renat SMA 13 ap 114 CONTRIBUTORY PLAN OF RETIREMENT OF EMPLOYEES IN THE COMMITTEE ON REFORM IN THE CIVIL SERVICE, HOUSE OF REPRESENTATIVES, Washington, D. C., Friday, February 20, 1914. The committee met at 10 o'clock a. m., Hon. Hannibal L. Godwin (chairman) presiding. Present: Representatives Manahan, Scott, Dies, Brown, Carter, Lobeck, and Madden. The CHAIRMAN. The committee will please come to order. We can proceed without a quorum, if there is no objection. The chair hears none. The object of the meeting, gentlemen of the committee, is to hear an argument in behalf of the retirement plan or the contributory plan of retirement, and Mr. William E. Russell, president of the United States Retirement Association, will control the time and introduce the speakers. STA EMENT OF MR. WILLIAM E. RUSSELL, PRESIDENT UNITED Mr. RUSSELL. Mr. Chairman and gentlemen of the committee, I wish to say, in prefacing my remarks, that there is a gentleman here who represents the other faction that is advocating straight pensions, and I should like to have you hear him. I think he will only ask 5 or 10 minutes in which to present his side of the case, and in the event any other gentlemen appear on that side, we shall be glad to waive any part of our time necessary to give them an opportunity to be heard. I desire to say that I am not a civil-service employee, although I am president of an association of Government employees. I have, within the past year, separated myself from the Government service and am serving out an unexpired term as president of this association. My interest in this matter is only that which arises from my contact with the service, and also from my belief in the merits of it. There are several bills pending before the committee. There is a bill introduced by Mr. Hamill, of New Jersey, calling for the payment of a pension to certain Government employees upon completing a definite cycle of employment, regulating the amount of the payment by the number of years of service, this payment to be made wholly out of the Public Treasury. On the other hand, there is a bill introduced by Mr. Gillett, of Massachusetts, calling for the retirement of employees upon an annuity basis, supported by contributions made. from their salaries, it being assumed in this bill of Mr. Gillett's, however, that the employees who now have reached an age that ap 110 3 proaches the retirement period, not having contributed to the fund at all, will have to rely upon the Government to supply the deficiency in their contributions. Then there is a bill introduced by Mr. Austin, of Tennessee-in fact, two bills-only one of which is before this committee. The retirement association of which I am president has been supporting the bill which is not before the committee this morning. It was introduced in the Sixty-second Congress and also in the Sixty-third Congress, first session. I have asked one of our members to get copies of that bill for the information of the committee. Mr. DIES. Which bill is that? Mr. RUSSELL. The first Austin bill. The CHAIRMAN. Is that bill different from this one before us? The CHAIRMAN. In what respect? Mr. RUSSELL. The bill you have under consideration now eliminates, I believe, the 15 per cent increase of salary and establishes schedules and grades of salaries. The CHAIRMAN. This bill eliminates the 15 per cent? Mr. RUSSELL. Yes, sir; and substitutes in lieu thereof a schedule of salaries attached to certain positions. The CHAIRMAN. Which bill do you favor? The first? Mr. RUSSELL. Not in every particular. The CHAIRMAN. You favor the second bill? Mr. RUSSELL. We are in favor of the reclassification provisions in this second bill and the annuity provisions of the first bill. I have a сору. of a bill which should be before the committee, and I ask permission to leave it with the committee. It is a bill to be introduced by Mr. George, of New York. It embodies the features of the Gillett bill, but it puts the cost of the annuity provisions upon the Government. In other words, it authorizes an increase of salary sufficient to meet the deductions imposed under the Gillett bill, which average about 4 per cent. It differs from the Austin bill in that the latter offers a flat 15 per cent increase of salary. This bill is offered by the Federal Civil Service Society of New York, an organization composed of employees of the 10 Federal departments, and it is a bill that is much less expensive than the Austin bill. The chief objection your committee had to the Austin bill a few years ago was that the cost was excessive. The principle, I believe, was indorsed very heartily by some of the members of your committee. Mr. CARTER. As I remember, the Austin bill would cost about $30,000,000? Mr. RUSSELL. As an increase in salary. Mr. CARTER. What will be the approximate cost of your plan now? Mr. RUSSELL. This bill has not been worked out in detail, but it will not cost more than $6,000,000 or $7,000,000, which will be an increased salary for the employees, this increase to be set aside as compulsory savings reserved by the Government and calculated so as to afford an annuity for these employees on the same basis as called for in the Gillette bill. The CHAIRMAN. You mean the entire amount of the increase will be devoted to that purpose? Mr. RUSSELL. The entire amount of the increase, because the increase is only sufficient to meet the cost of this annuity. Mr. DIES. What is the rate of deduction? Mr. RUSSELL. It varies according to the age of the employee and according to the length of service. It runs as low as 2 to 3 per cent in certain instances, and as high as 7 per cent in others. Mr. DIES. Is not the increase here provided for about 15 per cent? Mr. RUSSELL. The new Austin bill does not provide a 15 per cent flat increase. Mr. DIES. Grade 1, $2,100, $1,980, and $1,860 annually; grade 2, $1,740, $1,620, and $1,500; grade 3, $1,380, $1,320, $1,260, and $1,200 annually. Mr. RUSSELL. Then the under clerks in grade 4. Mr. DIES. They are $1,080, $1,020, $960, and $900 annually. Mr. RUSSELL. I do not think that increase would amount to 15 per cent. Mr. DIES. It would be more than the proposed deduction, would it not? Mr. RUSSELL. Yes; undoubtedly. We have not followed this second bill of Mr. Austin's very carefully, for the reason that all the provisions of it did not meet our views. Mr. DIES. This would be more expensive to the Government than straight pensions? Mr. RUSSELL. More expensive in the beginning. In the end your straight pension would probably prove the more expensive of the two. I assume that this committee, Mr. Chairman, recognizes the fact that the cost of living has increased and I presume that even the gentlemen of the committee feel it somewhat, although it may vary in different localities; in Washington it may be a little higher than in some southern sections of the country, but it seems to me the time has come when the Congress of the United States will have to meet this issue on the part of the employees. They have not had an increase of salary, except in certain branches, in more than a decade and the increases have been more or less haphazard. The CHAIRMAN. What is the average salary of the civil service? Mr. RUSSELL. $948 per annum, I believe, according to the last official report. Mr. DIES. Does that apply to Washington, $948, or all over the country? Mr. RUSSELL. Those are the figures submitted, I believe, by the Census Bureau for the service outside of Washington. Mr. DIES. But not as applied to the city of Washington. Does that embrace the very low orders-messenger boys, etc. Mr. RUSSELL. I presume that takes in all employees. Mr. DIES. As a matter of fact, the clerks themselves in the second, third, and fourth orders grade from $1,020 to $1,800? Mr. RUSSELL. I think that would be a little excessive; they enter the service at $800 in the Post Office branch of the service. The Post Office employees comprise about 60 to 70 per cent of the total employees in the civil service. Employees in the other departments enter the service at $960 and $1,000, depending on the location. Of course, in the smaller offices throughout the country they enter at a |