(3) That an appropriation for this purpose puts the Government into position to act logically in the matter of readjusting salaries in the Government service. It has long been contended that the average salary of $948 a year paid by the Government 1 is inadequate in these days of high prices. Salaries can not be consistently advanced, however, while there are a large number of worn-out employees in the service already receiving more than they earn. Expulsion from the service and readjustment of salaries through demotion are not satisfactory solutions for those who are superannuated but needs must continue at their desks, for those who are efficient but underpaid, or for the Government who is overpaying some and underpaying others. (4) That the necessity for appropriations from any source is only temporary. (5) That the appropriation of a reasonable sum for only 50 years is an economy and not an expense to the Government, since it removes from the service the evil of superannuation, which under the present system is fully as costly as the establishment of the proposed plan and besides is a permanent and probably growing expense. (6) That practically nothing is asked of the Government toward the support of a retirement plan except a chance to establish one at the expense of the employees themselves. (7) That it would be very unfair to force the younger employees to pay for annuities on the past services of their elders and, at the same time, contribute to their own retirement. Opposition to the proposal that the plan shall be put into operation by means of appropriations from the Government is only heard on the ground that the people of the country may look on such appropriations with disfavor. It is doubtful, however, if there would be opposition from those who understood the need for the measure, and the nature of the proposed plan. As suggested on page 33, the proposal that the plan be put into operation by means of appropriations from the Government does not necessarily mean that these appropriations will be in addition to the present appropriation for salaries. It is difficult to state with absolute precision just what the saving to the Government would be if the aged employees who do not fully earn their salaries were retired, for the reason that efficiency records of work performed by these aged people are not generally kept throughout the service. Such statistics as are available would seem to indicate that the amount lost the Government through the inefficiency of the aged about equals the cost of superannuation. As noted on page 13, an effort was made a few years ago by the Civil Service Commission and the National Civil Service Reform 1 See Census Bulletin 94, p. 32. League to determine what loss the Government was then sustaining through superannuation. Schedules were prepared and sent out to the various departments, and from the returns made on these schedules it was found that the loss in the District of Columbia amounted to approximately $400,000 a year. Assuming that employees at various ages possessed the same degree of efficiency in the District of Columbia and elsewhere, it was found, by applying the percentages obtained for the District to the employees elsewhere, that the Government was sustaining an annual loss in the District and elsewhere of $1,200,000. This estimate was made in 1906, when the service was considerably smaller than it is now, in 1911, and, of course, much smaller than it will be in future years. It is obvious that unless a retirement system is adopted the actual number of superannuated employees in the service must increase with the growth of the service. It is obvious also that unless the growth of the service continues at no less rate hereafter than it has in the past the proportion of superannuated to active employees must also increase. That the service is likely to continue to grow may be assumed without argument, but that it will continue to grow at the rapid rate of the past 30 years is debatable. The present superannuated employees represent the residue of the active service of 30 or 40 years ago. The superannuated employees 30 or 40 years hence will represent the residue of the present active service. Thirty or forty years ago the service was composed of not more than 30,000 employees. To-day the classified service is composed of about 200,000 individuals. If the residue of 30,000 employees of 30 or 40 years ago is now costing the Government $1,200,000 annually, then the cost of superannuation 30 years hence may fairly be estimated to be as 30,000 is to 200,000, or nearly seven times as great as at present. This estimate is, of course, based on the assumption that the rate of separation from the service by resignation and death will continue the same, which would seem to be a fair assumption, and perhaps more than fair, since commercial opportunities outside of the service are likely to be no greater than they have been in the past, and, therefore, to attract away no greater proportion of the service, and the rate of mortality at the ages up to about 70 years is known to be steadily decreasing. On this basis the cost of superannuation 30 or 40 years hence would be approximately $8,000,000 annually, or more than twice the maximum amount required to be appropriated in any one year for back services under the Perkins bill. This phase of the problem was of much interest to the Hon. Franklin MacVeagh, Secretary of the Treasury, and in order to determine whether the cost of superannuation in 1910 was not greater than the amount that would have to be appropriated under a fair contributory system, he undertook, in the spring of 1910, to ascertain how many young clerks could be employed out of the residue of present appropriations for salaries if the old clerks were first paid annuities out of those appropriations on the scale proposed under the Perkins bill (S. 1944). Since the annuities for past services would be paid wholly from public funds, it seemed to him entirely fair to place a minimum and a maximum on the amount that would be given to any one individual. He accordingly had prepared a statement showing the amount of money that would be required the first year to pay annuities under the Perkins bill, but with a minimum of $300 and a maximum of $600, with a minimum of $360 and a maximum of $720, and a minimum of $360 and a maximum of $1,000. The following table shows that the cost under the respective scales is $146,116, $168,080, and $194,308. The number of younger clerks under the respective scales that could be employed at $900 a year by expending for that purpose the difference between those amounts and the present salaries of these aged employees is as follows: 282, 258, and 229. Statistics relative to clerks in the Treasury Department 70 years of age and over. Ages of clerks in Treasury Department 70 years of age and over. As between the three different scales of annuities, the one giving a maximum of $720 a year would be the most expedient. Annuities from $300 to $600 would be inadequate, and the number of clerks that could be employed with the residue of the appropriations after paying these annuities would be more than is really necessary. Annuities from $360 to $720 would be much more satisfactory, and the 258 young clerks that could be secured under this arrangement would manifestly be of greater value to the department than the present 300 aged ones. Annuities with a maximum of $1,000 would greatly relieve the difficulty of removing inefficient employees in the higher grades, but the number of clerks (229) that could be employed with the residue of the present salaries is so small as to raise the question whether the departments would not be compelled to ask for additional appropriations to increase their forces if this scale were adopted. Similar investigations were made at the request of the Secretary of the Treasury in representative bureaus of the Post Office Department and the Department of Commerce and Labor, and indicate that aged clerks can be retired on the basis suggested and younger clerks employed to take their places and do their work, and that not only can these two things be done at the present cost of employing the older clerks, but that an actual saving of money would be effected from the beginning. In three divisions of one of the departments there are 17 employees receiving $24,940 a year in salaries, or an average of $1,467 each, who are rated as performing services worth slightly less than 50 per cent of their salaries. These 17 clerks could be retired under the plan outlined above on 48 per cent of their average pay, or say $700 a year each, and leave $767 a year each, or $13,040 for the employment of younger clerks at the lower grades. As these people are only performing 50 per cent of what is considered a fair day's work, it may be stated with accuracy that with these aged clerks retired on annuities aggregating $11,900 it would be possible with the balance of $13,040 to obtain better and more efficient service by the employment of, say, 13 young, energetic clerks, than the Government now has with the 17 old ones. It should be noted, in this connection, that the mortality among these aged employees is very high, and as they died off the annuities thus released could be used to increase salaries. From the foregoing it is apparent that the establishment of this plan along the lines of the Perkins bill, but with minimum and maximum limitations, as suggested by the Secretary of the Treasury, on the amount of annuities on services rendered prior to the adoption of the plan, would not only cost the Government nothing, but would probably result in a small saving even the first year, and that this saving would steadily increase from year to year as the employees' savings accumulated for their own retirement, until finally the cost of superannuation to the Government would be nothing. COST OF ADMINISTERING THE PLAN. Besides the cost of putting the plan into operation, the cost of administering it needs to be considered. It is believed that a small annual appropriation will be sufficient for this purpose. Section 17 of the proposed bill, which makes provision for that need, reads as follows. SEC. 17. That for the clerical and other service and all other expenses necessary in carrying out the provisions of this Act during the fiscal year nineteen hundred and ten, including salaries and rent in the city of Washington, there is hereby appropriated the sum of twenty thousand dollars out of any money in the Treasury not otherwise appropriated, to be available until expended. It is estimated that the savings accounts of the 170,228 employees included in the estimates of cost for the entire classified service could easily be taken care of by 26 bookkeepers. This estimate takes into account a most liberal number of Sundays, holidays, days of annual leave and sick leave, and presupposes that the Government bookkeepers would not average more than 300 entries a day and keep their accounts balanced. (If the plan is limited to 23,254 classified employees of the District only four bookkeepers would be required to do the work.) The computation is as follows: Bookkeepers for entire service. Number of employees in service_-_ Number of entries per year for each employee (12 monthly deposits, and the equivalent of 4 entries to cover crediting of interest, balancing accounts, and statement work) –– 170, 228 16 Total number of entries per year for entire service (170,228×16) __ 2, 723, 648 Number of bookkeepers for entire service (2,723,648÷÷-106,000) – 25.7 Bookkeepers for District of Columbia. Number of employees in service_-_. 23, 254 Number of entries per year for each employee (12 monthly deposits, and the equivalent of 4 entries to cover crediting of interest. balancing accounts, and statement work) – 16 |