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Senator WOLCOTT. In the service. There is now, then, practically a pension scheme in operation, if that be true, is there not?
Mr. WILMETH. You could not call it a pension scheme. Taking the older employees as their usefulness wanes, putting them down in the lower grades, they are still working and being retained in the service.
Senator WOLCOTT. Of course, it is not strictly a pension scheme; but there is an attempt to do it, I gather from what you say, is there not? And it seems to me it would be just inhuman to throw a man or woman in his or held old age out into the street; so, is there not an attempt to accept the principle, at least, as a pension scheme, in so far as its practical application goes, by still retaining them in Government employment, in jobs that they seem to be able to fill more satisfactorily because of their advanced age-that is, in some smaller job-is not that going on practically now?
Mr. WILMETH. Yes. There is a tendency to keep them. They are being kept; and we do it on the ground that after an employee has served long and faithfully and is, on account of age, not able to earn a livelihood elsewhere, and has spent all of his life and the best part of his usefulness in the department, it would be a manifest hardship and injustice to put him out.
Senator WOLCOTT. So it would.
Mr. WILMETH. Many of these older people, too, are veterans. The CHAIRMAN. Are you in favor of a flat rate of retirement for employees in the service after a certain length of time, or a graduated system?
Mr. WILMETH. I have not given it enough thought to answer intelligently, but my own thought is there should be an arbitrary age established, and I think the simplest thing would be to make a flat rate. However, I am not committed to that. I am simply giving you my own idea.
The CHAIRMAN. What have you to say about the retirement of women as well as men? Should they be retired on the same principle and at the same salary-the same retired pay?
Mr. WILMETH. Well, I have not given any thought to that. I do not see, in justice, why that should not be done. I think it should. The CHAIRMAN. I agree with you on that.
Mr. WILMETH. The entrance pay is the same and the promotion grades are the same, and they are promoted for the same skill and they do the same work. Why should they not be treated the same in the matter of retirement? I think without doubt that should be done. The CHAIRMAN. Is there anything else?
Mr. WILMETH. I believe I have nothing further to say.
The CHAIRMAN. When you get a copy of the hearing I wish you would put in such figures as you desire.
Mr. WILMETH. Yes.
(The matter referred to above is included in a letter, which is here. printed in full, as follows:)
TREASURY DEPARTMENT, Washington, August 17, 1917.
DEAR SENATOR MCKELLAR: Referring to my testimony some time ago before your committee on the subject of the retirement of superannuated civil-service employees, you will recall your request that I furnish you with a statement showing the percentage of the cost of a retirement plan as compared with the actual salary of the employees. My investigation on this subject does not
show any particular relation between pensions and salaries, so far as the matter has been investigated.
Mr. Herbert Brown, who has submitted a report on civil-service retirement in Great Britain, which was published as Senate Document 290 of the second session of the Sixty-first Congress, sets forth in his report that in England the pensions range from 4 to 32 per cent of the active pay roll. In the Post Office Department they amount to 6 per cent of the pay roll and in the customs service to 30.6 per cent of the pay roll.
Mr. Brown advises that the general impression seems to be that the total civil pension payments equal about 16 or 17 per cent of the amounts paid for salaries. His report shows that in rapidly growing offices where a large num ber of younger people have been employed the pensions represent a comparatively small per cent of the active pay roll; on the other hand, in offices that have grown slowly the pensions have risen in soine cases to as high as 32 per cent of the active pay roll. This is what I meant when I stated that there is no direct relation between pensions and active pay.
I invite your attention to pages 124 and 125 of Senate Document 290, second session of the Sixty-first Congress.
Very truly, yours,
Hon. KENNETH MCKELLAR,
JAMES L. WILMETH, Chief Clerk.
United States Senate.
Chairman Committee on Civil Service and Retrenchment,
Mr. ALCORN. I will introduce now Mr. Warwick, Comptroller of the Treasury Department.
The CHAIRMAN. Very well, proceed, Mr. Warwick.
STATEMENT OF WALTER W. WARWICK, COMPTROLLER OF THE
Mr. WARWICK. I do not know, Mr. Chairman, that I can add anything to this discussion. After a service of about 15 years out of the last 25, a part of that time in the classified service in the Government, I have reached the conclusion that the interest of the Government and the interest of the employees require some system of eliminating the superannuated. I have a view of that, possibly, that is different from others, but I think there ought to be an age limit fixed in the law.
The CHAIRMAN. What age limit?
Mr. WARWICK. I would say for the departmental service 70 years. For other services it might be a lower age. But I would not leave, if I were drafting a law, any discretion as to retaining a man after he reached that age.
The CHAIRMAN. You do not agree with Dr. Osler, then, when he says they ought to be chloroformed at 60?
Mr. WARWICK. No. I have 2 in my office. So far as the employees are concerned, there are only 30 in the clerical grades, and 5 of the 30 are past 70. This refers to my own office. One of the men is a bookkeeper, working with four other bookkeepers and doing just as much as the others. And we also have one man who is 80 years of age. The CHAIRMAN. Is he able to do his work?
Mr. WARWICK. He is not able to do as much as formerly. He is doing his best.
The CHAIRMAN. Have you demoted him because of that?
Mr. WARWICK. He has not been reduced. He has been in the service now 40 to 45 years.
My reason for saying that I would favor an arbitrary age is that when a man in a more responsible position in the service, such as a
chief of division or chief of bureau, becomes superannuated the loss to the Government is much more than his salary. The demoralization of the force is much greater if the chief is superannuated than it would be if one of the employees working with the others is unable to work. The fact that the retirement might be based on a low rate, say $800 or $900 a year, would prevent the retirement of men getting $3,000 or $4,000 a year when they reached the age of 70 unless the law required it. I am speaking of it as a practical question. The option to retire a man or the discretion to continue him after he reached a certain age, as a practical question, would be exercised like the discretion now that the head of the department has to remove a man when he can not perform his work.
Senator WOLCOTT. The Pennsylvania Railroad has, I believe, a retirement system—my purpose is to see if you have any definite information on the subject and that under their system retirement at a fixed age is mandatory. Is that correct?
Mr. WARWICK. Retirement at 70 years of age from the president of the railroad down to the bottom. There was one case in the last year that I know about of an employee of that railroad retired at the age of 70, who had worked for the road 59 years. He had started in at 11 years of age.
The CHAIRMAN. Do they have a graduated scale of retirement? Mr. WARWICK. My recollection is that it is a percentage based on years of service.
The CHAIRMAN. According to salaries?
Mr. WARWICK. Yes; percentage of salary depends on years of service.
The CHAIRMAN. Yes.
Mr. WARWICK. This man would receive about 60 per cent, because I think it runs along about 1 per cent for each year of service. The CHAIRMAN. Yes.
Mr. WARWICK. Now, some one has referred to the demoralization of an office or of a division in the service by the presence of those who are unable to work or unable to do the full amount of work for the day. That is unquestionably true. Keeping up the standard of work or required amount of work is very difficult where the people are in such condition that you must always make allowances. You must find something for the person to do who formerly was a very good worker. The fixed age of retirement and whether the pay be half of their current pay, with a maximum of $600 or $900, is a matter which, of course, will be decided by Congress; but the vital thing is to provide some system, looking at it simply from the Government's point of view and those prejudiced probably in favor of a system by which the employee eventually would pay all of his own retirement, yet while I say I was prejudiced in favor of that system, I am just about equally in favor of any system that Congress will put into effect that will make for the good of the employees and the efficiency of the service. I do not consider that the details as to whether all of the cost should be paid by the Government, or one-half, is of vital importance. I know to the employee on a small salary a contribution running up to 3 or 4 or 5 per cent of his salary is a serious matter; but the benefit to him, especially if he is old, if he is near the retirement age, the benefits would be so large as to justify him in
paying it. I have studied the subject long enough to know that I do not want to express any opinion as to what is the very best system for the employee and for the Government. I do not know, and people will always differ on that.
Are there any questions of me, Mr. Chairman?
The CHAIRMAN. No, sir; I believe that is all.
Mr. ALCORN. Mr. Fitzgerald, of the Bureau of the Census, desires to be heard.
The CHAIRMAN. You may proceed, Mr. Fitzgerald.
STATEMENT OF MR. T. J. FITZGERALD, OF THE BUREAU OF THE CENSUS, DEPARTMENT OF COMMERCE.
Mr. FITZGERALD. I want to say at the outset, in response to your invitation, the Director of the Census intended to be here in person this morning, but owing to a hurry call to appear before the Appropriations Committee he asked me to come in his stead. I have not talked the matter over and do not know what he was going to present, but I had a statement prepared showing the different age groups in the bureau which I think will be of information and value to the committee in considering this subject. At the present time superannuation in the Bureau of Census is not a serious question, because at the present time we have only 27 out of 560 over 65 years of age. That is only 5 per cent. However, we have 51 employees over 60 years of age, which would make a percentage of 9, and in the next 10 or 15 years superannuation may become quite a serious matter, for the reason that we have at the present time in the age group between 50 and 60 a total of 130 employees.
Senator WOLCOTT. What percentage is that of the total?
Mr. FITZGERALD. Twenty-three per cent between 50 and 60. There is 32 per cent of the entire force over 50 years of age. Of course, there would not be that percentage of superannuation 15 years hence, as some of the older employees would drop out.
The CHAIRMAN. Could you furnish the figures as to what it would cost, say, 20 years from now or 25 years from now? What would be the entire cost to the Government of a plan, say, of retiring them at $600 each, flat rate, on reaching an age of
Mr. FITZGERALD. A flat rate at what age?
The CHAIRMAN. Seventy years. Just use that as an illustration. Mr. FITZGERALD. I do not think the bureau has ever worked that out, but I believe it has already been worked out by Mr. Herbert Brown.
The CHAIRMAN. I think probably he has, and we can get these figures from him.
Mr. FITZGERALD. You asked Mr. Wilmeth a while ago whether he thought male and female employees should be retired under the same conditions. Of our 560 employees 246 are females.
In my opinion, there would be no good reason for differentiating between males and females in any form of retirement legislation. I think they should be retired at the same age and under the same conditions. The female employees give their best service and the best years of their lives to the Government, and in retirement they should be given the same consideration. I may state, too, that I am
rather inclined to agree with Mr. Wilmeth that it is a very difficult proposition to get administrative officers to drop men and women from the Government service after they have given the best years of their lives to it. Administrative officers, after all, are only human, and except in very rare cases you can not get them to recommend the discontinuance or dismissal of employees after they have passed their period of usefulness. I think that is true to some extent in practically all of the departments.
Senator WOLCOTT. I think it would be inhuman for anybody to do that.
Mr. FITZGERALD. We have 15 people in our bureau who by reason of age can not give the service they gave 25 years ago. I think it is only natural that administrative officers do not care to recommend the separation of employees from the service after they have given the best years of their lives to it. In my opinion, it would increase efficiency in the Government service if some equitable form of retirement law should be passed. That is about all I have to say.
The CHAIRMAN. We are much obliged to you. We will hear from Mr. Brown.
STATEMENT OF MR. HERBERT D. BROWN, CHIEF OF THE UNITED STATES BUREAU OF EFFICIENCY.
Mr. BROWN. So much has been said in regard to the necessity for a retirement plan that I hardly think I need add anything.
The CHAIRMAN. We would like to have the figures from you, Mr. Brown, to see where we are going to get by on this proposition.
Mr. BROWN. I made some tentative figures for Senator Pomerene last year showing the approximate cost of a plan he was advocating. The CHAIRMAN. Were they put in the record?
Mr. BROWN. At that time, yes, sir. The plan that Senator Pomerene was considering contemplated giving half pay with a maximum of $600.
Senator WOLCOTT. Half pay basing on the salary of the last year? Mr. BROWN. Half pay on the average for the last 10 years. I should say that these calculations embraced about 250,000 employees. The cost the first year would amount to a little more than $3,000,000. Then it would gradually run up for quite a number of years, 25 or 30, until it had gone a little above $6,000,000, and then run off to nothing, when all of the employees now in the service had been retired. After that
The CHAIRMAN. It would run off to what?
Mr. BROWN. The annual cost would decrease after 25 or 30 years until it had ceased entirely. After that time all of the employees would be providing pensions for themselves.
The CHAIRMAN. His was a half-and-half plan or an entire plan? Mr. BROWN. His plan contemplated that the Government would take care of all pensions that could not be provided by a maximum deduction of 8 per cent from the salaries of the employees. That means, of course, that the employees who are eligible for retirement at once would have to be pensioned straight out by the Government, and that all persons retired for a number of years thereafter would have to be aided by the Government. I will state that in another