabre observes that the American breadwinners' income is rising far faster than his paycheck indicates. Wage and salary payments have almost tripled since World War II, but employer payments that do not show up in paychecks-so-called fringe benefits-have increased nearly sixfold. This nonpaycheck pay is now somewhere about $20 billion a year and it does not tell the whole story. It covers primarily employer-paid insurance plus pension money for retirement. It does not include, for example, more paid holidays, longer paid vacations, plush employee country clubs, free employee lunches, sizable price discounts, stock option plans, and early retirement plans. M. Reagan, commenting on these facts in the June 15, 1963, issue of New Republic suggests the additional inequity of untaxed income, comparing those whose income is totally in the form of cash and those whose income is partly in nontaxable benefits. A free lunch every workday adds up to a sizable benefit each year-one public servants fail to enjoy.

The New York Times pointed up the salary discrepancy for top professionals in Government and industry on December 5, 1961:

"*** The basic problem is this: though the Federal Government is the most important, largest and most complex business in this country, the rewards it offers for superlative talent-in law, engineering, economics, and many other fields as well as science-are miserly compared to the rewards that nongovernment organizations pay. The rule of equal pay for equally difficult work ought to apply to all citizens, including those who work for the United States ***" A report, "Physicians' Earnings and Expenses," published by Medical Economics, Inc., Oradell, N.J., in 1961, based on a 1960 survey reflects the serious discrepancies between salaries paid physicians in the Federal service and the earnings of physicians in private practice.

In a recent American Management Association seminar on “Salary Administration for Scientific, Professional, and Technical Personnel," William Diefenbach, of McKinsey & Co., presented the salary problems of engineers and scientists. One of his principal points of emphasis was that salary plans for such professionals, as well as other employees, must take into consideration "the going industry scale."

In his recently published study, "Higher Skills for the City of New York," David T. Stanley, of the Brookings Institution, compares professional salaries of employees of the city of New York with comparable positions in other governments, including the Federal. The comparison clearly indicates that the Federal service is lagging behind a number of other jurisdictions in compensating many types of professional positions.

A survey by a member of the Federal Professional Association reveals the following pertinent facts about trade association executives in Washington, D.C.:

1. The top trade association executive (executive secretary, executive director, executive vice president, etc.) directs a paid staff of from 75 to 200 personnel engaged in membership, legislation, trade practices, research, and economic forecasts. He reports to a board of directors for policy and lobbying guidance.

2. The salaries of trade association executives range from $25,000 to $35,000 per year, plus fringe benefits too numerous and varied to be computed into dollar equivalents. These benefits include such items as; virtually free medical service, practically unlimited travel and expense accounts, very low-cost life insurance, a great deal of unaccounted-for leave, as well as regular vacation and sick leave, etc.

These are the officials with whom Congressmen and many executive branch officials and employees at subordinate levels must deal on a regular basis.

These trade association officials believe, almost to a man, that congressional salaries are too low by from $10,000 to $15,000 per year. They also believe that the salaries of the executive branch officials with whom they deal are similarly low. They recognize that the responsibility of the Government executive is considerably greater than that of the trade association executive, even though the latter is almost invariably paid more.

Nowhere is the contract made more clear than in the series of charts submitted to this committee by Chairman Macy in his statement of September 4, 1963.

FRINGE BENEFITS

Any discussion of comparability must, of necessity, take into consideration items other than regular salaries. These other items are commonly termed "fringe benefits.”

It is extremely difficult to compare the value of the fringe benefits available to "typical" professional employes in private enterprise with those available in Federal Government employment, because the use of any averages is apt to be misleading.

The annual leave provisions in Federal service are probably about equivalent to the best of those in private enterprise with respect to professional persons who have had at least 15 years of service-taking into account that the 26 days of annual leave in Federal service includes not only vacation time, but also short hour-to-hour absences for personal matters. On the other hand, the much shorter annual leave (15 days) for Federal employees with less than 15 years of service probably does not stack up well against the annual leave provisions for similar private employees.

Professional employees in private enterprise probably, on the whole, have much more liberal sick leave provisions than Federal employees-especially in cases of serious long-term illness.

The retirement benefits for Federal employees are on a very liberal basis, both as to amounts and as to early retirement ages. The cost of the civil service retirement system is probably well in excess of the combined costs of private pension plans and the social security system, although in some cases the former are financed entirely at the expense of the employer.

Undoubtedly, the vast majority of the group life insurance plans of private employers are more liberal than that available to Federal employees since the benefit is frequently two or three times the annual salary but often subject to a maximum of about $25,000 (rather than 1 year's salary). In some instances, group insurance plans in private industry are financed entirely by the employer, but in most cases, it is likely that the employee contribution rate per $1,000 of insurance is about the same as for Federal employees.

As to health benefit plans, the Federal Government finances only about onehalf of the cost of a relatively minimum basic plan, whereas in private industry, such programs are usually far more comprehensive and the employer pays a higher proportion of the cost. In the latter respect, it may be noted that Federal employees can obtain more comprehensive benefits, but then they pay the entire cost themselves.

Benefits for work-connected injury and disease are available to Federal employees under the employees compensation system, which is far more liberal than any of the State programs under which employees in private industry are protected. However, it is likely that professional employees in private industry would have certain supplementary protection available from their employereither under the pension plan (or on an informal basis) that, along with any social security benefits, would provide more adequate treatment than the State workmen's compensation benefits alone.

Some private employers have other types of employee benefit plans (such as savings plans under which the employer matches the employee's savings, stock options, etc.) that do not exist for Federal employees.

CONTRASTING RESPONSIBILITIES

In espousing the principle of comparability for Federal salaries, every well informed individual recognizes the difficulties of comparing the duties and responsibilities of the higher Federal officials with any positions in private enterprise. The fact is that there just is no basis for comparison because the responsibilities of the Federal official transcend any that may be found elsewhere.

Federal officials today are responsible for the largest payrolls, organizations, and economic entities in the world. They deal daily with programs, activities, and problems of a degree of importance and complexity unprecedented in the history of the world. In the course of their daily work they must communicate and negotiate with leaders in business, education, and other professional activities whose salaries are in many instances at least several times those of the Federal officials.

Members of Congress are in a similar situation. The range and complexity of the responsibilities of a Congressman have grown tremendously in the past 20 years. Today he must deal with problems of the national and international economy, with issues of world peace, national defense, atomic energy, space satellites, and medical research. While serving as a legislator for the Nation, he must represent the interests of this district and his constituents, and he must interpret to his constituency the actions and policies of the Federal Government. He frequently must maintain two offices, two residences, and must travel between Washington and his home district on many occasions at his own expense.

OTHER INEQUITIES

One unfortunate provision of the Federal Salary Reform Act of 1962 (Public Law $7-793) relating to effective dates of promotions and within-grade increases resulted in serious inequities for a number of Federal professional employees whose promotions were effective just prior to the effective date of that act.

Congressmen Olsen and Cunningham have introduced companion bills (H.R. 2039, and H.R. 2125, respectively) to correct these inequities. We strongly urge Incorporation of the provisions of these bills in the Federal Employees Salary Act of 1963. We also urge that similar safeguards be incorporated in this bill with respect to personnel actions being taken in this calendar year.

HISTORICAL COMPARISON

Vederal salary rates for the classified grades in 1930 provided a fair measure of ne various levels of responsibility carried by the incumbents of those grades. ver the past 30 years, as a result of consistently higher rates of salary increases

Cower grades, the relationships then existing among these grade levels have eeu seriously distorted. The attached table reflecting the rates prevailing 160 al 1904 for the four lowest grades and the grades 9 through 15 illustrates TS SOCIO For example, to cite two extremes, grade 2 was increased by 176 vatie grade 15 was increased by only 96 percent-a differential of 80

o maintain parity with the increases granted at the grade 3 level, grade we receiving $19,200 instead of the $15,665 provided by schedule Salary Act. Even the Udall bill (H.R. 8716) falls short of the wing an increase over the 1930 rates of only 115 percent. The 4.2. $986) does even less to correct this inequity.

We will now hear from Mr. Paul H. Robbins, executive director of the National Society of Professional Engineers.

I

Mr. LUNCH. Mr. Robbins was unexpectedly called out of town because of illness in his family. If I may, with your permission, would like to read his statement and summarize briefly.

The CHAIRMAN. Very well, you may proceed.

STATEMENT OF PAUL H. ROBBINS, EXECUTIVE DIRECTOR, NATIONAL SOCIETY OF PROFESSIONAL ENGINEERS, PRESENTED BY MILTON F. LUNCH, LEGISLATIVE COUNSEL

Mr. LUNCH. My name is Milton F. Lunch, and I am the legislative counsel of the National Society of Professional Engineers.

I have with me Mr. Gayle Wright, a member of our legislative staff of the National Society of Professional Engineers.

I will now proceed with the statement of the society.

The society is composed of over 62,000 members, each of whom is qualified to engage in the practice of professional engineering under applicable State engineering registration laws.

The national society appreciates the opportunity to appear before this committee in connection with its consideration of Federal employee pay legislation.

The society firmly believes that the Federal Government is entitled to and should have the best engineering and scientific talent available. To achieve this goal, the Government must be in a position to compete effectively in terms of salary scales, and must be able to adjust these scales quickly in order to meet the changing conditions in the private

economy.

Because of this need for flexibility, the national society has strongly endorsed legislative proposals for establishing a separate classification and compensation system for professional engineers and physical scientists employed in the Federal service. Such a separate schedule, permitting the Congress to address its specific attention to the needs of this important segment of the Federal service, would represent a long stride forward in making Government service more appealing to engineers and scientists.

The Federal Salary Reform Act of 1962, while it did not specifically provide a separate schedule for engineers and scientists, did encompass in principle many of the features of such a separate schedule. The two most important of these features were (1) establishment of the principle that Federal salary scales should be maintained on a level comparable to rates in private enterprise, and (2) broadening of the Civil Service Commission's authority to adjust Federal rates for individual categories of employees in short supply. As a result of this latter provision, the Civil Service Commission has, in effect, created a separate schedule for engineers in grades GS-5 through GS-11.

The society believes that the principle of comparability was the most important provision of the 1962 act. Not only is it important in terms of providing equity to Federal employees, but its implementation is essential if the Federal Government is to attract and retain adequate numbers of highly trained engineers and scientists.