iiilllllllllilllllllllllllllll!llill LM095453 3 Review Of The Implementation Coordinated Federal Wa In Selected Wage Survey Ar 8.164515 UNITED STATES GENERAL ACCOUNTING OFFICE .- . _ WTED STATES GENERAL ACCOUNT~MGOFFEE WASHINGTON, D.C. 20548 CIVIL DIV1StON B-164515 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 REPORT ON REVIEW OF THE IMPLEMENTATION OF THE COORDINATEDFEDERAL WAGESYSTEM 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 rates." 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 of --- 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 1 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. WAGE SURVEYS 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 representation. --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. 3 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 surveys. 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 area. 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. 4 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. 5 IMPLEMENTATION OF THE SYSTEM 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 6 . 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. 5584). 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. 8 --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 standards. --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- fices. CONCLUSION 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- ernment. 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. 10 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. RECOMMEXDATIONS 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 Government. 12 APPENDIX I REVIEW OF IMPLEMENTATION OF THE COORDINATEDFEDERALWAGESYSTEM WAGESURVEY AREAS AND FIELD ACTIVITIES VISITED 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, Pennsylvania Veterans Administration Hospital, Coatesville, Pennsylvania Seattle-Everett- Puget Sound Naval Shipyard, Bremerton, Tacoma, Washing- Washington (note ,a> ton General Services Administration, Re- gion 10, Auburn, Washington 13 APPENDIX I 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. 9 U.S. GAO. Wash.. 0.C. 14
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)