is a prime example. Committee recommendations for an expanded staff to do the research necessary to improve the accuracy of the pay matching process between the Federal Government and private industry was also a factor in the Civil Service Commission receiving resources for this work. In its most recent report Committee recommended that the pay agent and employee representatives separate disussion of technical aspects of the pay-setting process from discussions of the current year's pay increase. This should reduce friction between the pay agent and the Federal Employees Pay Council and also assure more deliberate consideration of long-term issues. We understand that the pay agent and the Council are trying to implement this proposal. The Committee has apparently established a feeling of trust on the part of both the pay agent and Federal employee representatives. Both feel that the Committee is impartial and willing to listen. They seem to recognize that the Committee is trying to help reduce the gap that exists between the agent and the Council. This gap is difficult to bridge. The relationship between the Committee and the parties has matured well. This is now evidenced by a joint memorandum from the parties requesting the Committee to render a binding decision in a dispute over a technical issue-one that can have a major effect on the size of Federal pay increases. The issue involves adequacy of the description of two important jobs used in the pay-setting process. Whether or not The Committee has authority to undertake this task has still not been finally determined.

The possibility of further requests similar to that over these job escriptions and the possibility that the Committee will need to comssion further special studies like that of salary changes following ontrols have led the Committee to request a small increase in its fiscal 1976 budget. Our budget has always included a contingency amount to be used only as necessary to conduct special studies clearly needed the Committee to carry out its duties. It is impossible at the beginng of the year to know what kind of special studies, if any, will be eded and what their cost will be. With the increase in costs that as occurred, such studies are more expensive than they were 3 years 120 when the Committee's budget was first set.

SPECIAL STUDIES

Our policy has been to make special studies only when there is a pelling need. We have not spent the entire amount authorized in r budget in any year and we hope that we will not need to do so ring the coming fiscal year. Without a substantial cushion, however, e would have been unable to undertake the special study of salary anges in the period following controls. Before we commissioned the *dy it was estimated that its cost would approach $50,000. Although ** were able to hold the cost down to less than half this level, we could tfix the cost until the study was completed.

In addition to a contingency amount for special studies, the budget pest is designed to pay the salary of our administrative assistantir only full-time employee-the rent and operating expenses of our adquarters office, the salary and travel expenses of the Committee

members when they are engaged in Committee work, and the cost of consultants.

A part-time consultant maintains liaison with the pay agent, Federal employee representatives, and the GAO, which has a unit dealing with Federal pay issues; and directs or conducts the economic research and analysis needed by the Committee in its work. The Committee relies on such part-time assistance as more efficient for a small agency than hiring full-time personnel.

LEGISLATIVE, EXECUTIVE, AND JUDICIAL PAY

I cannot miss this opportunity to remind you once more of the urgent need to increase pay for Members of the Congress, Federal judges, and Federal executives. You will recall that we discussed this problem at length last year when I appeared before you. It has now been 6 years since pay of these groups of key Government officials has been increased and the failure of their salaries to rise during a period of rapidly increasing pay in competing fields, to say nothing of rising living costs, is having a serious impact on the quality of talent that can be recruited for these positions. The additional cost of providing pay increases for the small numbers involved is small, both absolutely and in terms of the benefits to be obtained in terms of better personnel. Eventually, I think we must adopt a system whereby pay of these groups increases automatically with increases in pay for the workers directly covered by our Committee's recommendation. The most comprehensive summary of this problem is the report to the Congress made by the Comptroller General in February. It is called "Critical Need for a Better System for Adjusting Top Executive, Legislative, and Judicial Salaries."

Mr. STEED. In your statement you pointed out this is your fourth

year.

Mr. Rosow. Yes, sir.

Mr. STEED. Have there been any experiences during the current year that were new in their context and application?

PERIOD AFTER REMOVAL OF CONTROLS

Mr. Rosow. Yes, sir, there were, Mr. Chairman. Last summer as a result of the decontrol of wages and prices on April 30, 1974, the committee commissioned a special BLS study of pay changes in the private sector because it felt the regular so-called PATC, professional, administrative, technical, and clerical survey, would have a serious lag, in that it was collected in March and April before decontrol. So we commissioned this study out of the committee's budget, after discussing it with the pay agent, the Director of the OMB and Chairman of the Civil Service Commission and the Commissioner of Labor Statistics. The administration did not want to undertake that study because it anticipated it would have the effect of increasing costs, because pay in the private sector was advancing faster than the normal survey would have shown. So we were able to use money out of our budget to finance the survey.

It was originally estimated by BLS it might cost as much as $50,000, but we were able to get it done for considerably less. As anticipated, it was shown that private pay was advancing rather rapidly as a result of decontrol. That study was very useful in our discussions with both the pay agent and the Federal Employees Pay Council in showing the Committee was sensitive to its functions under the statute; namely to onduct any special research and to use independent facts to assist the President and the parties in arriving at a final judgment.

As a result of that survey we did recommend to the President, and we did meet with President Ford in September to discuss our recommendation that the proposed adjustments be increased somewhat to make up for the inflation that was taking place.

DATE OF RECOMMENDATION

Mr. STEED. Are you regulated by law as to the times you make recommendations, or do you do this based on the circumstances? Mr. Rosow. There are two functions. Basically our timing is reguated by the law, which provides that the President shall raise Federal pay every year effective October 1 based on a survey conducted in the Tring of the same year. Normally we wait until we receive from the pay agent a proposal to the President as to what they recommend that he do in the current year. Normally we receive a report from the pay agent in August, and we render the President a written report by mid to late September in advance of the October 1 deadline. So that is our ormal schedule.

However, if there are special circumstances, as in 1974, we interened by conducting a special survey in the spring and summer of 1974 not waiting for the regular material.

We do meet with the parties from time to time either at their option or our own. We have been meeting usually twice a year with the employee union representatives on the Federal Employees Pay Council, d with the Chairman of the Civil Service Commission and Director of the Office of Management and Budget, usually jointly, to discuss problems and issues developing in the administration of the act.

TYPE OF INFORMATION USED

Mr. STEED. When you prepare to make a survey leading up to a ommendation, what is the size, shape, and ingredients that you put to this operation? What type of information must you have?

Mr. Rosow. The basic factfinding services are provided by the BuPau of Labor Statistics in a large sample survey of the United States vering about 5,000 employers. That survey is the basic document which the Government uses in fulfilling the comparability requireSent. We also refer to the same data.

In addition to that report, the pay agent renders an analysis of at report to the President recommending how the payline should be **ed, recommending any special changes as well as changes in methdology of conducting a survey. The Federal Employees Pay Council, nsisting of five union delegates, renders a memorandum of their wn. So we really in effect use three documents-the BLS PATC sur

vey, the pay agent's report to the President, and the Federal Employees Pay Council report.

We supplement that with hearings where we meet with each of the parties separately, usually in early September.

In addition to those normal documents and normal procedures, we do from time to time commission consultants to make special studies of our own, as in the instance of the 1974 special survey.

In view of the complicated nature of that survey, we asked the BLS to conduct it so it would be very reputable and follow the identical. samples the basic survey does.

Years could go by in which we would not conduct special surveys or studies, but we have found in the past few years they have been quite important. In the first year of our operation, we engaged a consultant to study the compression problems; we had already seen very serious compression of the supergrades being held down by the Executive Pay Act. Now we see that is spreading down into the grade 15 and even 14.

The main question is that we rely fundamentally on the BLS survey and our work to analyze the data to make judgments on the appropriateness of the interpretations being made rather than conduct independent studies.

UNIQUE JOB CLASSIFICATIONS

Mr. STEED. AS vou try to determine the comparability between the Federal Government and private enterprise, I know a great many members of the work force of the Federal Government have classifications that are virtually identical to those in private industry. But also, by the nature of the thing, you have a great many employees who have no counterpart in private industry. How do you allow for that, and how do you take it into consideration?

Mr. Rosow. We merely follow the prescriptions of the statute in our interpretations and advice to the President. The comparability principle is based on two fundamentals. One is external alignment with the prevailing salaries in the outside private sector, that being the universe which is surveyed, and the second being internal alignment or effective relationship of classifications and pay of the Federal employees to each other.

Recognizing your point, Mr. Chairman, that there are hundreds of jobs in the Federal service that have no counterparts in the private sector, the system is for the BLS to price some 82 key jobs that rep resent a cross section of Federal jobs from grade 2 through grade 15 more recently, the Civil Service Commission did a one-time special study of supergrade jobs to see how they compare to the private sector Based on this sample which picks up millions of salaries in the United States, they draw a general pay line. And the way in which jobs that are peculiar to the Federal service are adjusted to this system is through the classification method. The job evaluation classification system says that if a position that is rare or peculiar to the Govern ment is equal in duties and responsibilities or sufficiently similar to b placed in GS-14, then it takes the salary range of GS-14, as, let's say an attorney position or personnel job or one of the engineering job that were in the key sample.

EXTERNAL AND INTERNAL ALIGNMENT

So you have external pricing for a sample and internal relationship for everyone using the same pay structure as applicable to the total.

GEOGRAPHIC DIFFERENTIALS

Mr. STEED. With regard to that point, there is another matter that concerns me. The GS schedule in the Government is pretty much constant throughout the country, and yet wages in the private sector will vary greatly depending upon geographic location. For instance, obviously a GS-9 could live a lot more comfortably in my State of Oklahoma than he could in New York City. How do you try to cope with that sort of a geographical differential problem?

Mr. Rosow. The present pay system set forth in the 1970 act has accepted and maintained the principle that has been in effect since the first Classification Act was passed in 1923; namely, that the Federal pay system is a national system.

Mr. STEED. But the same act deliberately makes an exception for Hawaii and Alaska and Puerto Rico.

Mr. Rosow. There is a cost-of-living allowance for Hawaii, Alaska, and Puerto Rico. It is quite possible that the Congress could in its wisdom put geographical differentials into the pay system. However, the legislative history reveals that every time different administrations and different Congresses have addressed this problem, there has been a reluctance on the part of the Congress, particularly during the period when the Postal Service was still a part of the Federal service, to establish a geographical pay system because its effect would be to press salaries in many sectors of the country and not raise salaries too much in other sectors of the country. There would be some cities that would gain, but there would be populations of Federal employees in rural and smaller communities and in less competitive, less highost communities, who would suffer some reduction. This could be done with phasing out and not disturbing present incumbents, red circling or maintaining their pay through some catch-up period.

The Oliver report, which was commissioned by the Congress and Completed I believe in 1973, did in fact recommend the reorganization of the pay system to regional or geographical based payments. Of ourse pay of the blue collar or wage employees is based upon local ommunity wages, the prevailing wages in the community, within a ommuting distance. There are wide variations in their payments around the country but this has never been acceptable legislatively for white collar employees.

Mr. STEED. As you arrive at your final figure on comparability for the various wage levels, what weight have you given to fringe benefits? For instance, the job security, retirement benefits or any of those various factors that might accrue to the benefit of a person on the Federal payroll as opposed to most of the work force in the private sector?

Mr. Rosow. Again we must limit our work to the statutory provi ons of the Comparability Pay Act which defines pay as salary under the classified pay structure. Any other emoluments, indirect income, urity programs, the pension plans, vacations, sick leave, and the Ke are excluded from the definition of pay by the act.