Annual Message to the Congress on the Comparability of Federal and Private Salary Rates.

To the Congress of the United States:

I forward herewith the annual comparison of Federal salaries with the salaries paid in private enterprise, as provided by section 503 of the Federal Salary Reform Act, and recommended adjustment of the Federal statutory salary schedules in accordance therewith, to be effective in January 1964. The Civil Service Commission will send to the Congress in the next few days a draft bill which would put these recommendations into effect. The budget which I have proposed for fiscal year 1964 contains a provision for $200 million for this adjustment.

The Federal Salary Reform Act of 1962, the most important Federal employee pay legislation in 40 years, declares that Federal salary rates shall be comparable to private enterprise salary rates for the same levels of work, and provides in section 503 that:

"In order to give effect to the policy stated in section 502, the President: (1) shall direct such agency or agencies, as he deems appropriate, to prepare and submit to him annually a report which compares the rates of salary fixed by statute for Federal employees with the rates of salary paid for the same levels of work in private enterprise as determined on the basis of appropriate annual surveys conducted by the Bureau of Labor Statistics, and, after seeking the views of such employee organizations as he deems appropriate and in such manner as he may provide, (2) shall report annually to the Congress (a) this comparison of Federal and private enterprise salary rates and (b) such recommendations for revision of statutory salary schedules, salary structures, and compensation policy, as he deems advisable."

By Executive Order 11073, I directed the Director of the Bureau of the Budget and the Chairman of the Civil Service Commission to make the required annual comparisons and to refer the Bureau of Labor Statistics' findings and their comparisons to the Federal employee organizations for their views. Under the Order the Director and the Chairman are to report these comparisons and employee views to me, and to make recommendations with respect to the several statutory salary systems after consultation with the Postmaster General, the Secretary of State, and the Administrator of Veterans Affairs.

The first annual report of the Director and the Chairman is attached. The Bureau of Labor Statistics' National Survey of Professional, Administrative, Technical, and Clerical Pay shows that private enterprise rates increased in 1961-62. The new levels of private enterprise rates are reflected in the revised statutory salary schedules proposed in the attached report.

To carry out the intent of the 1962 Salary Reform Act, the schedules in the attached report, which will be in the bill to be submitted by the Chairman of the Civil Service Commission, should be adopted in lieu of the second-phase schedules provided in that Act, to be effective in January 1964.

The Salary Reform Act, pending adjustments in executive pay, imposed a temporary $20,000 ceiling on the GS-18 salary, in place of the $24,500 rate I had recommended. As one consequence of this ceiling, the Act established rates below the 1961 comparability levels for all grades above GS-7. The schedules I am now proposing include the increases necessary to bring salary rates for all grades through GS-15 up to full comparability. The scheduled rates proposed for the grades above GS-15 approach as near to full comparability as is feasible at this time, in light of the review now being made of top executive salaries. It is highly desirable, in the interests of equity and the solution of pressing problems in professional and administrative staffing, to achieve full comparability rates for all grades as soon as possible. The draft bill to be submitted by the Chairman of the Civil Service Commission, which would put into effect up-to-date career salary schedules, will take account of the relationship with executive pay by providing that the rates above $20, 000 in the recommended career schedules shall go into effect only upon adjustments in top executive pay.

In accordance with the recommendations of the Senate Committee on Post Office and Civil Service, a study of executive pay is now underway. Development of an objective approach to Federal executive pay poses important and complex problems. Consequently, I have asked the Advisory Panel on Federal Salary Systems to study the subject and to recommend a course of action.

The views expressed by employee organizations, which are contained in Appendix C of the attached report, are thoughtful and constructive. The greatest concern expressed by employee representatives is for reduction in the time lag between BLS reports and adjustments in the statutory salary rates. The spirit of the comparability principle and natural considerations of equity quire that the lapse of time be held to the minimum possible, and the Director of the Bureau of the Budget and Chairman of the Civil Service Commission will review the process and renew discussion of the subject with employee organizations. Several other suggestions of substance have already been or will be studied and discussed with employee organizations.

The Government's action in this, the first year of operations under the Salary Reform Act, is critical to the rights and reasonable expectations of Federal employees and to the needs of Federal agencies. The Government has adopted the principle of comparability with private enterprise and a process for accomplishing it which are noteworthy for objectivity and clarity. By our actions in this first year's test we can demonstrate that the Government has sincerely committed itself to the twin proposition of fair treatment of its employees and adequate compensation for recruitment and retention purposes.

JOHN F. KENNEDY