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served on many Government pay commissions, including the Hoover Commission.

The first thing that we did when we came down was to take a hard look at the problem presented by Mr. Wilson to be sure the Defense Department did have a problem. We were very quickly convinced that there was a problem-largely due to the fact that the Defense Department, both for its military and its civilian employees, has to compete with private business.

We asked the various military departments to prepare a list of their shortages of key personnel and they came out with some alarming figures which we checked and believe to be very conservative. For example, 1 out of every 5 positions in the electronics or aeronautical engineering field is vacant for want of qualified candidates. In the matter of turnover, the situation has been growing progressively worse for the past 4 years. The turnover now in top-level technical people is four times the ratio of 1951. On top of that, the quality of the civilian work force appears to be declining. This is a difficult thing to measure. I cannot give you any precise quantitative statistics on quality but it was the practically unanimous opinion of the heads of the various technical bureaus, research agencies, laboratories, and similar installations in the Defense Department that they were losing their best men. That, of course, would be expected when industry is in a position to pay unlimited salaries while the Government is not.

On top of this serious situation which we found in the existing work force, we found that the input was inadequate both in quantity and in quality. As to quantity, many new jobs were not being filled. We found that last year, when the Defense Department went out to hire college graduates and technicians of various kinds, 1 out of 8 to whom they offered jobs accepted. That 1 out of 8 is in the professional nontechnical fields such as accountants, lawyers, business managers, administrators, and so on. In the technical field, only 1 out of 10 who were offered jobs accepted.

When it came to quality, we took a look at what had happened some years back at the people who came in back in the 1930's and who now constitute the very fine quality of top-level technical personnel which we have in the Defense Department. In those days, we found that about half of the new input to these jobs came from the top onefifth of their college classes. This is quite impressive: half of the people coming into Government, the new men, came out of the top fifth of their college classes. Today, the situation is completely reversed. We find the Government has to take a large proportion of men who do not have college training and then train them in order to get the people it needs.

I would like to make it plain, Mr. Chairman, from the start that the type of civilian employee to whom I am referring and with which the Cordiner report was concerned, is not the blue-collar worker in the Department of Defense, of which we have over 600,000. It is not the clerk or the lower salaried employee. I am talking about the technicians, professional men, college graduates, engineers, scientists, and the higher grades in the civil service.

Our next step, having found this definitely was a problem, was to go into the causes. In this connection, I think you should know that the committee did a great deal of work as far as personal investigation was concerned. All of us traveled all over the country. Some of us even went abroad. We got many reports from the field. We personally investigated and talked with hundreds of civilian employees.

We had a salary survey conducted in cooperation with the Civil Service Commission to determine more accurately what the difference in pay between industry and Government was in these top-level jobs about which we are talking. We had heard a lot about fringe benefits and we were not satisfied that the data that was available was adequate and so we hired an independent group of consultants that are nationally known for their work in this field to make a study of fringe benefits, so-called, both inside and outside of Government to see how they compared.

Finally, we had industry consultants such as Mr. Meader to advise us on industry practices and to give more breadth to our investigations.

As a result, we found that the causes of this excessive turnover, these shortages and this decline in quality, basically was due to the system of compensation under which our civil servants are paid. As you know, sir, this is fixed by statute and it lacks the flexibility and response to competitive pressures which characterize the systems in industry. .

In private industry, a specialist gets the going rate. If his skills are in particular demand, he can get a higher rate of pay for that skill. If he has himself a unique ability, if he is better than other people in the same line of work, that superiority is reflected in his pay. If his conditions of work are unfavorable, he is induced to tolerate them by added compensation. None of this flexibility is permitted in the Department of Defense.

Furthermore, when we came to our salary survey, we found that on an absolute basis, the Federal white-collar worker is at a serious disadvantage.

I would like now, Mr. Chairman, to refer to a chart. I have a blown-up copy of it here and perhaps you could follow it as well by looking at page 32 of the report which you have in front of you.

Senator NEUBERGER. I think we will take note, Mr. Pratt, in the record of the hearings that the chart to which you are now referring also appears at page 32 of volume II of the report and recommendation to the Secretary of Defense and I think it should likewise appear in the report of this subcommittee, so that the record may be complete. I just wanted that included in the record so we know to what you are referring.

(The chart referred to follows:)

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Senator NEUBERGER. Please go ahead, sir. Mr. PRATT. This chart represents the results of a very extensive salary survey conducted by competent wage and hour and salary administrators within the Government, both in the Department of Defense and the Civil Service Commission, in cooperation with a number of industrial firms all over the country.

There were 136 industrial firms surveyed to form the basis of what the industrial salaries were. These represented a number of different industries located in all parts of the country. The survey included positions such as civil engineer, electrical engineer, chemist, physicist, mechanical engineer, electronic engineer, aeronautical engineer, and positions at each work level for accounting, auditing, industrial relations, and personnel officer positions.

The dotted line on the chart indicates the average paid by private business for engineers at different levels of responsibility. The solid line represents the average for all physical scientists and then as a check, we took what I would call professional as distinct from scientific fields and ran figures on accountants and personnel officers. These are shown as dashed lines. It is interesting to see that all of these lines overlap one another.

Across the bottom of the chart are the equivalent grade levels under the Classification Act and the very broad band indicates the ranges of salary which may be paid to Government employees at these different grade levels under the Classification Act.

As you can see clearly from the chart, the average paid by private business to all of these classes of people and at all levels of responsibility, is higher at each instance than the maximum which can be paid under the Classification Act.

The details of this survey are available in a detailed compensation study which was made by the Cordiner Committee and I would like, Mr. Chairman, to offer a copy of that study to your staff. From it they can get the very detailed statistical data which is distilled in simple form on this chart.

Senator NEUBERGER. We will appreciate that, Mr. Pratt, and it will be taken note of and included in the information available to the committee.

(The above-mentioned compensation study, entitled “Compensation in Civilian Scientific, Professional, Technical, and Managerial Personnel of the Department of Defense,” is on file with the committee and is available for reference purposes.)

Mr. PRATT. I would like to ask you just one question, if I could, sir. I note in these comparisons that you have some rather high technical skills that are in the basis of the comparison such as physical scientists, engineers, personnel officers, and so forth. Would there be a similar discrepancy in the salaries paid in private industry and in the Government for people of what you might call lesser skills and training?

Mr. PRATT. As near as we could tell, Mr. Chairman, in the lesser skills, such as the clerical workers, there was not the same discrepancy as there was in these more highly paid, scarcer skills covered by the report. We found no problem in the Department of Defense in recruiting in these skills which require less education and less training and, therefore, there being no real serious problem in that particular

area, our entire study was devoted to what I would call the top-level people.

Senator NEUBERGER. Thank you very much, Mr. Pratt. Mr. PRATT. Now the next thing we took a look at was what happened to our entering employees who were recruited for the lower grades in these highly technical skills and who would form the basis of the employee work force for the years ahead.

Senator NEUBERGER. I think we will include here a notice that Roman numeral III, to which you are now referring on the chart is at page 31, if I am not mistaken, in the report.

TABLE III.--Professional starting salaries, 1956

Degree or profession

Information source

Indus

try

Gov. ernment

Difference

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Bachelor of science engineer..------- National Advisory Committee for

Aeronautics.! Do..

Colgate-Palmolive Co.2 Do..

American Management Associa

tion.3 Engineer...

Endicott..------Bachelor of science physicist

National Advisory Committee for

Aeronautics. Bachelor of science chemist

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| Colgate-Palmolive Co Bachelor of arts-bachelor of science mathe National Advisory Committee for matician.

Aeronautics. Bachelor of arts-bachelor of science business Colgate-Palmolive Co.

administrator. A ecounting -.

Endicott..--General business trainee ..

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i Derived from National Advisory Committee for Aeronautics 1956 survey of 74 colleges and universities. ? Derived from Colgate-Palmolive Co. 1956 survey of 26 colleges and universities.

8 Derived from American Management Association, 1956. Report on Administrative and Technical Position Surveys.

4 Derived from 11th Annual Report on Trends in the Employment of College and University Graduates in Business and Industry, 1957 by Frank S. Endicɔtt, director of placement, Northwestern University.

Mr. PRATT. That is correct.

This table indicates the professional starting salaries which were being paid generally by industry in a number of various categories: Engineer, physicist, chemist, and so on. As you can see from the chart, it indicates that at every level, there is a very material difference which, of course, is bound to affect the young man in deciding what he is going to do.

Coming down on the plane today, I noticed in U. S. News & World Report a new survey of what job offers are this year in 1957. The article is headed, “Latest Offers—$100 a Week Is Common for the Class of 1957.” The survey goes into some detail as to the various rates of pay that are being generally offered by industry. They run anywhere from $500 to $750 a year more than the offers last year.

In Government, on the other hand, we have a fixed salary scale. The law passed by Congress prescribes the maximum salary that can be paid to a college graduate when he enters in Goverment service and the Government is thus in an even worse competitive system this year than last year with respect to new input.

Senator NEUBERGER. If you would like to leave that article with us, Mr. Pratt, we will ask to have it included in the record of the hearing inasmuch as you have made reference to it.

Mr. PRATT. Well, I tore out the first page, Mr. Chairman, but I guess you can get another copy.

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