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able that people of, let's say, of less professional requisites also be paid a comparable salary in Government to what they could receive in private employment?
Mr. PRATT. I should say, as a general statement, that is true, Mr. Chairman. The point that I wanted to make was that when we took a look at the whole scale in the Department of Defense—I am speaking about the Department of Defense alone—we found critical short
in recruiting replacements. We did not find critical shortages or excessive disabling difficulty in recruiting replacements in the lower levels.
Senator NEUBERGER. I think the chairman of the full committee also has a question he would like to ask you, but go ahead, Senator Morton.
Senator MORTON. Well, on that point, in the Department of Defense is where you have most of what we call wage board employees. In other words, the blue-collar workers in the Department of Defense, their wages are geared, sometimes belatedly, but geared to the local levels for similar employment, be they machinists, electricians, and what not. Mr. PRATT. That is correct.
Senator MORTON. Most of our wage board employees in the Government, and I believe it represents some 34 percent of our entire civilian employment, is found in the Department of Defense, I believe, so there may be a difference between Defense and, let's say, another agency of Government that is a large employer. For instance, in the postal service, you have very few of the wage board employees percentagewise as compared to Defense and that also in Defense, a great deal of your clerical help, such as stenographers and secretaries and so forth, is provided by the uniformed services, your Waves, your Wacs, and so forth.
Mr. PRATT. The percentage is quite small actually, Senator Morton.
Senator MORTON. Maybe when I go over to the Pentagon I look and see just that facet.
Senator NEUBERGER. I wonder at this point if the committee staff can obtain this statistical fact for the record: First off, the percentage of the total wage board employees that constitute the civilian personnel of the Department of Defense?
Mr. PRATT. I can.
Senator NEUBERGER. If you have it, fine. Also, a secondary thing, the total percentage of wage board employees of the entire Government which are located within the Defense Department itself. I think that would be useful to the point raised by Senator Morton, if we could have that, Mr. Pratt, or if you cannot obtain it, the committee staff will obtain it, to relieve you of the trouble.
(The above-mentioned information follows:)
The Civil Service Commission advises that as of March 31, 1957, Defense employed 85 percent of the wage board employees in Government.
Mr. PRATT. In the Department of Defense, we have in round figures, 654,000 blue collar civilian employees whose pay is under the wage board system and we have 518,000 so-called white collar employees who are paid under the Classification Act.
Senator NEUBERGER. Did you have a question, Senator Johnston ? I would like the record to note that the chairman of the full committee, Senator Johnston, is here and has a question for Mr. Pratt. .
The CHAIRMAN. I believe your statement is along the line mostly of professional people?
Mr. PRATT. That is correct. The Cordiner Committee was specififically asked to look into compensation practices for professional and scientific and top managerial personnel and that is what we did.
The CHAIRMAN. In that something like your tabulation under No.3 ? Mr. Pratt. The various professions that are represented there are illustrative of the type of man that we were considering.
The CHAIRMAN. It shows how the people that you have are underpaid with outside industry?
Mr. PRATT. Yes, sir, it does.
The CHAIRMAN. And that is one reason why you think they are not able to keep the best men, is that right?
Mr. PRATT. We have no doubt, as a committee, that we are losing many of our best people.
The CHAIRMAN. Of course, when a man leaves you and you have to employ another, that is when it costs money to get them trained into that particular position, is that not true? Mr. PRATT. That is right, Senator.
The CHAIRMAN. That is also true in any turnover to a certain extent, is that not so?
Mr. PRATT. Yes, although the higher the skill, the greater the difficulty.
The CHAIRMAN. That is correct. The higher the skill, of course, the greater would be your loss but we have a turnover of 400,000 in our civil service. Do you have any idea of what the loss to the Government is on account of that 400,000 turnover a year?
Mr. PRATT. I am sure it must be very large. I know from my own experience in the Defense Department what turnover can do to you.
The CHAIRMAN. And it is your belief that a great deal of it may be caused from not being paid as much as they could get outside of the Government?
Mr. PRATT. With respect to the people whom we investigated in this committee, I agree. I would not be in a position to express an opinion as to the Government service as a whole, Senator.
Senator NEUBERGER. Senator Yarborough, do you have some questions?
Senator YARBOROUGH. No questions, Mr. Chairman.
Senator NEUBERGER. Mr. Kerlin, do you have some questions you would like to ask Mr. Pratt?
Mr. KERLIN. I have several. Mr. Pratt, I wonder if you could tell the committee what the status of the Cordiner Committee report is at the present time.
presentation to Secretary Wilson, but I know nothing more than what I read in the newspapers.
Mr. KERLIN. The reason I thought the answer to that important is that yesterday the administration suggested that a study be made and at the conclusion of the study, it would be determined whether a pay raise would be appropriate. In the Cordiner Committee report, the recommendation is exactly the opposite, that an immediate pay raise be granted and then a study be undertaken, to see what the long range treatment might be, so the conflict there exists and I was wondering if there is any progress toward overcoming that conflict ?
Mr. PRATT. I am just a private citizen, Mr. Kerlin, and I do not know what the administration's plans are.
Mr. KERLIN. When was the report presented to the Secretary of Defense officially? Mr. PRATT. May 8. Senator NEUBERGER. Of this year! Mr. PRATT. Yes.
Senator NEUBERGER. One point that you raised was very illuminating and is extremely important to all personnel matters before this committee and this committee's jurisdiction in the field of Government personnel, which is very broad because it involves civil service as well as the post office. I believe you made a statement in your very illuminating presentation, which we all appreciate, that fringe benefits in Government which once were very advantageous to the Government employees had narrowed by contrast with those in private in
rect because I wanted to get a little specific information from you on that?
Mr. PRATT. That is correct, Mr. Chairman. The detailed survey is a part of the compensation study which we will furnish to your staff, some of which you may want to reprint. In summary, the comparison of Government to industry showed that, in Government, fringe benefits, which include sick leave, holidays, vacations, retirement plans, life-insurance plans, unemployment compensation, health programs, training and education opportunity amounted on the average to 27.2 percent of salaries. That is, the cost of the fringe benefits amounted to 27 percent of straight-time salaries.
Senator NEUBERGER. May I ask, specifically, what you mean by that, just to clarify my own mind? In other words, if a man made $100 a week, would the fringe benefits mean an additional $27.20, or would that be $27.20 which is part of his $100 salary?
Mr. MEADER. Some of that is, Senator, and some is not. For instance, paid vacations and so on would be a part of the salary base, but pensions would not be a part of his annual salary, so it is a little misleading from this point of view.
Senator NEUBERGER. But, in other words, in the case of nearly all Government salaries, it would be 27.2 percent of that particular salary in terms of benefits?
Mr. MEADER. That is correct.
Senator MORTON. Isn't it the cost to the Government? I think you are going to give us a figure for private industry and I anticipate that, and the cost to the Government for each $100 of salary paid is $27.20 for all fringe benefits, which includes vacation with pay and also includes the Government's share of life insurance and the Government's share of pensions ? Mr. MEADER. Right.
Senator MORTON. But the employee's share of the pension fund is, of course, in the $100.
The CHAIRMAN. Just one question; some of it is shown in the salary but some of it would not be shown and it would be on top of the salary?
Mr. Pratt. That is correct.
Mr. PRATT. Now, in contrast, the study, which covered 356 companies, showed that fringe-benefit costs to the companies was 25.3 percent of salaries—about the same.
Senator NEUBERGER. This included all the personnel in those companies, not just professional personnel ? Would it include everybody from the top echelon to the lower echelon? I think that is rather important, if you could provide us with that. Mr. PRATT. Can we just look?
Senator NEUBERGER. Yes, because I think that is a rather important point. * Mr. Pratt. Without taking a lot of time, sir, I cannot give you the precise area that it covered. I can say that the survey was intended to cover the same type of employee in private industry as our Committee was concerned with; that is, it did not, of course, cover hourly manual workers, and so on.
Mr. MEADER. All salaried employees.
Senator NEUBERGER. It was 25.3 percent for fringe benefits in the 356 private industries surveyed as contrasted with 27.2 percent for comparable employment in the Government.
The CHAIRMAN. Is it not true, if you made the survey in that particular classification, would it not also hold just about the same in others because most of it is based upon the salary?
Mr. MEADER. Yes. Mr. PRATT. I believe that is true. The CHAIRMAN. The percentage would run about the same. Mr. PRATT. I would like to add, if I may, two other factors that bear on these particular figures. The chamber of commerce conducted a study of 1,000 companies, and the employees covered in it were both hourly paid and nonsupervisory employees. Surprisingly, the cost of fringe benefits there was 23.9 percent. Now, the Government percentage, of course, is a little higher, but you have got to take into account that Government employees pay a larger proportion of pension and insurance than they do in private industry.
Senator NEUBERGER. In other words, the contributory factor, for the same reason, is greater in terms of Government employees? Mr. PRATT. Correct. Senator NEUBERGER. Do you have that related at these levels ?
Mr. PRATT. The Government employee gives 7.2 percent of pay. In our survey of 356 companies, it was 4.5 percent of pay.
Senator NEUBERGER. That is a very substantial difference. Mr. PRATT. And, in the chamber of commerce survey, it was 3.6 percent of pay. Now, if you combine those figures, you will find that you come out just about even.
Senator MORTON. Mr. Pratt, you mentioned in your testimony that, during the mid-1930's, the Government had a greater opportunity to recruit qualified people who ultimately went to the top in these technical assignments, technical jobs in the administration. Of course, the
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economic opportunities, as we know, were not there in the mid-1930's, in private industry, but, at that time, fringe benefits were a factor. Du you have these figures that you have just given us, as of 1935? I suppose there is no way of getting them? Mr. PRATT. No; there is no really good way of getting those.
Senator MORTON. Of course, fringe benefits are a phenomenon of our private industrial system in the last 20 years. There really weren't many before. :
Mr. PRATT. We know from general knowledge, Senator, that giving fringe benefits generally in industry began around 1940, which is when all of these various plans began to grow and blossom. It would be very hard to find comparable figures farther back, because the data just plain is not available.
Senator NEUBERGER. The reason this is such a cogent point, Mr. Pratt, is this: There has been the contention before this committee that Government employees should be willing to tolerate a lower salary level because their fringe benefits are so much greater than they would be in private employment, but your Committee has not discovered that in the studies which you have undertaken, have you?
Mr. PRATT. That statement was right once, but it is not right today. The Government does not offer its civilian employees superiority in fringe benefits. I think the facts are perfectly clear.
Senator NEUBERGER. Thank you very much.
Does anybody else have any other question? Mr. Chumbris, did you have a question you wished to make ?
Mr. ČHUMBRIS. I just wanted to find out if the record is clear that this $27.20 for Government and $25.30 for private industry takes in exactly the same fringe benefits? That would make a difference.
Mr. PRATT. Oh, yes. Of course, the trouble that you have is the difficulty of equating different kinds of plans and so rather than figure the benefit to the individual employee, what was done was to take the cost to the employer of the total package. Now, the only thing that was eliminated, I believe, was bonuses. Special bonuses were not included because Government had nothing comparable and in industry they varied so very, very widely, that those were tossed out.
Senator NEUBERGER. Mr. Pratt, also, there are in line with that question, certain things that are not capable of pure dollar measurement per employee which undoubtedly you did not take into consideration. Now, the Chairman has called to my attention the fact that certain of the mills in his State have beach facilities and park facilities and recreational facilities and playgrounds and picnic facilities, whch are available to employees. Then, it has always been my understanding, if I am not mistaken, that when private industry recruits somebody,
examined, and so on, whereas Government very rarely does that. There are things like that that are incapable of this type of measurement that are factors, is that not true?
Mr. PRATT. As far as your recruitment bonuses are concerned, those were not included.
Senator NEUBERGER. They could hardly be measured because you would not know when they take place and when they do not but they are an advantage in private industry that does not exist in Government.