Mr. WEATHERBEE. That is right, Mr. Chairman.

I wonder, since this problem will be the same as the one Bureau of the Customs will present following me, if I could insert for the record a brief paragraph which explains how the effective date of these wage adjustments is set?

Mr. GARY. I wish you would.

(The matter referred to follows:)

EFFECTIVE DATE OF WAGE ADJUSTMENTS

The effective dates of wage adjustments under this plan are subject to that part of 72 Stat. 1696 (Public Law 85-872, 85th Congress, approved September 2, 1958) which provides: “(2) if the wage survey is conducted by a department or agency (either alone or with one or more other departments or agencies) and is utilized by any department or agency which did not conduct such wage survey, such increase shall become effective, for the employees of the department or agency utilizing such wage survey, not later than the first day of the first pay period which begins on or after the twentieth day, excluding Saturdays and Sundays, following the date on which the department or agency utilizing such survey receives the data collected in such wage survey and necessary for the granting of such increase." For the jobs subject to this wage plan, the twentyday period prescribed by this law will begin on the earliest date of receipt of the appropriate wage schedule issued by the General Services Administration, by either the Office of Personnel, or by the Bureau concerned, or by the field office concerned; provided, that this rule will apply to Army-Air Force wage schedules for any locality where the General Services Administration does not issue a wage schedule.

Mr. GARY. The other increases that you spoke of; are any of those increases due to the consideration of the tax bill?

Mr. WEATHERBEE. Yes, but I would not put the burden on the tax bill. We try to make adjustments for any of these special emphasis programs as they come along. The main category of expenditure we have had a problem with this year has been in the paperwork area. There has been so much detail required to explain this, that, or the other clause in either an item that was being considered or proposed, or in preparing replies to those who raise questions about pending items being considered by one or the other of the committees.

This has been reflected, of course, in our increase in communications and paperwork handling costs, but we are not making any request of the committee for any adjustment for these purposes.

VACANCIES IN POSITIONS

What we have done actually, sir, is to use the money that has become available by holding positions open for some time after they have been vacated.

For instance, we now have one of the top positions in the Department vacant. Naturally we want to fill it as fast as we can get a qualified employee, but the fact that we have not been able to do that has actually helped us meet some of these costs. That is the position of Director of our Office of Financial Analysis, which you may recall the Secretary was interested in having established to look to as his counterpart of the President's Council of Economic Advisers.

Another position that was vacated just this past week was the position of Deputy Assistant to the Secretary for Congressional Re

lations. This is one, naturally, we want to fill and we will fill rapidly, but for the time being the fact that it is vacant is helping us to meet some of these costs.

Our chief librarian has been vacant for several months. We held off as long as we could in not filling that position, but this last week we did fill it. By not having it filled we were able to use that money for several months.

This is the kind of thing we have had to do and there are about a dozen positions now vacant.

ANTICIPATION OF FURTHER WAGE BOARD INCREASES

Mr. GARY. How often are the wage board rates reviewed?
Mr. WEATHERBEE. Usually annually.

Mr. GARY. Do you anticipate any further such increases during the current fiscal year?

Mr. WEATHERBEE. Yes, sir. We have had several that have occurred already. They are not reflected in this request, but they are reflected, insofar as we were able to get them, in our 1965 appropriation request. The adidtional cost of those we have put into effect this fiscal year is $12,000 and that is in addition to what you see here. We are absorbing this cost this year, but are requesting the funds for 1965 which we will discuss when we come up next week.

In addition, actually, for instance, in the fiscal year we are now in there have been three separate wage board increases for different groups. It is actually the same annual review but different people are affected in each one of them. One was a reevaluation of supervisors in what we call our crafts and custodial group; that was in September; another was for our lithographic group in November; and the third was for the crafts and custodial regular personnel in December.

These constitute the round, actually, for this year. This $29,000 is for those approved during the past year.

Mr. GARY. Is the same procedure followed in these wage board increases on a Government-wide basis?

Mr. WEATHERBEE. Yes, it is, sir.

The Bureau of the Budget in cooperation with the Civil Service Commission is, however, making a Government-wide survey of the practice of setting these wage rates. I think all of us are concerned about whether or not we are doing it the right away, the best way, and getting the best timing in the arrangements. There are so many agencies involved that it takes a pretty broad scale study to really evaluate the procedures. The Bureau of the Budget and Civil Service are working together toward that end now. I have not seen any preliminary results of that study. I do not believe they are available yet.

BASES FOR WAGE BOARD INCREASES

Mr. PILLION. Are these wage board increases applicable mostly to what is called the blue-collar-type employees?

Mr. WEATHERBEE. Yes.

Mr. PILLION. And are these based upon living costs? Is that what figures the wage board examines?

Mr. WEATHERBEE. Not necessarily, Mr. Pillion. Indirectly I am sure the living costs have an influence there but the principle as far as the Government wage setting is concerned on the wage board employees is to meet the competition of private industry, and this competition could be created by increases in the rates that apply in private industry, whether or not it is tied to cost-of-living increases.

Mr. PILLION. I have always been intrigued about the way you set these things. You take, evidently, private industry in the highly unionized, high-cost industry and then compare Government with that, whereas actually there are two broad labor cost areas, one in which you have a high unionized wage and then you have a much lower wage for service industries and industries that are not unionized. Yet the Government does not take the average between the broad lower scale of maybe 40 million people working at, say, $1.50 to $2 an hour. You always compare it with the very highest union wages that go up to $3 or $4 an hour, and I think it is a questionable proposition to always select the highest paid, highly unionized groups with which to compare wages.

Mr. BETTS. The law, Mr. Pillion, was written saying that these wage rates for Government employees shall be set for the prevailing rates in the community for similar positions. So, as Mr. Weatherbee said, Treasury does not make wage surveys and set the rates. They have elected to use the surveys that have been made by other Government agencies, in this case the Army-Air Force schedule has been elected to be used for certain types of jobs. The rates for lithographictype jobs are set by an interdepartmental lithographic wage board that handles all lithographic jobs throughout Government. They develop rates for the Government employees in Washington that compare with the private printing trade in Washington. And so on for each metropolitan area. So, these are set on a locality basis rather than a Government-wide or nationwide basis.

Treasury also uses some wage board schedules for GSA-type jobs that have been developed by GSA. Thus there is a minimum of work as far as we are concerned in making the survey. We use the data and

Mr. PILLION. I am not criticizing your figures at all. I am just talking about the broad aspect of it.

Mr. GARY. As a matter of fact, Treasury does not determine these. They are determined by a board set up by the Government under acts passed by Congress; is that not correct?

Mr. BETTS. That is correct.

Mr. WEATHERBEE. In our case, these apply mostly to janitors and charwomen. Then we have a few other people. As you know, we maintain our building whereas GSA maintains most buildings and we have employees in the crafts group, such as engineers, the people who maintain the air-conditioning system, and carpenters, who right now are completely redoing the annex. We maintain both the annex and main Treasury Building. The Bureau of the Accounts is in the process of moving to the annex and they are practically re-creating

that building inside. We are doing this with our own facilities. Well, these are the people that are involved, and they are in direct competition with almost anything you will find in Washington outside Government because these people are in the building construction activity, and it is highly unionized here.

Mr. GARY. It applies to those employees who are working on an hourly rate, rather than those who are employed on a salary basis; is that not correct?

Mr. WEATHERBEE. That is right, sir.

Mr. GARY. And the purpose of the procedure is to keep the Government pay on a comparable basis with outside employment? Mr. WEATHERBEE. Yes, sir.

REVIEW OF WAGE BOARD INCREASES BY THE DEPARTMENT

Mr. GARY. And it is the duty of this board to determine what is a comparable pay and when they determine that then it becomes your duty to apply that rate to the employees who are affected?

Mr. WEATHERBEE. We do not actually accept these things without question. We do have what we call a Treasury wage board and this wage board looks at each one of these decisions that come out from the other wage setting authorities. On that board we have the Director, Office of Budget and Finance, the Director of Personnel, and the Fiscal Assistant Secretary. That wage board in Treasury reviews the decisions and then makes a recommendation to me. On behalf of the Secretary I approve or disapprove or try to change it. But it is pretty automatic, actually, because we are completely dependent upon the findings of the people who have the staff and the competence and experience, and the facilities to make these surveys.

Mr. GARY. You stated that some of the subsequent increases are reflected in the 1965 budget. I assume that the increases that you are requesting here are also reflected in your 1965 budget, are they not? Mr. WEATHERBEE. Yes, sir.

UNOBLIGATED BALANCES

Mr. GARY. Will you explain the reason for the unobligated funds anticipated in the Office of the Treasurer?

Mr. BETTS. I will be glad to answer that, Mr. Gary.

Mr. GARY. I think you referred to it, but we would like to have an explanation.

Mr. BETTS. Public Law 8-36, which was enacted in June of 1963, as you know, permitted the replacement of dollar silver certificates by Federal Reserve notes. There was included in the 1964 appropriation for the Office of the Treasurer several million dollars for the purchase of silver certificates. We expected to buy them for all of the fiscal year, 1964. Beginning November 1963, the Federal Reserve notes began to be issued so that the Office of the Treasurer did not have to buy the silver certificates. There has been a saving developed of $4,614,000 in the 1964 funds. We came to you earlier in the year and asked that you approve the reprograming of $1,100,000 to buy some

ADP equipment in the Office of the Treasurer. Therefore there is $3.5 million remaining unobligated that is reflected in the President's budget.

In the House Document 174 there was about $1,175,000 requested to be transferred from the Office of the Treasurer to the mint which you will hear next month when the mint is before you.

There is an additional $844,000 proposed to be transferred in House Document 203.

These savings result from the silver legislation.

Mr. GARY. Do you propose to use all of those unobligated funds during fiscal 1964 by transfer to other Treasury activities?

Mr. BETTS. No, sir, Mr. Gary. We are proposing, in the two House documents that have been submitted, a little over $2 million of the $3.5 million to be transferred; so there still does remain $1.5 million that could be used later in the year if there are other emergencies or supplementals necessary.

Mr. GARY. Mr. Pillion?

Mr. PILLION. Both of these first two items, the $29,000, $115,000 then will come out of that Office of the Treasurer?

Mr. WEATHERBEE. That is right.

Mr. PILLION. And then the balance will be new money, the Coast Guard, the $10 million?

Mr. WEATHERBEE. Not all of the Coast Guard-$700,000 of the Coast Guard is for Reserve training and it is proposed to come out of here also. But the two large items in the Coast Guard are proposed for direct appropriation.

Mr. PILLION. I would just say, Mr. Chairman, I think the requests here are modest and necessary. And I think they indicate rather good housekeeping.

Mr. GARY. Yes, sir. I think they have done very well.

Mr. BETTS. We are happy to come to you in the 1965 budget showing a reduction of almost $10 million in the Office of the Treasurer as a result of the silver legislation.

Mr. PILLION. Hallelujah. If I may ask, How does the Federal Reserve pay for their Federal Reserve notes now? That will be an additional expense to them. How will they get their money?

Mr. BETTS. Their payment into the general funds of the Treasury of their profits will be reduced.

Mr. PILLION. I see. They will just take it out of their revolving fund and then whatever profit is they will pay less into the U.S. Treasury?

Mr. BETTS. That is correct. So the end result is probably no difference to the U.S. taxpayer.

Mr. WEATHERBEE. A savings to the Treasury Department but not to the U.S. Government, or the Treasury of the United States.

Mr. PILLION. They have a pretty big surplus, I understand, so they can well afford it.

Mr. GARY. Do you want to take up the Bureau of Customs next? Mr. WEATHERBEE. Yes, sir, Mr. Chairman. Mr. Gatchell is here from the Bureau of Customs.