Mr. BARRY. I notice on page 4 you stated that the average salary or income is $700 per year. What is the average Government salary in Puerto Rico? Mr. VELEZ. This is the average salary for the people, the 21⁄2 million Puerto Rican people, that I got here. Mr. BARRY. Per person or per family? Mr. VELEZ. Per capita. Mr. UDALL. Per capita. Mr. VELEZ. To extend further, our Government said there was something $350 lower than the lowest State in the Union, Mississippi. Mr. BARRY. I am not trying to compare it to the United States. I was trying to figure the average per family share, or where a Federal family fits in that kind of situation. Mr. VELEZ. I cannot offer you an average, but I can cite an example, if I may use my own family as an example. Mr. UDALL. Yes. Mr. VELEZ. My wife has a bachelor's degree from the university and a master's degree from the medical school. She is a She is a public health supervisor in an agency which is subsidized in part by the Federal Government. She earns the fabulous salary of $345 a month. My secretary earns over $400. Because she is at the top of her grade. Mr. BARRY. She is a Federal Government employee and your wife is a State employee? Mr. VELEZ. State employee. So, using that as a measure and repeating what Mr. Kryzanowski said, except in the case of executives and attorneys, which are paid much higher in the State government than in the Federal Government, State attorneys start at $600 basegreen, right out of the bar exam, and they go all the way up in four steps to, I believe, right now $1,150 a month, and there is a proposal to raise them even more. But as a general rule, outside of the topdrawer professionals, your executives, your doctors, and your highly trained special technicians, of which you would not find much comparability-for example, FAA was mentioned for Virgin Islands; it carries through to Puerto Rico. Mr. BARRY. There are 5,077 Federal employees on the two islands. What is the total employment in the two islands? Mr. VELEZ. Total Federal employment? Mr. BARRY. No. You have given me that figure. That is 5,077. Mr. VELEZ. In general. Mr. BARRY. What is the total employment? Mr. VELEZ. I do not have that figure, but Mr. Concepcion de Gracia offered you our study, and we have a copy here. I believe we have two copies-we are submitting the book, the big book. Mr. KRYZANOWSKI. Sir, we do not have the figure of the total employment in Puerto Rico. The figure runs around 31 percent. Mr. BARRY. Is it half a million people or something of that kind, or is it 200,000? I am trying to get some kind of a comparability. We found in Alaska that almost 20 to 25 percent of the employment there was Federal employment. I would like to find out something by way of the impact of the Federal Government. Mr. VELEZ. I see your point now, Mr. Barry. On that point we are a very small percentage. Mr. BARRY. I would think so, too. Mr. VELEZ. We are very small percentage. Mr. BARRY. On page 5, you speak of a report showing there is a 20percent differential in cost-of-living index as distinguished from 4 percent. Where is this report? Mr. VELEZ. Parts of this report are contained as appendixes right in the statement you have, sir. Mr. BARRY. This is the report you are referring to on page 5, is it? Mr. VELEZ. Yes, sir. Mr. KRYZANOWSKI. Yes, sir. Mr. VELEZ. We have about 20 pages of it included in this statement. My statement was not as thick as it looked; and the rest of it is in preparation now, as I said, with the able assistance of some of the specialists from the national employee unions here, which I need not detail. You will be hearing from them on the 10th, I understand. Mr. UDALL. We will be glad to have them and have that information in the record. Mr. BARRY. In conclusion, I want to direct your attention to page 14, where you talk about a Damocles sword hanging over your head. Do you actually believe that, if we rendered a decision in your favor, that the Civil Service Commission would hand down a decision reducing COLA to zero? Do you think there is that little integrity in the Civil Service Commission? Mr. VELEZ. Sir, I did not mean any disrespect to Mr. Macy or any Government official in Civil Service Commission. I am stating a fact, the fact of some of the communications to some of the members of your committee and some of the gentlemen in Congress who are supporting our position, saying that: We are holding off on the reduction of 5 percent, which, as you gentlemen know, was to have been effectuated on April 1. Until this hearing is over with, if nothing happens with this bill, they will survey again in the fall. Our contention is that the way they carry out the surveys, we are right back where we started from, and I can just start packing now, because they are going to cut the COLA. Mr. BARRY. In other words, you have a 5-percent cost-of-living index? Mr. VELEZ. No, they would cut it from 12% to 5 percent. Mr. BARRY. Well, you say here to zero. Mr. VELEZ. I say they could cut it to zero and we could not rebut their conclusions, because we are told about these things when we read it in the press. And as I said, if this were a bargaining table, the deck would be stacked just a little bit different. But as it is, all we get is decisions and conclusions. And even under the laws in effect now, where employee unions are supposed to have certain rights of bargaining, shall we say, with our employer, we have no such rights with the people who administer those laws, the Civil Service Com mission. Mr. BARRY. I appreciate your coming before us, but I do not believe you want the statement on page 14 to stand stating that you believe that Civil Service would cut to zero the cost-of-living allowance if we in this committee decided that you were to continue the cost-ofliving allowance. I do not think you want that in, do you? Mr. VELEZ. Well, sir, I say they could hand down a decision. Mr. BARRY. They could have done it at any point in the past, but they did not, did they? Mr. VELEZ. Yes, sir; they handed down a decision Mr. KRYZANOWSKI. Yes. Mr. BARRY. To zero? Mr. VELEZ. To 5 percent, effective April 1. Mr. BARRY. Maybe they had some facts to base it on, but it is not to zero. Mr. VELEZ. It is on the basis of facts, sir, and that is exactly what we are rebutting with our studies. Mr. UDALL. The Chair is going to have to conclude this. There is a quorum call on. I want to thank you for coming such a far distance. Mr. John MacKay, the distinguished president of the National Postal Union, who will be heard from later; I understand you have Mr. Cristobal Lliteras from Puerto Rico. Did he wish to be heard separately; could he return? Mr. MACKAY. Mr. Chairman, he is part of our delegation. He is not supplying a separate statement. But I would like to have him stand and introduce him to the members of the committee here. He is president of the Postal Union of Puerto Rico and the Virgin Islands. Mr. UDALL. We are very sorry we did not get to hear you in detail, and I will assure you that you are in good hands with the president of your organization, and he will present your case very adequately when the time comes. Mr. LLITERAS. Thank you, sir. Mr. UDALL. In addition, I would like to say that you have a very fine advocate for the territory of Puerto Rico, and I think your statement is most comprehensive. Mr. VELEZ. Thank you, Mr. Chairman. The next witness is Mr. John G. Brady, chairman of the legislative committee of the National Association of Internal Revenue Employees. Mr. Brady. STATEMENT OF JOHN G. BRADY, NATIONAL ASSOCIATION OF INTERNAL REVENUE EMPLOYEES Mr. BRADY. Mr. Chairman and members of the subcommittee, I am John G. Brady, chairman of the legislative committee of the National Association of Internal Revenue Employees, accompanied by George Bursach, executive secretary-treasurer. Our association of over 27,000 members are opposed to the elimination of the cost-of-living allowances for statutory-salaried Federal civilian employees in non foreign areas. I received the following information dated February 20, 1964, from our chapter 35 president, Donald C. Peacock, and I quote: We, the affected employees, do not consider the dollars paid to us through COLA to be fringe benefits. We consider those dollars just a part of the payroll dollars paid to us by the Federal Government-the payroll dollars which were originally contracted for between the Federal Government and us. Thus, the intent to eliminate COLA should be denounced by not only the Hawaiian classified Federal employees but also by all classified Federal employees, for what is being attempted by the Civil Service Commission at this time, to eliminate COLA, to the detriment of the Hawaiian classified Federal employees, might in the future be attempted to the detriment of the classified Federal employees in those areas where the cost of living is so low as to warrant similar reductions in takehome pay. We consider ourselves, out here in Hawaii, to be one segment of the Federal employees family and what affects us should be construed as affecting all members of the family. We here in Hawaii emphatically denounce the Government's attempts to single out one member of the Federal family for a reduction in payroll take-home pay. Furthermore, it is bad faith on the Government's part to enter into contracts with Federal employees, agreeing to pay them certain wages including the cost-of-living allowance and then reneging on its agreement. As you can see, the intended elimination of COLA is creating a severe morale problem in this area. The 137 members of the National Association of Internal Revenue Employees. Unit 35, respectfully request your aid in preventing the announced cut in the cost-of-living allowance in Hawaii. We feel that such a decrease is not warranted by the facts. This would seem to be borne out by the figures which were given me by the local U.S. Civil Service Commission. They show the following: Both of the indicated drops in the ratio of cost-of-living allowance are a result of new factors. We are told that the decrease in 1959 was caused by the removal of a weighting factor when we were taken out of the "tropical" category. This was based on an apparently arbitrary figure that states that 76° mean temperature is tropical; a mean figure of 75.1° such as ours is not tropical unless the humidity is high. Who decides what is high? Is the humidity of Honolulu really considered low? If so, why do our leather goods and clothes mildew in the closets? Why do our cars rust out in a few years? We lost 2% percent of our cost of living in 1960. Now although the cost of living, as reported in the local newspapers, has hit a new high in Hawaii, we are scheduled to lose an additional 21⁄2 percent. The explanation for the drop in our cost-of-living ratio as compared with Washington, D.C., is supposed to be that the cost of homeownership is compared in 1961, for the first time. We are not told the basis of this, but as one who came to Hawiii from the mainland, I find it hard to believe that a valid comparison was made. In fact, the cost of housing in Hawaii is the most shocking adjustment that most of us have to make. The cost of housing here greatly exceeds anything comparable on the mainland, and the cost of fee simple land is shocking. In most areas of the mainland, most people would not even dream of building a home on leased land and paying land rent and then paying the property tax on the land (for which no deduction is allowed). Does this survey of comparative living costs give any consideration to the cost of higher education. Although the University of Hawaii is being constantly improved, many families find it necessary to send children to mainland colleges and universities, either for studies not available here, or for some other reasons. We do not have four universities in Honolulu proper, as they do in Washington, D.C. Mr. Chairman, I would like to place on record the following information from chapter 69, Anchorage, Alaska: COST OF LIVING, ALASKA I am enclosing the sheets on which we conducted a survey to endeavor to arrive at comparative living costs in Alaska. A comparison of this nature is very difficult as many of the employees live in substandard housing here than what was available in the States. The following facts seemed quite apparent: Housing and utilities were at least double of those in the south 48. Many employees who attempted to make their homes in Alaska and have purchased housing on a 30-year contract were demoralized by this proposal. Housing costs are apparently being adjusted downward here, but the employees at tempting to make their homes here have made 20- to 30-year commitments at the higher costs. They, therefore, do not feel they are getting fair treatment if their future salary will be reduced. The proposed elimination of the 25 percent cost-of-living allowance has had an adverse effect on employees who might be in the housing market now, as they do not dare make a long-term commitment. Several of the better homes have been placed "for sale" to endeavor to get out from under the long-term contracts. There is no doubt, as you can note from the comments on the survey made, that Alaska would lose a material portion of its more qualified civil-service personnel if the proposal to eliminate this allowance goes through. In Anchorage, there are approximately 10,000 trailers, with a probable 30,000 people living in trailers from estimates given me by local real estate firms. There is, therefore, a large potential housing market as yet unfilled. Also, the industry here needs the work. It is hoped that a somewhat permanent arrangement can be worked out whereby if employees purchase homes they will have future protection on income reductions. The present proposals by the Civil Service Commission have had an adverse effect on this situation. This situation also places a much heavier tax burden, on the people who do purchase housing, in that school taxes, etc., must be comparably higher. I would like to furnish to your committee all of the data covering the cost of living survey prepared by our chapters from Alaska and Hawaii. I thank you for your interest and I appreciate the opportunity of appearing before your committee. (The communication containing the Hawaii data is as follows:) NATIONAL ASSOCIATION OF INTERNAL REVENUE EMPLOYEES, Mr. JOHN G. BRADY, DEAR MR. BRADY: Thank you very much for the copies of your February 27, 1964, statement before the House subcommittee concerning H.R. 7401. I believe further clarification is warranted concerning the Government's part of entering into bilateral contracts with Federal employees and the Government's subsequent one-sided attempts to break those contracts. Therefore, I will relate to you my case as an example. During May 1955, I was employed as a special agent in the Internal Revenue Service with post of duty at Seattle, Wash. In January 1959, in response to the Government's published requests for applicants to fill a special agent's position in Honolulu, I applied for the position by completing and submitting a form 57 to the Honolulu district. In answer to the question set forth on the form 57, I stated that the lowest salary I would accept for my employment in Honolulu would be my Seattle, Wash., base pay plus a 20 percent cost-of-living allowance. The Government accepted my offer to work in the Honolulu district at that wage and that percentage of cost-of-living allowance by (1) executing a form 50, dated June 12, 1959, changing my post of duty from Seattle to Honolulu and my salary from $7,030 to $7,030 plus 20 percent COLA; and (2) paying me that wage and percentage of COLA after my arrival in Honolulu. In the latter part of 1960, my COLA was arbitrarily reduced by the Government to 17% percent. Almost a year later, my COLA was arbitrarily reduced by the Government to 15 percent. In effect, what has happened? (1) The Government solicited mainland employees to fill a vacancy in Hawaii; (2) I offered to work in Hawaii for a dollars plus 20 percent cost-of-living allowance; (3) the Government accepted my offer, transferred me to Hawaii, and began paying me at my requested rate of pay plus my requested percentage of COLA; (4) the Government violated our bilateral agreement by reducing the agreed upon COLA; and (5) the Government again violated our bilateral agreement by further reducing the agreed upon COLA. It may be argued that my base pay now exceeds the base pay plus COLA which the Government agreed to pay me when I first came to Hawaii. Such an argument is without merit because the major portion of my increase in wages after coming to Hawaii resulted from my being promoted to a higher grade and |