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This is a free country with a free labor market that is highly competitive. We have taken a step in establishing the principle of comparability to take our place in the labor market to compete for those that have ability.

If the two branches of Government are to move forward with the programs that have been established it is essential that we have salaries that make it possible for us to compete for and secure the quality of talent that is necessary to meet the needs of the Federal Government.

Last year, Mr. Chairman, under your leadership the Government took a long step toward establishing a sound salary system. We appropriately identified that step as a step of reform.

This year we are faced with the second step of reform in bringing about the completion of the unfinished business that remains from last year's action.

I urge favorable consideration of these proposals and offer the services of the Commission and other representatives of the executive branch in working with you in making this second step.

The CHAIRMAN. We certainly thank you. The only thing I think that you didn't touch on was salaries in South Carolina in the report. The reason I say that is because I think if you go there and investigate you will find the salaries are about equal to anywhere else in the United Štates.

Mr. Macy. Mr. Chairman, I felt if I used data from South Carolina I would be accused of being too obvious in presenting my case, so I crossed the border into Georgia.

The CHAIRMAN. I noticed you did that but I would like to show what people in my State are getting to justify that Government workers should have their salaries raised.

Mr. Macy. We can provide you with some of the data we have with respect to South Carolina if you should desire.

The CHAIRMAN. It will not be necessary. Mr. Boggs.

Senator Boggs. Thank you, Mr. Chairman. I want to express my appreciation to Mr. Macy for his always very clear and helpful presentation. I don't have the experience on this committee that our distinguished chairman and others have, so I have a lot to learn as I go along.

Mr. Macy, I am curious as to the costs. Do those costs reflect socalled other benefits like insurance or pensions and so forth?

Mr. Macy. The costs that are presented in chart X do include the increased cost for retirement, insurance, and health benefits deductions, which, as you properly point out, are a related cost in any salary adjustment that we make.

Senator Boggs. I had one other question-and I don't know what bearing it would have on it—but assuming an across-the-board individual income tax reduction bill is enacted, would that in any way change the gaps here or should it be considered?

Mr. Macy. It is our judgment, Senator Boggs, that this would not be reflected in any salary levels that would be relevant to our consideration of these rates.

Now, conceivably, the reduction in taxes, through its provision of larger consumable income, may have some effect upon salary levels in the country generally, but that is not anticipated.

have to pay

What we are endeavoring to do here is to match Federal salaries to the prevailing pattern of salaries for like work across the country, so that whatever we would recommend to the President on that or he might recommend to the Congress would be reflective of whatever changes took place in the marketplace subsequent to a tax reduction.

Senator Boggs. Thank you.

The CHAIRMAN. You are speaking of the income tax now. Of
course,
when
you
do that

you
increase the taxes that

you
on the increased salaries, so that would help to equalize it a little bit.

Any other questions?
Senator Boggs. No, thank you.

The CHAIRMAN. Mr. Macy, we thank you for coming. We have enjoyed listening to you and you have been very helpful to everybody present. We will have another meeting soon. We will have to have it at the call of the Chair. I promise you it will be as soon as possible.

Mr. Macy. Thank you, Mr. Chairman. I will stand by.

(Whereupon, at 11:40 a.m., the committee recessed, subject to the call of the Chair.)

1

FEDERAL PAY LEGISLATION

MONDAY, MAY 4, 1964

U.S. SENATE,
COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.C. The committee met at 9 a.m., pursuant to call, in room 6206, New Senate Office Building, Senator Olin D. Johnston (chairman of the committee) presiding.

Present: Senators Johnston, Monroney, Randolph, Fong, and Boggs.

Also present: William P. Gulledge, staff director and counsel; Richard Fuller, professional staff member; David Minton, staff member; and Frank A. Paschal, minority clerk.

The CHAIRMAN. The committee will come to order.

This hearing is convened so that the committee may hear testimony on Federal pay-adjustment legislation. We all know that the House committee has recently ordered reported a pay bill. This being so, I thought it would be well to schedule these hearings so that the committee may proceed as expeditiously as possible.

The House bill is H.R. 11049. Since its witnesses will be referring to that bill, I will place it in the record at this point even though that bill has not passed the other body as yet.

(H.R. 11049 is as follows:)

[H.R. 11049, 88th Cong., 2d sess.) A BILL To adjust the rates of basic compensation of certain officers and employees in the

Federal Government, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the “Government Employees Salary Reform Act of 1964".

TITLE I-FEDERAL EMPLOYEES SALARY SYSTEMS

SHORT TITLE Sec. 101. This title may be cited as the "Federal Employees Salary Act of 1964".

CLASSIFICATION ACT EMPLOYEES SEC. 102. (a) Section 603(b) of the Classification Act of 1949, as amended (76 Stat. 843; 5 U.S.C. 1113(b)), is amended to read as follows:

. 57

"(b) The compensation schedule for the General Schedule shall be as follows:

[blocks in formation]

GS-1. GS-2. GS-3. GS-4. GS-5. GS-6. GS-7. GS-8. GS-9. GS-10.. GS-11. GS-12. GS-13. GS-14.. GS-15 GS-16.. GS-17. GS-18.

$3, 385 $3,500 $3,615 $3,730 $3,845 $3, 960 $4,075 $4, 190 $4,305
3, 680 3,805 3,930 4,055
4,005

4, 180
4, 140

4, 305 4, 275

4, 430 4, 555
4, 410

4,680
4, 545
4,480

4, 680
4, 630 4, 780

4,815 4,950 4, 930

5,085 5,000

5,080 5, 165

5,230 5,330

5, 380

5, 530 5, 495 5, 660

5, 680 5,505

5, 825 5, 690

5,990 5, 875

6,155 6,320 6,060 6, 245

6, 430 6.050

6,615 6, 250

6.800 6,450 6,650

6,985
6,850

7,050
6, 630
6,850
7,070

7, 250 7,450
7, 290
7, 510

7,650
7, 210

7,730

7.950 7,455 7, 700 7, 945

8,170 8,190

8,390 7.840

8, 435 8. 110

8, 680 8. 380

8, 925

9, 170 8,650

8, 920 8. 550

9, 190 8.845

9, 460 9, 140

9, 730 9, 435

10,000

9, 730
10, 200 10, 555

10, 025
10, 320

10, 615
10, 910 11, 265

10,910
11, 620 11, 975
12, 075

12,330
12, 495

12.685 13.040
12, 915 13, 335
14, 170

13, 755
14, 660

14, 175 14,595 15, 150

15, 015
15, 640

15, 435
16, 130
16, 460

16, 620
17.030

17,110 17,600
17,600 18, 170

18,090
18, 740
18, 935

19, 310
19, 590

19, 880 20, 245

20, 450 20, 900

21,020 21, 445

21, 555 22, 195

22, 210 | 22,865 23, 52024, 175 22, 945

23, 695 24, 445 24,500

$4, 420 4,805 5, 220 5,830 6,485 7, 170 7,850 8, 610 9, 415 10,270 11, 205 13, 395 15,855 18, 580 21, 590

(b) Except as provided in subsection (d) of section 504 of the Federal Salary Reform Act of 1962, the rates of basic compensation of officers and employees to whom the compensation schedule set forth in subsection (a) of this section applies shall be initially adjusted as of the effective date of this section, as follows:

(1) If the officer or employe is receiving basic compensation immediately prior to the effective date of this section at one of the rates of a grade in the General Schedule of the Classification Act of 1949, as amended, he shall receive a rate of basic compensation at the corresponding rate in effect on and after such date.

(2) If the officer or employee is receiving basic compensation immediately prior to the effective date of this section at a rate between two rates of a grade in the General Schedule of the Classification Act of 1949, as amended, he shall receive a rate of basic compensation at the higher of the two corresponding rates in effect on and after such date.

(3) If the officer or employee is receiving basic compensation immediately prior to the effective date of this section at a rate in excess of the maximum rate for his grade, he shall receive (A) the maximum rate for his grade in the new schedule, or (B) his existing rate of basic compensation if such existing rate is higher.

(4) If the officer or employee, immediately prior to the effective date of this section, is receiving, pursuant to paragraph (4) of section 2(b) of the Federal Employees Salary Increase Act of 1955, an existing aggregate rate of compensation determined under section 208(b) of the Act of September 1, 1954 (68 Stat. 1111; Public Law 763, Eighty-third Congress), plus the amount of the increase provided by section 2 of the Federal Employees Salary Increase Act of 1955, by section 2 of the Federal Employees Salary Increase Act of 1958, by section 112 of the Federal Employees Salary Increase Act of 1960, and by section 602 of the Federal Salary Reform Act of 1962, he shall receive an aggregate rate of compensation equal to the sum of (A) his existing aggregate rate of compensation determined under such section 208(b) of the Act of September 1, 1954, (B) the amount of the increase provided by section 2 of the Federal Employees Salary Increase Act of 1955, (C) the amount of the increase provided by section 2 of the Federal Employees Salary Increase Act of 1958, (D) the amount of the increase provided by section 112 of the Federal Employees Salary Increase Act of 1960, (E) the amount of the increases in schedule I and schedule II provided by section 602 of the Federal Salary Reform Act of 1962, and (F) the amount of the increase made by this section in the maximum rate of his grade, until (i) he leaves his position, or (ii) he is entitled to receive aggregate compensation at a higher rate by reason of the operation of this Act or any other provision of law; but, when such position becomes vacant, the aggregate rate of compensation of any subsequent appointee thereto shall be fixed in accordance with applicable provisions of law. Subject to clauses (i) and (ii) of

the immediately preceding sentence of this paragraph, the amount of the increase provided by this section shall be held and considered for the purpose of section 208(b) of such Act of September 1, 1954, to constitute a part of the existing rate of compensation of such employee.

(5) If the officer or employee is in a position in grade 16 or 17 of the General Schedule of the Classification Act of 1949, as amended, to which he was promoted on or after the first day of his first pay period beginning on or after January 1, 1964, and if he holds such position, or another position in the same grade, on the effective date of this section, his rate of basic compensation shall be adjusted, as of such effective date, to that rate of basic compensation to which he would have been entitled if the compensation schedule in subsection (a) of this section had been in effect on the date of his

promotion. SEC. 103. (a) Section 801 of the Classification Act of 1949 (5 U.S.C. 1131), relating to new appointments, is amended to read as follows:

“SEC. 801. All new appointments shall be made at the minimum rate of the appropriate grade, except that in accordance with regulations prescribed by the Commission which provide for such considerations as the candidate's existing salary, unusually high or unique qualifications, or a special need of the Government for his services, the head of any department may appoint individuals to positions in grade 13 and above of the General Schedule at such rate or rates above the minimum rate of the appropriate grade as the Commission may authorize for this purpose.”.

(b) Section 1105 of the Classification Act of 1949, as amended (5 U.S.C. 1071, note and 1082, note), is amended to read as follows:

"SEC. 1105. The provisions of section 507, title VII, and title VIII of this Act shall not apply to professional engineering positions primarily concerned with research and development and professional positions in the physical and natural sciences and medicine placed in grades 16, 17, and 18 of the General Schedule in accordance with subsection (b) or subsection (j) of section 505 of this Act. The President or an agency or agencies that he designates shall issue regulations governing the rate of basic compensation within the grade to be received by any officer or employee occupying, appointed to, or promoted to, such a position, and, in the case of reduction in grade, may issue regulations governing retention of the rate to which the officer or employee was entitled immediately before reduction."

(c) Section 505(b) of the Classification Act of 1949, as amended (5 U.S.C. 1105(b)), relating to the limitation on numbers of positions in grades 16, 17, and 18 of the General Schedule of such Act, is amended by striking out "which may be placed in such grades” and by inserting in lieu thereof ", examiner positions under section 11 of the Administrative Procedure Act (60 Stat. 244; 5 U.S.C. 1010), and positions placed under this Act pursuant to section 309 of the Federal Executive Salary Act of 1964, which may be placed in such grades”.

(d) Section 604(d) (3) of the Federal Employees Pay Act of 1945, as amended (5 U.S.C. 944(c)(3)), is amended to read as follows:

“(3) In the computation of rates, all remaining fractions of a cent shall be eliminated."

POSTAL FIELD SERVICE EMPLOYEES

SEC. 104. Section 1 of title 39, United States Code, is amended by striking out the period at the end of such section and inserting in lieu thereof a semicolon and the following: “'revenue unit means that amount of revenue of a post office from mail and special service transactions which is equal to the average sum of postal rates and fees received by the Department during the fiscal year for 1,000 pieces of originating mail and special service transactions determined in accordance with section 2331 of this title.".

Sec. 105. Section 702 of title 39, United States Code, is amended to read as follows: "g702. Classes of post offices

"(a) Effective at the beginning of each fiscal year the Postmaster General shall divide post offices into four classes on the basis of the revenue units of each office for the second preceding fiscal year. He shall place in the first class those post offices having 950 or more revenue units. He shall place in the second class those post offices having 190 or more revenue units, but less than 950 revenue units. He shall place in the third class those post offices having

32-884-64-5

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