Chairman Hampton, it is always a pleasure to see you aboard, and I commend you for your statement.

The Congress, a few years back when it had the opportunity to make this adjustment on a very objective basis, declined to do that.

I refer to Mr. Udall's proposal of several years ago, when it was proposed when the salaries of the executive and the legislative branches would have been adjusted on a annual basis, in accord with that, so would the entire Federal fraternity. That was what it should have done.

Unfortunately, the Congress itself defaulted and did not act in the affirmative at that time. So it seemed to me then that the only other option we had was under the commission approach.

It is very interesting as you read the statistics related to the history of congressional pay increases, the fact that over a period of 100 years, mind you, dating back to 1873, this body has had but nine increases.

So with that thought in mind, how can you possibly avoid the large percentage increase because of this inadequate mode of operation, this obsolete mode of operation that we embrace here.

If we had, only a few years ago, moved in the direction of Mr. Udall's proposal, we would have once and for all laid this matter to rest and what adjustments were appropriate for the times would then take place.

If the economy happened to go down, well then salaries would have been decreased accordingly. And if the economy inflation prevailed and economy moved up and inflation prevailed, salaries would have been increased accordingly.

But we did not see fit to accept that very rational objective then. Thus, we do not have much in the way of other options but to move in this manner.

The private sector, as we know, virtually adjusts their contracts every year; every year, and that being the case, it is reasonable to believe that over the course of the last century, almost 100 times, salaries have been adjusted.

But with regard to this body, it is really inconceivable to think that over that period of a century only nine times has this matter been adjusted. So I commend the concept, that at least it would be done every 2 years and I would hope very much we would get to the point where it would be done each year so that we would not run into this large percentage difference which poses a bit of a problem.

Just a question, Chairman Hampton. Do the agencies have a problem retaining top quality talent because of the ceiling imposed, the salary ceiling?

Take the example of an attorney who is employed by the Federal Government and who is going to prosecute a case in behalf of the citizens of America, he presents himself in that courtroom and he is matching wits with an attorney from the private sector whose income might be well in excess of $200,000 or $300,000 a year, and this fellow who is supposed to match wits with the fellow in that category might be only getting something like $35,000 or $36,000. With that thought in mind, do you have a problem retaining good talent?

Mr. HAMPTON. I think we do, Mr. Hanley. I think that it has been. aggravated in the last 2 years by two things.

One, the compression. There is no opportunity to provide any monetary incentive to an individual in the top three grades. They are all essentially the same salary level.

Couple that with the fact that you have a retirement cost-of-living increase. He can look then at his salary, his years of service and see the 6-percent annuity increase, and he looks at his own record and he comes to the conclusion that, faced with the static pay, it would be better to go out on a reduced annuity since he would have to stay for 2 years, and that will vary from 18 to 24 months, depending on a lot of factors, just to have that same annuity if he stayed on board.

So the good man, the man who has a very remarkable talent, and that has obligation at this stage in life, when he is educating children in college and he is toward the end of his career and because he is a senior official, the incentive is to go out and take that reduced annuity and then draw another salary during those years.

I don't recall the exact number of people that went out last year in the supergrade levels, and we do not have the figures this year. But I did gather the figures for the Commission on Legislative, Judicial, and Executive Salaries on the number of career executives who left and it was about 300. That is roughly 7 or 8 percent because we are talking of around 4,000 career supergrade people.

In addition, from my own experience of reviewing background qualifications of people coming into the Federal service from outside and even looking at some of the résumés of these young people, the White House fellows, I found that top talent like that is making considerably more than the people earn in Federal service and with considerably less experience.

I think if you are going to have good management, if you are going to call on the Government to be efficiently managed, you are going to have to pay for this talent. You are going to have to pay the going

rate.

I feel, as when I testified in the Senate, I do not run for office, and I do not know what the sting of the voters is to a Member of Congress who raises his own pay.

But the very nature of duties that Congress is involved in has changed, and you do not have a session that starts anymore in January and ends on June 30, and you are almost in a continuous session and traveling around. I think that people who are inclined to run for public office should not be just those people who can afford it but I think anybody who runs for public office should have adequate recognition. So I support this idea; I think a Congressman or Senator who comes here should expect to be compensated.

Mr. DULSKI. Any more questions?

Mr. HANLEY. Thank you very much, Chairman Hampton. Thank you very much, Mr. Chairman.

Mr. DULSKI. Mr. Hillis?

Mr. HILLIS. I have no questions at this time, Mr. Chairman.

Mr. DULSKI. Mrs. Schroeder.

Mrs. SCHROEDER. I just wanted to ask a couple of quick ones.

How many people will this pay raise affect? Do you have any rough estimate in numbers?

Mr. HAMPTON. Well, it would affect all the Members of Congress. In the judiciary-well, that would be 535 in Congress. Mr. Sweeney will have to answer that question as far as the judiciary is concerned. In the Federal Government, there are around 500-odd Presidential appointees who will be affected.

In the supergrade levels, we are talking about 1,800. That would include both quota and nonquota supervisors. So that would be 2,300, 500; that is around 2,800 for the executive and the legislative branches and others whose pay might be affected in the long run.

Mrs. SCHROEDER. And you say there are about 500 that are Presidential appointed heads of agencies?

Mr. HAMPTON. Yes; if you would like, I will get the specific figures and provide them to you.

[The following was furnished:]

The executive pay adjustment will directly affect the pay of those positions that are either in the Executive Schedule (subchapter II of Chapter 53, title 5, United States Code) or are paid at Executive Schedule rates. The number of positions are as follows:

In addition, there are more than 100 ambassadors and other top representatives of the United States Government abroad who are paid at Executive Schedule rates. The U.S. Postal Service also has a number of officials who are paid at rates up to the rate for level I of the Executive Schedule.

Of our career employees below level V of the Executive Schedule, we estimate more than 5,000 are currently having their salaries limited by the $36,000 ceiling. This includes 2,885 employees in the top three grades of the General Schedule, as well as employees under other statutory and administrative pay systems.

Mrs. SCHROEDER. I also wondered, what is the present gap now between the supergrade level, monetarily? Is there any way to do that without going through all the steps?

Mr. HAMPTON. Yes; I have the figures here.

Mrs. SCHROEDER. I would appreciate it.

Mr. HAMPTON. The salary of a GS-18, based upon comparability figures, should be $41,734, and he is presently getting $36,000. So there is a gap there of $5,734.

The grade 17-there is a gap in all rates of the grade.

Mrs. SCHROEDER. The thing that concerns me about this is if you move the top level up, then it seems that there is no pressure, there is no further pressure to keep them moving all the grade levels up proportionately, and I wonder if you would not be setting a bad precedent at this time when we are trying to hold the line on spending. So the immediate impact, what I am saying of S. 1989, may not be so much, but in the long range, by relieving this pressure, may be much more so.

Mr. HAMPTON. The relationship here is downward, as your compression moves down, rather than upward. The first 15 grades are based upon paying salaries under the comparability principle, as they relate

to what we find being paid in the private sector, and so regardless of what would happen to the top, we would continue to adjust those salaries on the comparability principle for the first 15 grades.

What is happening is, as we adjust those salaries consistent with the existing law, the compression moves down because we are bumping into a ceiling established by law which relates to GS-18, the executive level V. So if you project into 1977, using the types of figures that are available to us today and, sav, you have the same rate and rise in cost of living, and you have the changes reflected in private industry salaries, the compression could go down in 1977 to grade 14.

The problem. I think, as vou have presented it is that there is an upward creep in salary, and that is correct. But as long as that is present in the private sector, it will be reflected in the public sector.

Mrs. SCHROEDER. So you are really saving that it is conceivable that GS-15's could be making more than the 16's, 17's and 18's if we were not to pass this bill?

Mr. HAMPTON. No: we would go down to-I mean, we would adjust the salaries of any of the other levels in the general schedule until they reached the statutory ceiling.

So it is conceivable that all of the upper levels, 14, 15, 16, 17, 18. and executive level V, would all be of one salary range by 1977.

Mrs. SCHROEDER. I see. So it would be one. But there would not be any way that a GS-14 or 15 could go higher than an 18, et cetera ? Mr. HAMPTON. NO.

Mrs. SCHROEDER. Thank you very much, Mr. Hampton.

Mr. DULSKI. Mr. Mallary.

Mr. MALLARY. Mr. Hampton, I gather from your statement we are dealing largely with questions of procedure rather than dealing also with the presumption that there would be a recommendation calling for an increase.

Can you provide for us-and probably it is difficult now-a rough estimate of what the different percentage of increases under recommendation might mean in terms of total budgetary impact?

Mr. HAMPTON. I cannot at this time, because I have no idea. I have not seen the final report of the Commission that went to the President. We will be having discussions on that with the Office of Management and Budget and the White House Staff, to prepare recommendations for the President's consideration.

At that time, we will then be able to provide any cost figures on whatever the President may recommend.

Mr. MALLARY. I assume that probably the timing of an increase in pay is not of great importance within the general civil service or within the executive categories or within the judiciary; in other words, does it make any difference whether pay increases occur in January or April or October?

Mr. HAMPTON. We have not really addressed ourselves to the question of timing.

But my personal inclination, should I be asked in these discussions, would be to relate it to the next adjustment in the general schedule pay and no decision, of course, has been made there.

We are in the midst of meeting with the Federal Employees Pay Council, in accordance with the terms of law, as to when the next

Federal pay adjustment will be made and what the comparability figures show.

The most orderly way, from a management point of view, would be to adjust the salaries on the same date. But I do not think that the President is bound by that. I think that his decision will have to relate to the economic situation and be consistent with economic stabilization guidelines and what those may be under phase 4 and all. I just do not know, sir, at this time.

Mr. MALLARY. There has been a tradition in several States that salary increases for members of a legislative branch, which either directly or indirectly approves those increases, do not take effect until after the next election of the new group is settled. This may be illsaid. Maybe this is largely a political question and not one that relates to your testimony. But would you like to comment on that as a procedure?

Mr. HAMPTON. Well, if I were to have the privilege of exercising a political judgment, I would say make it effective before January 1974 because then you are out of an election year. The only other choice that you would have would be going into 1975. You are talking about making it effective in another Congress, in which case we are living with the compression situation for another 18 months. Mr. MALLARY. Thank you very much.

Mr. DULSKI. Mr. Waldie.

Mr. WALDIF. Mr. Hampton, why can't we do this annually instead of biennially?

Mr. HAMPTON. I really agree with what Congressman Hanley says. I think it should be done and reviewed annually because I think, very definitely, there is a relationship between General Schedule pay and executive pay and the pay of other individuals, particularly, I think, when we have an inflationary situation.

Mr. WALDIE. Well, if we do it for all other Federal employees on the basis that we want to keep vital employees, then that makes real

sense to me.

But the people that really make most of the policy decisions as to where the vast numbers of Federal employees shall move, we apparently do not seek comparability with their counterparts in the private industry, and I would expect you would have that in the range you alluded to as an inevitable result of that failure, and I have never understood why we made it a 4-year review in the first instance and, now, why we want to reduce it to a 2-year review, why it cannot be annual. I do not see what the principal difference is.

In fact, it would seem to me-and I have been struck with this since I have been in Congress-that we pay little attention to the cost of materials for Government; that is, there is some concern about overrides in Defense contracts but it never seems to manifest itself into too much action.

But as to the heart of Government, which is the service component, we have a great deal of concern. And we always, I think, politically posture on that issue to show what great economists we are; and, thereby, we might starve the public system of its competent people and we ought not to do that.