The need for a prompt and substantial wage increase for the postal and classified worker in Government service is imperative and we hope this committee will act with reasonable promptness in considering the testimony and adopting a favorable report. In order to properly evaluate the situation of the Government worker, one must go back to a basic period when salaries of Government employees were on a reasonably comparable basis with those engaged in private industry. Since 1945 there has been a widening gap between the earnings of the Government worker and the worker in private industry. The worker in private industry has had his greatest advancements in wages since 1949 a trend which has been continuing up to the present time. Statistics show that the average employee in private industry has received an annual increase since 1949 while the Government employees on the other hand, received only five increases and each one was insufficient to catch up with the private employee. During this period the Congress has passed four additional bills to provide for increases but these were vetoed after passage, which aggravated the situation of low pay.

We are in full agreement with the contention of Mr. Elmer B. Staats, Deputy Director of the Bureau of the Budget, that the consumer price index factor has no independent validity as a basis for adjusting salaries. This consumer price index often erroneously called cost-of-living index was carefully explained in 1960 by Ewan Clague, Commissioner, Bureau of Labor Statistics, when he pointed out that the name of the consumer price index was changed from costof-living in 1945 because of the general misunderstanding of its nature. He stated that the statistics measure the effect of price changes and price changes only on the cost of living of the average wage and clerical worker's salary. It did not measure the total change in their cost of living. At the present time there is a trend among unions representing employees in private industry to negotiate a wage scale which provides a proper base wage, at the time of negotiation, and provide for increases annually for the next 2 or 3 years, whichever is the life of the contract. In addition to these projected increases there is often a clause which would provide supplemental increases based upon the change in the BLS Consumer Price Index.

In an article appearing in the February 19, 1962, issue of the U.S. News & World Report the news article was headlined "$100-$150 Wage; It's Common Now." The article went on to show that the average weekly pay of production workers in the hard goods industry is $103.98. It further stated that the weekly rates for production workers in making automobile bodies headed the list with $150 a week, as an average employee payments, with over a dozen or more categories receiving various amounts less than that down to the trucking wages averaging $110 per week. We feel strongly that Congress should pass a bill that would bring the salaries of Government employees to the point where they would be able to enjoy the standard of living that is permitted people in comparable positions in private industry and which could serve as a proper base to project remedial steps to follow the pattern of wages in private employment. We therefore urge the approval of the bill by Congressman Morrison-H.R. 9531 for postal workers, and H.R. 9935 providing increases for the classified workers of the Federal Government. We wish to further express our warm

appreciation to all of the Members of Congress who have submitted bills for an increase in pay for postal and classified workers.

I wish to thank the chairman and members of this considerate and sympathetic committee for granting this opportunity to appear before it in the interest of the Federal employees.

(The following was supplied :)

APPENDIX A

The following excerpt is from a report by Clarence B. Randall, chairman of the board of Inland Steel Co. He served as special assistant to President Eisenhower, and also performed many public services for President Truman and President Kennedy, including a recent panel to review Federal salary policy. In 1952 he was named "Man of the Year" by the National Association of Manufacturers. In 1960 he was cited by the Chamber of Commerce of the United States with its National Recognition Award.

The excerpt was taken from a report given by Mr. Randall to the National Civil Service League, an organization of Government, civil, and business leaders in the United States, entitled "A Businessman Looks at Government Pay."

"THE COST OF ADEQUATE FEDERAL SALARIES

"There are two ways of computing the cost of making Federal salaries comparable with those in private enterprise. The first is a simple arithmetic procedure always popular with Congress-in which the average increase is multiplied by the number of employees who will receive it. To achieve reasonable comparability, the cost under this method will be around $1 billion, between 1 and 1% percent of the Government's annual appropriations.

"Such an approach is totally inaccurate by definition. If one argues that higher salaries automatically result in higher costs, one must logically conclude that all private enterprise costs are excessive because of its high salary levels. I am sure this would be soundly denied, as it should be. Private enterprise pays at the salary levels we now have in order to obtain the highest possible level of competence. Salary averages in private industry today are the absolute proof that this is the level at which American business leaders believe that they can best fulfill their basic goals of profit and product. Few among us who pay salaries in the vicinity of private enterprise averages would be so foolish as to advocate adopting Federal salary levels as an economy measure.

"Salary levels closely related to industry levels must be available to Government if it is to maintain the high competence it needs to meet its responsibilties. I am firmly convinced that higher Federal salaries would attract a level of competence that would so improve Government operations that there would be no out-of-pocket cost at all. Improving the quality of Federal managers will very rapidly result in savings significantly greater than the relatively small cost of initiating a program of equal pay for equal work between Government and industry.

"Only an aroused public opinion can bring these changes to pass, and the leadership in that movement must come from the business community. All that is required is wider understanding of the problem. Once the business community catches the vision of the danger presently locked into our Federal service by our unwillingness to compensate adequately those devoted and dedicated people in whose hands the welfare of our country rests, they will demand in no uncertain terms that the set reforms be put into effect."

Mr. LANGAN. I want to say in all my 40 years of experience as a Federal employee-a post office employee-I have not found a similar condition where there are so many proponents from the various economic sectors of the United States supporting an increase in salary for Government workers as we have at the present time.

No. 1, the administration itself has pointed out the need in the President's message of some adjustment in salaries. We have had the employee leaders, the representatives of employee associations, of course, but we also have had civic leaders and leaders in business as

well as the Civil Service League, which is in nowise motivated by the mployee organizations. So far as I know the league gets very little, f any, support from employee organizations, but they are composed of business and civic leaders of the Nation.

I feel that it would be repetitive for me to put in the record here tatements of a statistical nature showing comparative wages paid by he Government and outside the Government, because the committee has had sufficient information on that.

But I have included in my statement an excerpt from a booklet which is entitled, "A Businessman Looks at Government Pay," by Clarence B. Randall. I would like to point out something about Mr. Randall. Reading from my own statement, Mr. Randall served as special assistant to President Eisenhower; also performed many public services for President Truman and President Kennedy, including a recent panel to review Federal salary policy. In 1952 he was named man of the year by the National Association of Manufacturers. In 1960 he was cited by the Chamber of Commerce of the United States with its National Recognition Award.

My only reason for introducing this is the fact that if anybody should be impartial in this problem and not have a selfish interest, certainly Mr. Randall ought to fit that situation.

Incidentally, I have sufficient copies here for the committee if you would like to have them.

We have been listening, reading, and seeing on the television and reading in the magazines quite a bit of comment about the present economic situation of this country. It seems a great many people are in agreement that we are in a sluggish economy at the present time, so much so in fact, it has been suggested that a way to help the economy would be to reduce the taxes. I do no want to get into that argument. I am just pointing out we are all reading that.

The CHAIRMAN. That is not before our committee-the income taxes. Mr. LANGAN. I do want to point out there seems to be a great deal of concern for our economy and the need for some stimulant, something to assist. I do not know of any better way than to bring the salaries of Federal employees up to a proper level. Immediately it would mean money would be spent to pay bills, for much-needed articles, to purchase goods, to bring standards up where they ought to be, which in turn would permit business expansion.

There is so much of interest in this that the U.S. News & World Report for the past three issues has had articles in it on the same subject. They have had interviews with Paul McCracken, professor at the University of Michigan, on business conditions, and Paul Sandelson of MIT. Each of them have agreed there is a slump and some money is needed in order to promote business and to promote the circulation of money in our economy.

Day before yesterday I heard a television interview of Professor Friend, economics professor of the University of Pennsylvania, who agreed with the other professors.

I think that with all those factors in favor of increasing the salaries of Government employees, this committee should give consideration to the bills before it and come up with something that ought to be reasonably satisfactory to the employees and members of Government and the Congress.

The CHAIRMAN. What do you have to say about the present proposal?

Mr. LANGAN. I am in favor of H.R. 9531 and H.R. 9935.

The CHAIRMAN. What do you think of the President's proposal? Mr. LANGAN. I think the President's proposal is too little and too late. It does not provide an adequate increase, and prolongs it too long to be of much benefit. It provides a person in Government would have to wait 27 years to reach the top item in that proposal.

The CHAIRMAN. What do you think about our national debt and the increase all the time and the deficit?

Mr. LANGAN. That comes up every time that the Government employees ask for an increase in salary, or an adjustment in salary. I do not know the answer to that. That is someone else's problem, to provide the money. Certainly I do not think it is fair to be able to find money for every other purpose except to provide adequate salaries for Government employees.

Mr. JOHANSEN. I respect completely your right to advocate this pay increase, but I find one statement in the appendix A which, very frankly, staggers me.

In it you say:

I am firmly convinced that higher Federal salaries would attract a level of competence that would so improve Government operations that there would be no out-of-pocket costs at all.

Do you really believe that, sir?

Mr. LANGAN. That is the opinion of Mr. Randall.

Mr. JOHANSEN. This is a statement of Mr. Randall?

Mr. LANGAN. Yes. It is in this book. Having had no experience. in handling employment outside, I think Mr. Randall is much more competent to speak.

Mr. JOHANSEN. I did not realize, because this was not in quotes, that it was Mr. Randall's statement, but do you subscribe to this particular statement?

Mr. LANGAN. Yes; I would agree with Mr. Randall.

Mr. JOHANSEN. Do you actually believe under the Morrison bill the $1,850 million of annual increase in payroll costs is going to be absorbed so there is not out-of-pocket expense to the American taxpayers through increased competence and improved performance of Federal employees?

Mr. LANGAN. No, I do not think that is true in the manner in which you put it. It is quite difficult to determine exactly what the Government would save in questions of this kind.

For the most part, all the Government has to sell is services. There are no commodities involved and no price tags put on anything. Mr. JOHANSEN. You would repudiate Mr. Randall's statement? Mr. LANGAN. I certainly would not. He is more qualified to make a statement like that than I. I will accept his statement.

Mr. GROSS. I have read Mr. Randall's report. I note that he cites the State of Michigan as one of the States where they have done a good job of raising salaries. The last I heard they were in real serious financial difficulty in the State of Michigan. There was a time not so long ago when they could not pay some of their teachers' salaries in the State of Michigan. I do not know how much credence to put in Mr. Randall's statement, Mr. Langan.

Mr. LANGAN. I just want to submit this-the Government should not pay substandard wages, pay less than what should be paid for the service that is given because of budgetary considerations.

Mr. GROSS. Do you think it is a very good example to use a State that has gotten out of line with its spending in paying salaries, as Mr. Randall says the State of Michigan does, among others? It is in very serious financial trouble. They cannot start the printing presses in Michigan and pay off these debts they have incurred.

Mr. LANGAN. Does Mr. Gross imply it is because of the salaries this situation has been brought about?

Mr. GROSS. Mr. Randall says they are one of the outstanding States in the paying of salaries to employees, and uses that as one of the reasons why the pay of the Federal workers should be increased. Mr. LANGAN. I do not know anything about Michigan.

Mr. JOHANSEN. I am deeply grieved to have my colleague from Iowa cite the facts about Michigan. I still am just appalled at this statement. I think whether it is yours or Mr. Randall's, I think the statement that $1,850 million increase can be absorbed through improved Government operations so there is not out-of-pocket cost at all is utterly preposterous. I do not care who said it.

I wish I could get it clearly on the record as to whether you endorse and accept that premise in your testimony.

Mr. LANGAN. All I can say, Mr. Randall has distinguished himself in the business world. He was chairman of the board of Inland Steel. He has citations from the National Association of Manufacturers and the U.S. Chamber of Commerce.

Mr. JOHANSEN. None of those impress me at all. I do not care if he is president of the largest corporation in the United States. Any person who makes a statement that $1,850 million increase in payroll costs can be absorbed so there is no out-of-pocket costs simply is talking beyond all reason.

That is all I have.

The CHAIRMAN. Any other questions?

Mr. ADDABBO. I believe Mr. Randall does not state what the increases should be.

Mr. JOHANSEN. Would the gentleman suggest what that rate of increase would be that would bring it within the capacity of absorption so there would be no increased out-of-pocket cost?

Mr. ADDABBO. Not being an economist, I could not do it at this point. Mr. GROSS. Mr. Randall does support the pay reform bill of the administration?

Mr. ADDABBO. I do not know.

Mr. GROSS. I am sure you will find he does.

Mr. ADDABBO. The pay reform bill of the administration?

Mr. GROSS. Yes.

Mr. ADDABBO. Which is less than $1 billion.

Mr. GROSS. But it is several million plus.

Mr. ADDABBO. Is it not a fact, due to the lower salary rates in the low grades, there has been a tremendous turnover and there is constantly a tremendous turnover in the lower grades in the postal service?

Mr. LANGAN. That is right. There has been quite a bit of turnMr. Biemiller testified that at Phoenix, Ariz., it was 17 percent.

over.