Private enterprise levels were extended to these schedules by linking salaries of Chief Medical Director with GS-20; As at present, salary ranges for intermediate Medicine and Surgery grades would generally follow the Classification Act pattern. Å number of adjustments in the grade structure would recognize organizational and functional changes since the original 1946 statute. Again, details will be furnished on this title by the Veterans' Administration. Title V-Reform of Foreign Service salaries This title contains three sets of schedules for Foreign Service officers and for Foreign Service staff, effective in January 1963, January 1964, and January 1965, respectively. Private enterprise levels were extended to Foreign Service schedules by linking Career Ambassador with GS-20; FSO-4 with GS-13; FSS-10 with GS-4. Intervals between salaries at successive levels would follow consistent patterns. The Foreign Service staff schedule would adopt the Classification Act 30-percent rate-range pattern, which would absorb existing longevity increases. Twenty percent ranges would fit Foreign Service officer career patterns because of the promotion system and other factors. As in other statutory systems, and for the same reasons, salary increases would be greatest at the higher levels. The State Department will provide further testimony on this title of the bill. Title VI-Repeal of specific statutory salaries Title VI would repeal provisions in the Federal Executive Pay Act or other statutes fixing specific salaries for a number of bureau heads and other positions. The positions concerned would thus be returned to the Classification Act or other appropriate system. Most positions returned to the Classification Act would go into new grades GS-19 and GS-20. This section would be based on the implicit policy— That positions of department secretaries, deputies, and assistants; of agency heads and deputies; and of chairmen and members of commissions and boards are appropriate for inclusion under an Executive Pay Act; and That other positions, including bureau heads, should be paid under career-type salary systems. This policy can also serve as a guide in determining the appropriate salary setting method when new positions are established as new agencies and new bureaus are created. At present there is no accepted guide, so that within the same department salaries for some bureau heads are set by individual statutory provisions and salaries for others by the Classification Act, with not always consistent results. Title VII-Miscellaneous provisions The most significant provisions of this title would increase and relate to the Classification Act the salary ranges for specified numbers of positions, mostly scientific or professional, now prescribed in Public Law 313 and like statutes. Present ranges are generally $12,500 to $19,000 a year. New provisions would establish a range from the minimum salary of grade GS-16 to the top salary of grade GS-18 for these positions. The ranges would become: January 1963__ January 1965_. $16, 400-$20, 315 17,970- 22, 740 19, 125- 24, 500 Thirty positions in the National Aeronautics and Space Administration which may now be paid up to $21,000 could be paid up to $24,500 beginning in January 1963. Thus, any future adjustments in GS-16 to GS-18 Classification Act salary levels would automatically extend to the groups of positions covered by title VII. SALARY PRACTICES OF PRIVATE FIRMS For comparison with certain features of the President's proposals, I should like to mention briefly some common practices found today in salary administration in private enterprise. In 1960, the Civil Service Commission studied the salary systems and executive salary rates in 21 very large corporations. From this study and other published material, a number of conclusions can be drawn about salary practices of private employers. Within-grade salary ranges of about 30 to 35 percent are very common. It is also a common practice-quite the reverse of current Federal practice to establish wider salary ranges at the higher responsibility levels, frequently a range of 50 percent. Within-grade increases are generally reported to be based on merit, although a minimum waiting period between increases is generally required. Increases amounting to 5 to 10 percent of an employee's salary are a common standard. By these standards, our proposals are modest: 30-percent pay ranges and 313-percent pay steps, exceeded only in the lower postal ranges for special reasons. Salary rates above the minimum of the grade in industry are also freely used to attract high-quality personnel and to compete in shortage occupations. As I mentioned in my earlier reference to this study, executive-level salaries in the 21 firms-below the level of corporate officers—were substantially higher than Federal levels, reinfrocing the thesis that the greatest lag between Federal and private enterprise pay is at the higher levels. The study staff obtained information about the duties and responsibilities of 124 positions in the 21 firms equivalent in level of work to Federal positions in grades GS-16, GS-17, and GS-18. Here is a summary of the pay findings: The appropriate grade for each position was determined by a consensus among a group of experts from the Civil Service Commission and other Federal agencies, and this equating of industry positions against Classification Act grades was reviewed and corroborated by a panel of three outstanding consultants who knew both Government and industry jobs, including the director of the executive compensation studies of the American Management Association, the head of a university department of management, and a top business executive with wide Government experience. SALARIES IN NONPROFIT ORGANIZATIONS It is not only salaries of private companies that have moved ahead of Federal levels. Many State and local jurisdictions and universities pay considerably more at the top end of their scales. New York State, for example, pays its career employees up to a maximum of $23,764. Georgia has recently extended its salary schedule to a top rate of $22,020. The Illinois schedule has a top of $20,010; California's top is $20,484. Top scheduled rates in cities include $23,079 in Philadelphia, $24,999 in St. Louis, and $27,444 in San Francisco. City manager salaries are set at $30,000 in Cincinnati and Norfolk, $21,808 in Dallas, and $24,000 in Kansas City, for example. According to a National Education Association survey of 897 institutions in 1961-62, there were 81 college presidents and 31 vice presidents paid in excess of $25,000. There were 628 professors paid more than $18,000, which approximates the top Federal career salary of $18,500 reserved for positions of very high administrative or professional responsibility. A QUALITY CIVIL SERVICE Let me emphasize once more that the significance of the President's proposal lies not in the immediate salary changes but in the basic policy and procedure for adjusting and administering Federal salary systems it would for the first time provide. It would provide a solid foundation for a continuing high-quality civil service that this country must have. Its benefits would accrue not just today, and not primarily today, but during the many years of challenge and struggle that are ahead of us. I conclude with the two sentences with which the President opened and closed his special message to the Congress on Federal pay reform: The success of this Government, and thus the success of our Nation, depend in the last analysis upon the quality of our career services. . . . If our civil servants are to fulfill with skill and devotion their obligations to the Nation, the Nation must fulfill its obligation to the career service. This concludes my formal statement. I appreciate the opportunity to take the time to present it in full. I am available for whatever questions you and your colleagues may wish to ask me. Mr. MORRISON. Thank you, Mr. Macy. Any questions, Mr. Davis?" Mr. DAVIS. I would like to say I have read and listened to your statement, Mr. Chairman, with a great deal of interest. I would like to ask you some questions particularly with reference to the method of annual determination and annual review of the statutory pay systems in the Federal Government. For instance, I have introduced a bill, H.R. 10908, which I hope you have had the opportunity to read. Mr. MACY. Yes, sir. Mr. DAVIS. And I would like to know your opinion of the provisions of that bill. Mr. MACY. Mr. Davis, I would be happy to comment. The provisions of H.R. 10908 rather closely parallel the proposals in the President's program. They call for the establishment of a policy for the Federal Government of establishing rates on the basis of equal pay for equal work, and recognition of distinctions between jobs, and also relating to rates of pay in the private sector. The bill calls for the establishment of a committee that would conduct an annual review of the information along these lines. The system that is proposed in the President's program is quite similar. The principal difference is that the proposal does not have a specific organizational device that would be used in making this review. The review is a three-step process as proposed in the President's plan. First, an annual survey by the Bureau of Labor Statistics of the 80 metropolitan areas that are representative of all metropolitan areas across the country. Then the analysis of that data, the development of averages, and the preparation of a pay line, and then from that pay line the construction of a pay schedule. Under the proposal this schedule would be analyzed within the executive branch. It would be reviewed in consultation with representatives of employee organizations, and then the President would arrive at a judgment as to what the proper adjustment should be for that year and submit his recommendations to the Congress. Mr. DAVIS. What machinery is contemplated under the plan in this bill about which you have been testifying, the President's proposal, for following through on this annual review? Mr. MACY. The specifics of that, Judge Davis, have not been finally defined, but our preliminary thinking has been this would be a combined function performed by representatives of the Bureau of the Budget, the Civil Service Commission, and the Department of Labor for the President. They would make a staff review that would be submitted annually, preferably at the time the President reviews his budget and develops his state of the Union message and his economic message, and the message with respect to pay would come forward at that time. Mr. DAVIS. When is it contemplated this machinery would be set up? Mr. MACY. This machinery would be set up under the proposal upon enactment of the bill, and would call for reviews starting this year so a presentation would be made to the Congress in 1963 under this review to provide information that would relate to the schedule set to go into effect on January 1, 1964, so, while the adjustments were being made under the present proposal, there would be consideration on a current basis of the information relating to comparable salaries on the outside. Mr. DAVIS. If you see any advantages in the proposal included in the President's bill as compared with the provisions in H.R. 10908, which does set up the machinery which will give in some specific detail what should be done, I would like to know what advantages you think would be included in the President's bill-if you think there are any. Mr. MACY. My feeling is that the proposals in your bill would provide an equally effective device for making this review. The President's bill does not go into this detail. It had been thought this would be left to the President's discretion in determining what machinery he would follow in handling this review. H.R. 10908 would prescribe a committee and indicate the composition of the committee that would be used for that purpose. Mr. DAVIS. Have you heard any objection to the provisions in H.R. 10908? Mr. MACY. There would be no objection. I would feel this would carry out the purpose with equal effectiveness. Mr. DAVIS. That is all. Mr. MORRISON. Mr. Corbett, do you have any questions? Mr. CORBETT. I have a couple of questions. No. 1, I would like to comment that I recognize the vast amount of work that has gone into the preparation of this bill and this statement, and it is certainly deserving of our most serious consideration. As a matter of fact, I was so impressed with the persuasiveness of the portions dealing with the need for these adjustments that I wondered why they are going to be delayed for 3 years. The patient is pretty sick. When he is sick, do you not apply the remedy immediately? We have this situation where our space program is going on. I listed the places where recruitment is difficult, where people are separating to go with private industry. If we have this trouble, and you have convinced me we do, why do we not correct it right away? Mr. MACY. The reason, Mr. Corbett, is that this represents such a substantial increase in total payroll for civilian personnel, and therefore an increase in the total expenditures of the Federal Government, that it was believed desirable to make this transition over a 3-year period so that the increases in cost would not fall in a single fiscal year. Mr. CORBETT. Understanding some of that, this same philosophy, though, did not apply to our appropriations for military equipment, or for space exploration. They went ahead and raised them. If we need people to run these programs, we cannot just appropriate the money for these things and suddenly the rockets will go to the moon. If we need these people, we need them now. Your answer is, of course, there are budget considerations. |