Review of the Implementation of the Coordinated Federal Wage System in Selected Wage Survey Areas

Published by the Government Accountability Office on 1971-12-10.

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



Review Of The Implementation
Coordinated Federal Wa
In Selected Wage Survey Ar    8.164515

                                                                           .-     . _

                                       WTED STATES GENERAL ACCOUNT~MGOFFEE
                                                    WASHINGTON,      D.C.       20548



                         Dear    Mr.     Hampton:

                                   This is our report          on the review     of the implementation                      of
                         the Coordinated        Federal        Wage System      in the wage survey                     areas
                         of Denver,      Colorado;      Little    Rock,   Arkansas;      Philadelphia,                  Penn-
                         sylvania;      and Seattle-Everett-Tacoma,                Washington.

                                   This report       contains     recommendations          for your considera-
                         tion which      are subject        to the provisions       of section     236 of the Leg-
                          islative    Reorganization          Act of 1970.      We shall     appreciate       receiving
                          copies    of the statements          you furnish     to the specified        committees
                         in accordance         with these provisions.

                                    Copies   of this report     are being sent to the Chairmen             of the
        I       I   .)   House and Senate Committees                on Appropriations,       Government          ‘-j o 0 c, \‘Ou
                         Operations,       and Post Office       and Civil   Service.     Copies    are being         k, 2 qti
                          sent also to the Director,         Office    of Management       and Budget;       the
                         Secretary       of Defense;     the Secretaries     of the Army,      Navy,     and Air
                         Force;      the Administrator       of Veterans     Affairs;  the Administrator
                         of General       Services;    and the Director      of the Mint,     Department         of
                         the Treasury.

                                  We shall     appreciate      receiving          your     comments           on the    mat-
                         ters   discussed      in this report.

                                                                      Sincerely           yours,

                                                                      Director,           Civil    Division        ,

                \        The Honorable         Robert     E. Hampton,     Chairman
            /            United States       Civil   Service   Commission          ? ‘3

                                               50 TH ANNIVERSARY                1921-    1971


      In November 1965 the President     requested the heads of
executive departments and agencies, under the leadership          of
the Chairman of the Civil    Service Commission, to develop a
common Federal wage system.     The purpose of such a system
was to eliminate  wage rate differences      among agencies for
the same trade and labor jobs in the same local wage areas
and to bring about equitable    coordination    of wage practices.

      After 2 years of intensive    study and consultation   with
Federal agencies and union representatives,      the Civil  Ser-
vice Commission developed the Coordinated      Federal Wage Sys-
tem.     The System, approved by the President   in December
1967, was designed to cover, beginning in July 1968, Gov-
ernment wage employees in trade, craft,     and laboring   occu-
pations.     It was to provide for

      rl** common policies,      systems, practices,    and
      job-grading   standards for uniform application
      by all executive     agencies in fixing    pay for wage
      employees as nearly as is consistent        with the
      public interest    in accordance with prevailing

      The Coordinated    Federal Wage System was to be placed
into effect    on an area-by-area   basis as full-scale     wage sur-
veys were made over a Z-year period.         When fully   implemented
this System was to replace the separate wage board systems
previously    maintained  by the individual    departments and
agencies of the Government and was to ensure that (1) hourly
wage employees of all Federal agencies in the same local
wage area received equal pay for substantially          equal work
and (2) pay distinctions      were maintained   in keeping with
work distinctions.

       During fiscal  year 1971 we reviewed the implementation
--- the  Coordinated _Federal     Wage_-System in fourKg;-are&
                       -.- -- i ._.-_-
for which the Department of Defense was designated as lead
agency having the responsibility          for making wage surveys
and issuing wage schedules.           (See appendix.)  Our objectives
were to determine (1) whether the System was implemented on

a timely and effective  basis and (2) the extent to which
the System had brought about coordination    of wage practices
in local wage arease   Our findings  are discussed below.


        In each wage area extensive  preliminary   work by partic-
ipating    agencies was required before a full-scale    wage sur-
vey was made. This included:

     --A local installation      of the lead agency, designated
        as the host installation      for wage survey activities,
        obtained and furnished     data to the lead agency on
        the total    number of wage employees in the area and
        on the number of wage employees under exclusive           union

     --A local wage survey committee consisting   of three
        members, all Federal employees, was formed.

     --The lead agency's wage-fixing      authority provided guid-
        ance to the local committee and to officials      of other
        Federal installations   on policy matters,   survey plans,
        and data-collection   procedures.

     --The local committee held hearings to permit interested
        parties to present recommendations concerning the pro-
        posed survey.

     --Data collectors   were selected and were provided           with
        training  by the local committee.

     --After   receiving   from the lead agency a list  of estab-
        lishments   to be included in the survey, the local
        committee formally     requested the selected establish-
        ments to participate,

     --The lead agency's wage-fixing       authority    formally    or-
        dered the survey to be made.

       Pertinent statistics relating to the full-scale surveys
made in the four wage areas which we reviewed are summarized
as follows:
                                              Little      Phila-
                                    Denver      Rock      delphia   Seattle

Establishments    that fur-
  nished data                          78       55          252           98
Jobs on which data were
  to be collected                      25       23           34           33
Jobs on which data were
  collected                            25       22           34           33
Two-person   data   collec-
 tion teams                            15        7           30           11
Workdays used in col-
 lecting  data                         24        8           17           13

      After the wage data had been collected          they were re-
viewed at the host installation        by representatives    of the
lead agency's wage-fixing     authority.      The local survey re-
ports then were prepared and forwarded to the lead agency.

      In our opinion,         improvements   are needed in three         aspects
of the data-collection          procedures   under     the Coordinated     Fed-
eral Wage System.

      1. The same kinds of jobs are designated to be surveyed
in all local wage areas.   As a result,    in many instances
wage data were obtained on private    industry  jobs for which
there are no comparable Government wage jobs in the area be-
ing surveyed.

       In the Denver area survey, only 43 percent of the pri-
vate industry    jobs surveyed were comparable to Government
jobs existing    in that geographical    area.  We believe that
more meaningful wage survey data could be obtained if lead
agencies, having the assistance       of local installations,        were
permitted    to select for survey only those private        industry
jobs which most nearly matched the jobs of large numbers of
Government wage employees in the area.

       2. The collection of data in wage surveys presupposes
that persons performing   this task be (a) well versed in the
occupational   content of a wide range of wage occupations,
(b) well acquainted with Federal wage administration     prac-
tices,   and (c> able to collect  wage data objectively  and
open mindedly.

       Under the present procedures employees of Federal agen-
cies in each wage survey area are used to collect         the data.
These employees, selected from the local installations,          per-
form the data-collection      task once a year with only limited
training,    In our opinion,     the limited  exposure of these
employees to the wage survey process does not provide them
with the expertise     necessary to effectively     accomplish the

       We believe that data collection      could be accomplished
more effectively,    with greater objectivity,      with less incon-
venience to the private     establishments,     and at less cost to
the Government if the wage surveys were made by the experi-
enced professional    data collectors     of the Bureau of Labor
Statistics    of the Department of Labor,

        3, The geographical boundaries of the Systemss desig-
nated wage areas have been greatly      expanded beyond those
prescribed    under prior agency wag e-fixing   systems which were
limited    to reasonable commuting distances.

      As a result     of this expansion9 employees who worked at
Federal installations       in rural locations   within the wage
area received greater wage increases upon their conversion
to the Coordinated      Federal Wage System than employees who
worked at installations        in metropolitan locations    within
the same wage area.        This occurred because wage data used
in establishing     wage rates under the Coordinated       Federal
Wage System were obtained mainly from private          industries
located in metropolitan        areas where wage rates and living
costs were higher than in the rural locations          of the wage

      For example, Coatesville,    Pennsylvania,   is located in
a rural  area about 40 miles from Philadelphia.       Under the
previous agency system, wage rates for employees at the
Veterans Administration   ?Iospital were established     on the
basis of data obtained in surveys made at private        firms lo-
cated in a 25-mile radius of Coatesville.        The hospital   em-
ployees were paid from 18 to 44 cents an hour less than
comparable Federal employees working in the Philadelphia
area who were paid on the basis of metropolitan       Philadelphia
wage survey rates.

       Because Coatesville  is now included in the Philadelphia
wage area, the hospital    employees received far greater wage
increases than did employees in the Philadelphia     metropoli-
tan area when the Coordinated     Federal Wage System was imple-
mented and the Philadelphia    wage rates were applied through-
out the wage area,

        In our opinion,    more equitable wage rates could be es-
tablished,     with the least disruption   to the economy of the
private    sector,   if separate wage areas were established   for
metropolitan      and rural communities.


Application    of wage schedules

      From data contained in the local wage survey commit-
tee's reports,    wage schedules for nonsupervisory,    leader,
and supervisory     wage employees were developed and issued by
the lead agencyts wage-fixing      authority.  Copies were fur-
nished to all zlgencies having employees in the respective
wage areas.     0x1 the same date, or within a few days of the
date of issuanc:e of the lead agency schedules,      the appro-
priate agency !.leadquartgrs   reissued these schedules as
ag==y $&edules.
     All wage schedules for the Federal installations        within
a wage area prescribed    the same effective   date except the
schedules for the Veterans Administration      Hospital  in Little
Rock where, ljecause of a difference     in the starting   date of
the pay period,   a later date was prescribed.

       In the four wage areas reviewed,      employees of all Fed-
e2ral installations    were covered by the new pay schedules.
In some instances     delays in iqzkmentation      occurred because
of delays in issuance of the schedules by the lead agency
or becawe of late receipt      of .&e schedules by the local in-
stallae&on     as shown below.

      Dwver--with&n        11 pay perim3s           of the effective    date.

      Little   Rock--the     effective          date:.

      Philadelphia--     within     four       to seven pay periods     of the
      effective    date.

      Seattle--the    effective       da@ or within          four   pay periods
      of the effective      date.

Conversion     to new system

       The mechanical conversion   of employees, the process of
converting   previous agency grading and pay structures     to the
grading and pay structure    of the Calordinated Federal Wage
System, was made in accordance with the conversion      tables
prescribed   by the Civil Service Commission.    This action was


    accomplished in each wage area on the date that the first
    wage schedule under the System was placed into effect.

            Payments of retroactive      pay made to wage employees
    upon their conversion to the System were correct                except for
    some of those made by the Philadelphia          Naval Shipyard.           Er-
    roneous payments at this installation,           initially      found and
    questioned by the Navy Area Audit Service,              were caused by
    failure    to properly   consider reduced night-shift           differen-
    tials    applicable   under the System when computing the employ-
    ees' retroactive      pay entitlement.      About 1,400 employees at
    the shipyard had been overpaid approximately               $52,000 as the
    result    of the administrative      error.   The indebtedness         of
    the employees is being waived by the Department of the Navy
    under the provisions       of the United States Code (5 U.S.C.

    Application    of iob-grading      standards

          Under the Coordinated     Federal Wage System, the job-
    grading system includes      (1) a grouping of occupations,
    (2) a grade framework,      (3) job standards to provide criteria
    for determining   relative    worth of jobs in terms of grades,
    and (4) a job-grading      method to ensure consistency   in appli-
    cation of job standards.

            The Civil   Service Commission is responsible          for estab-
    lishing    and defining     individual   occupations    and for develop-
    ing and publishing       job-grading    standards which provide the
    criteria    for assigning      grades to jobs.     The Commission pre-
    scribed 39 key-ranking         jobs for the 15-grade nonsupervisory
    structure     of the System, which were to control          the alignment
    of the grade levels in all nonsupervisory            job-grading     stan-
    dards.     Job grading is accomplished by agencies by consider-
    ing such things as skill          and knowledge, responsibility,
    physical    effort,   and working conditions.

          The initial    application  of the job-grading    system is
    the process by which the new job-grading        system, including
    all available     Commission job-grading   standards,   is applied
    to jobs which have been mechanically       converted.     This appli-
    cation was to bring the jobs into proper alignment with the
    grading framework of the new system.        The process was to be

                                          7                                         ,.
accomplished in each wage area within 1 year              from the
mechanical-conversion date in the wage area.

       We found that this process had not been completed
within the l-year        period in the wage areas examined.            Causes
of the delays included (1) Civil             Service Commission stan-
dards for many jobs not being available,              (2) departmental
instructions      prohibiting      the application    of standards for
most-nearly-related         occupations1    to jobs for which Commis-
sion standards had not been received,              and (3) installation
decisions    withholding      the application      of standards for non-
supervisory     jobs until      standards for leader and supervisory
jobs also were made available.

       Some of our findings  on this matter are presented below
to illustrate   the problems which installations   faced in im-
plementing this phase of the conversion under the System.

      --Lowry Air Force Base, Colorado, used existing       Air
         Force job-grading   standards and job descriptions     for
         26 of the 39 key-ranking     jobs at the base in deter-
         mining the appropriate    grades for its employees.
         This process was used since appropriate     Commission
         standards had not been received.

      --Pine Bluff Arsenal,         Arkansas, had received 34 Commis-
         sion job-grading       standards and had applied 16 of the
         17 standards which were applicable           to arsenal jobs
         within    the required     l-year period.      The District
         Corps of Engineers at Little           Rock had received 36
         Commission standards and had applied seven of the
         nine which were applicable          to Corps jobs within the
         l-year period.       In compliance with the Department of
         the Army instructions,         neither   the arsenal nor the
         Corps had applied Commission standards for most-
         nearly-related      occupations     to jobs for which precise
         standards had not been received.

1 Denotes occupations        which are most nearly     related  to other
  occupations    by reason of nature of duties,         work require-
 ments,    responsibilities,      etc.

     --At the Veterans Administration     Hospitals      in Denver
        and Little  Rock, Conmission job-grading       standards
        were not applied until  about 1 year after the date
        of their receipt.   This permitted   some employees,
        especially  those who occupied housekeeping-aid         jobs
        for which Commission job standards for janitors
        would apply under the System, to receive benefits            .
        greater than they would have received had the stan-
        dards been promptly applied following       their receipt.

       Hospital  officials   told us that the standards had
       not been applied because they (1) had 1 year in
       which to apply them, (2) were waiting      for the stan-
       dards for leader and supervisory     jobs, and (3) wanted
       to apply all standards at the time the next yearly
       wage-change survey schedule would become effective
       in order to lessen the hardship on employees who
       would suffer reductions    in grade upon the application
       of the new standards.

     --Because of the unique nature of the jobs at United
        States Mints, most of the 39 key-ranking    jobs pre-
        scribed by the Commission were not relevant      to jobs
        at the mints at Denver or Philadelphia.     To deter-
        mine the grades for their jobs, these mints found it
        necessary to consider both the key-ranking     job de-
        scriptions  as well as other available   Commission

     --At the General Services Administration           Regional Of-
        fice in the Denver wage area, it was necessary to
        use key-ranking     job descriptions    and standards for
        most-nearly-related     occupations    in determining    the
        grades of employees.      This method was necessary
        since only a small portion        of Commission standards
        received were applicable       to jobs existing    at the of-


      Conversion to the   Coordinated  Federal Wage System by
the installations  that   we reviewed in four wage areas was
made on a timely basis    even though some delays occurred in
each geographical  area   in the issuance and application  of
uniform wage schedules.      Uniformity   in wage rates      has been
achieved for jobs identified      as being the same.

       More meaningful wage surveys could be made and data-
collection    requirements     could be met more effectively       with
less inconvenience      to the private    establishments     involved
and at less cost to the Government, in our opinion,              if the
surveys were made by the professional          data collectors      of
the Bureau of Labor Statistics         of the Department of Labor.
A bill    pending before the Ninety-Second         Congress (S. 1636)
would establish      a Federal wage system under which wage rates
would be determined       on the basis of surveys conducted by the
Bureau of Labor Statistics.         We noted that the Bureau was
required    to make the survey of private        industry  salaries
used in connection      with the Federal Pay Comparability          Act
of 1970 for General Schedule employees of the Federal Gov-

       We have doubts that the wage rates established            under
the System are I'**     consistent    with the public interest         in
accordance with prevailing       rates."       Uniform wage rates for
Government employees performing          the same work had at least
one adverse effect     on rural communities brought into the
greatly   expanded geographical      wage areas.       It has resulted
in an inflation    of the wage structure         of the rural communi-
ties where wage rates and living           costs generally    are less
than those of metropolitan       areas and has imposed a hardship
upon private    employers in their competition           with the Govern-
ment for workers.

        We believe that consideration    should be given to in-
stituting    wage survey and wage-fixing    methods which will re-
quire equal consideration     of private   industry  wage rates
and of area living     costs in both metropolitan     and outlying
rural areas,      This could best be accomplished by establish-
ing separate wage areas for metropolitan        and rural areas,
similar    to those used under prior agency wage systems.

        In lieu of requiring      the same kinds of jobs to be sur-
veyed in all local wage areas, we believe that a determina-
tion should be made as to what Federal jobs exist in large
numbers in the area and as to whether jobs designated              to be
surveyed in private      industry    should be only those which
most nearly match those Federal jobs.           This determination
could be accomplished by lead agencies, assisted by local
installations,     in the initial     phase of the planning for the
survey.      It would permit obtaining     only that data which
would be of particular       value in the specific    wage area.

       Delays by the Commission in issuing job-grading        stan-
dards, and delayed and varied application       by local installa-
tions of standards that are available,      have frustrated
achievement of uniform job classifications        among agencies
necessary to ensure pay equity.      We believe that this can
be corrected   if the Commission takes action to issue all
job-grading   standards and prescribes    a uniform effective
date for their application    on a Government-wide     basis.


      To ensureamore      equitable  and effective  Coordinated
Federal Wage System, we recommend that the Chairman of the
Civil Service Commission take action to (1) revise           the Com-
mission's   prescribed    procedures for conducting wage surveys
and establishing     wage schedules and (2) strengthen     the pro-
cedures relating     to the issuance and application    of job-
grading standards by:

      --Requiring   wage data to be collected by the profes-
         sional data collectors  of the Bureau of Labor Statis-
         tics rather than by employees of Government installa-
         tions located in the wage areas.
--Requiring     collection   of wage data from private es-
   tablishments     only on jobs for which there are con-
   parable Government jobs in the area.

--Prescribing      a wage survey method which will ensure
   that equal consideration      is given to wage rates in
   private    industry  in both metropolitan    and outlying
   rural areas and to living       costs in both areas.

--Requiring  all nonissued        job-grading   standards   to be
   issued promptly.

--Prescribing   uniform effective dates for application
   of Commission job standards throughout  the Federal

                                                                         APPENDIX I

                       REVIEW OF IMPLEMENTATION OF



Wage survey     area                           Field     activity

Denver,     Colorado       Lowry Air Force Base, Denver,                    Colorado
                             (note a9

                           General Services Administration,                      Re-
                             gion 8, Denver, Colorado

                           United     States     Mint,      Denver,      Colorado

                           Veterans Administration                  Hospital,     Den-
                             ver, Colorado

Little   Rock, Ar-         Pine Bluff Arsenal,              Pine Bluff,         Arkan-
   kansas                    sas (note a9

                           District    Corps of Engineers (Civil
                              Functions),   Little Rock, Arkansas

                           Veterans     Administration              Hospital,
                             Little     Rock, Arkansas

Philadelphia,     Penn-    Philadelphia Naval Shipyard,  Philadel-
  sylvania                   phia, Pennsylvania (note a)

                           United States Mint,              Philadelphia,

                           Veterans Administration   Hospital,
                             Coatesville,  Pennsylvania

Seattle-Everett-           Puget Sound Naval Shipyard,                   Bremerton,
  Tacoma, Washing-           Washington (note ,a>
                           General Services Administration,                      Re-
                             gion 10, Auburn, Washington


Wage survey   area                   Field   activity

Seattle-Everett-      Veterans Administration           Hospital,
  Tacoma, Washing-      Seattle, Washington
  ton (continued)

aDesignated host installation  for the Department             of Defense
 which was assigned lead agency responsibilities.


                                                            U.S.   GAO.   Wash..   0.C.