Computing Hourly Pay Rates for Civil Service Employees

Published by the Government Accountability Office on 1971-07-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                  COMPTROUER      GENERAL-OF
                                                WASHINGTON.       D.            c

f-_   1   Dear Mr.    Forsythe:
                 Pursuant    to your request       of June 2, 1971, we have reviewed
          a suggestion     by your constituent,          Mr. Simon S. Harris,         237 Maine
          Avenue, Cherry Hill,        New Jersey,     for modifying       the manner ofcom-
          puting   hourly    pay rates     for civil     service   employees.      Mr. Harris
          suggested    that the provisions        of section      550.4 of Title      5, United
          States   Code--biweekly       pay periods      and computation      of pay--be
          amended to provide       for dropping      mills     in computing    hourly    pay
          rates.     He estimated     that such a procedure         could save the Govern-
          ment $15 million       a year.
                Section       5504(b)      provides           that:
                 "For pay computation           purposes                 affecting  an employee,
                the annual rate of basic pay                           established    by or under
                statute     is deemed payment for                        employment   during    52
                basic     administrative       workweeks                  of 40 hours.      When it
                is necessary        for computation                    of pay under this      sub-
                section     to convert       an annual                 rate of basic pay to a
                basic hourly,         daily,   weekly,                 or biweekly    rate,   the
                following      rules     govern:
                       "(1)     To derive       an hourly               rate,       divide         the   an-
                                nual rate       by 2,080.
                       "(2)     To derive   a daily rate, multiply    the hourly
                                rate by the number of daily     hours of ser-
                                vice required.
                       "(3)     To derive   a weekly or biweekly  rate, mul-
                                tiply   the hourly  rate by 40 or 80, as the
                                case may be.
                "Rates are computed to the nearest      cent,    counting,                                     one-
                half   and over as a whole cent. ***.I'       (Underscoring
               The above method of computing     rates  resulted  from the enact-
          ment of the Government   Employees  Salary   Reform Act of 1964, Public
          Law 88-426 (H.R. 11049),   approved August 14, 1964.
               Prior   to the enactment      of Public     Law 88-426,      all pay rates
          were computed in full      cents,   counting      a fraction    of a cent as the
          next higher    cent.    The conference     report     accompanying      House bill
          11049 (Report     1647, August 3, 1964),       included      the following    re-
          marks concerning     the computation      of pay.

                                        50TH ANNIVERSARY 1921-1971

               "Section     103(d) of the House bill             amends sec-
              tion 604(d)(3)        of the Federal        Employees Pay Act of
               1945 (5 U.S.C.       944(c)(3))       to change the method of
              computing      salary    rates     for all pay computation          pur-
              poses affecting        most employees        *** so that in the
              computation       of rates      all remaining       fractions     of a
              cent shall       be eliminated.          The existing       method of
              computing      rates is to compute in full               cents,   count-
              ing any fraction         of a cent as the next higher              cent.
               [Underscoring       supplied.]
              "Section    103(c) of the conference  substitute       re-
              quires   rounding  off to the nearest  cent,     counting
              one-half    cent and over as the next higher      cent.    ***."
               As noted in the cited       conference    report,   the Congress re-
        jected   the proposal    to eliminate      all remaining     fractions      of a
        cent in computing     rates    (which was what Mr. Harris           suggested)
        but accepted    the method of rounding         up or down.
    I          The Civil  Service Commission reviewed     Mr. Harris'                    suggestion
/       on May 4, 1971, and recommended against       its adoption                 for     the fol-
        lowing   reasons.
              1. The Commission  did not consider  reductions       of employees'
                 pay as an appropriate  way to achieve     savings.
              2. The Commission  believed  that it would.be inequitable    if
                 all employees  were to lose money and that employees     would
                 notice the loss of 1 cent an hour in their    paychecks.
              3. The adoption  of the suggestion     would have                no effect on
                 the pay of the Government's     approximately                 750,000 hourly
                 wage rate employees.
              4. The Commission      believed    that the system of rounding         off
                 to the nearest      cent was fair       to employees,      because over
                 a period    of time they would break about even as a result
                 of pay-rate     changes caused by periodic          within-grade    in-
                 creases,    promotions,      demotions,    and changes in pay sched-
                In view of the expressed        congressional      sentiment   concerning
        the present      method of computing      rates     and the absence of any
        overriding     factors   indicating     a need to revise        this method, we
        see no basis      for pursuing      the matter    further.


     We trust     that the   above   information      will    serve   the   pur-
pose of your    request.
                                             Sincerely       yours,

                                                       ller   General
                                            'of    the United   States
The Honorable  Edwin B. Forsythe
House of Representatives