loss, or an expense to the Government of approximately $154 million in 1 year. The Bureau of the Budget has expressed misgivings about the number of employees who would complete 30 years of service at an "extremely early age" if retirement on full annuity is permitted at age 55. However, not all who are given the opportunity to retire on full annuity at an earlier age will avail themselves of it. The Civil Service Commission estimated that 35,000 employees during the fiscal year 1960 were eligible to retire optionally with 30 years of service between ages 55 and 60. Of this number, only 2,583 employees, or less than 8 percent of those eligible, actually did retire. This number increased to 3,135 in 1961, and and was 2,980 in 1962. Presently, it is estimated to be about 3,000 a year. It was further estimated that, had provisions parallelling S. 176 been in effect in 1960, the cost of annuities would have been increased about $220,000 a year. Total payments to employees who had retired between ages 55 and 60 increased from $8,800,000 in 1960 to $11,430,000 in 1962. Increasing the $220,000 the added cost in 1960 of provisions similar to S. 176, in the same proportion as the increase in total annuity payments from 1960 and 1962, the first-year additional cost of $220,000 becomes $285,000. This sum is less than two one-thousandths of 1 percent of total Government payroll, or slightly more than twenty-five one-thousandths of 1 percent of total disbursements from the retirement fund in fiscal year 1962. I noted with interest that when the Chairman of the Civil Service Commission testified before this group, he estimated the cost of S. 176 will eventually increase the cost of the system by $23 million a year, and we believe that may well be excessive, because he has estimated that the increase in number of retirements will go about 25 percent additional, which will make one out of every three employees who are eligible to retire between the ages of 55 and 60 will actually take advantage. I do not think it is reasonable to believe this. The average annuity now being paid to an employee is about $165 a month. We do not believe that adding $8.25 to the average employee's annuity will cause him to retire at the tremendously increased rate which the Civil Service Commission has estimated. However, for the sake of argument, let us assume that this will be the ultimate cost of the improvement. It is equal to about fifteen onehundreths of 1 percent of the current total Government payroll. And I think you will agree with me that it is only a very small cost in comparison to the value of this significant benefit. The idea of using millions of dollars to increase cost and the idea of using a sum which would increase the deficit of our present retirement system is not new. This is done by the Budget Bureau, by the Civil Service Commission, in every case, where they oppose progressive retirement legislation. When we reduce those figures to payroll cost, percentage figures, it does not look so large. I dare say this to you, gentlemen, that it has been my experience that when the Civil Service Commission or the Budget Bureau or other departments of this Government want to make changes in our retirement system, they seem to find ways and means to get the money to do it. The cost here should not have any bearing upon our decision, the decision should be based, in our opinion, on whether or not this is a good bill, good legislation, whether it is good for the employees and good for the Government, because we believe that the good than can come from this legislation will far outweigh any additional costs that might be incurred. If this bill were enacted to permit retirement regardless of age, we have little doubt that the number of retirements will be only a minor portion of the number of eligibles. That number would certainly be lessened if a reasonable effort is made to offer Federal employees a rewarding career. It is the considered belief of the American Federation of Government Employees that lessened turnover would more than balance added cost of retirement under S. 176, because regardless of whether these people take advantage of it or not, they can look forward to a long-range career of service with the Government. This will be an added incentive or an added job security to them. And after all, it is our opinion that the average employee in the Federal service is looking for job security, better retirement, other fringe benefits, which are in addition to reasonable pay for his work. It would be one more way of influencing the valued employee to make the Federal service a career, and to give the Government a minimum of 30 years of service, which in the most recent survey was achieved by only 4.4 percent of Federal employees. Mr. Chairman, we are very grateful for the opportunity of appearing before you and presenting our views with respect to this particular piece of legislation. Thank you very much. Senator MCGEE. Thank you, Mr. Griner, for a very fine, very helpful statement. I would raise one or two points, here, with you. The first is: What would be your judgment as to whether retirement at age 55 might encourage more to retire in order to try to find some sort of limited new career while they still had a lot of good kicks left in their physical system? Mr. GRINER. Mr. Chairman, that is always a possibility. And within the last 10 or 15 years, it was not only a possibility, it was a probability, because we have had a condition where the job was looking for the man, rather than the man looking for the job. At age 55, it is not very easy for a man to secure a job any longer. Yes, there will be some who will look forward to securing another job, or going into business for themselves, and of course everyone that does that might hamper some employment opportunities of others. But keep this in mind: That when this man leaves Federal service, in practically all cases, his position will be filled by someone else, which would balance off the question of employment opportunities. Senator MCGEE. Yes. I would think that factor which was raised earlier, here, in an earlier day of our hearing, is really quite beside the point. You can get a higher level of service for 30 years. It should not really matter what year retirement takes place, or whether the man or woman retires or does not retire. I would think that the handicap that sometimes is suggested here in terms of comparing the costs is that we can fix a pretty close estimate on what it would cost under the proposed change, here. But we have no way of really fixing an estimated cost on the improved caliber of service in the civil service, on the new professional pride, the increase in the caliber of personnel, all of that sort of thing. The savings that you allude to in terms of more work, in terms of better work, that cannot be reduced to dollars and cents because of the differential in the actual job positions that would be available to calculate from. I think this is perhaps one of the important points with which you conclude that the cost savings are there, but you are at the disadvantage of being unable to tie it up with a little blue ribbon. Mr. GRINER. Mr. Chairman, we agree with you 100 percent on what you have said. The good to the service as a whole cannot be placed or valued with a dollar mark. At least not at this point. It is intangible. None of us can reasonably estimate what percentage of the people will take advantage of this opportunity. However, we do believe that it would certainly be a morale builder within the Federal service, and of course, we need that at all times. Senator MCGEE. I have no more questions. Again I want to thank you for your splendid statement. Senator MCGEE. Before moving to the next witness, I do want to give public recognition to a few visitors here at the dais. We had some visitors here from Japan on the opening day. The two visitors here this morning are from the State of Wyoming. These young citizens are the winners of a statewide essay contest on how to make democracy work better, and they have been brought back here to watch the wheels turn and perhaps to come up with some ideas, we hope, that will help us make democracy work better. The two winners are Jean Carol Ahrens, from Torrington, Wyo., and Courtney R. Johnson, from Cheyenne, Wyo. Mr. GRINER. Mr. Chairman, may I just make this remark, that I do not know of any better way for these young people to find out how democracy works in this country of ours than to sit in on a committee which you chair. Thank you very much. Senator MCGEE. Thank you. We feel we are penalized, out in Wyoming, in one way. We are so far away. It is a 3,500 mile round trip, whereas the schools here along the east coast can come in here as a matter of routine and participate in this laboratory of democracy. And so for us, out in the Rocky Mountains, it is a treat whenever we can find some way to get here in order to indulge this experience. The next witness this morning is Mr. John O'Connor, legislative director, United Federation of Postal Clerks. Mr. NAGLE. Mr. Chairman, my name is Paul Nagle. I am administrative vice president of the United Federation of Postal Clerks. Today's witness is en route. May I ask that our appearance be deferred until his arrival? Senator McGEE. We shall defer. Paul, may I bring you greetings from a whole host of people over the State of Wyoming who have had correspondence with you. I just returned from a meeting of the postal clerks in the State, and I will not detail the names now, but they sent their greetings. Mr. NAGLE. Thank you very much, Mr. Chairman. I am glad the convention was a success, and I thank you most heartily for having honored our convention with your presence. Senator MCGEE. Mr. Owen, the president of the National Federation of Federal Employees, will now proceed. STATEMENT OF VAUX OWEN, PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES Mr. OWEN. Mr. President, my name is Vaux Owen. I am president of the National Federation of Federal Employees. Our national office is located at 1737 H Street NW. Our organization has members in practically all of the departments and agencies of the Federal Government. We have members in practically all pay levels, and in both the classified and the wage board groups. On behalf of our organization, I want to thank the chairman and the members of the subcommittee for holding prompt hearings on S. 176. I also desire to thank the chairman of the Senate Post Office and Civil Service Committee, Hon. Olin T. Johnston, for introducing S. 176. We strongly support S. 176 in principle, but urgently recommend that it be amended to provide for optional retirement after 30 years of service, regardless of age. We have favored 30-year optional retirement without regard to age for a number of years. At our last national convention, held at Phoenix, Ariz., in September 1962 our national convention adopted the following resolution: Resolved, That the National Federation of Federal Employees continue to recommend and support legislation providing that all Federal employees be permitted the option of retirement at full annity after 30 years of service without regard to age. This resolution was the master resolution adopted by the delegates at our convention. There were many other resolutions from various parts of the country. In all, there were 29 resolutions in favor of 30year optional retirement. The widespread geographical area from which these resolutions came indicates the nationwide interest in this subject. The following is a list of the locals and the cities in which they are located from which these resolutions came: Local 2, Washington, D.C. Local 32, Sault Ste. Marie, Mich. Local 135, Vicksburg, Miss. Local 259, Memphis, Tenn. Local 491, Bath, N.Y. Local 492, Canandaigua, N.Y. Local 574, Muskogee, Okla. Local 1335, Washington, D.C. Mr. Chairman, there has been continuing interest in and bipartisan support over the years for this type of legislation. A Federal employee who has worked 30 years for the Government deserves a rest if he wants it. The Government has had the benefit of his services during the most productive years of his life. When and if he decides to retire, an annuity should be available to him. With the development of automation and the constant desire to keep the number of employees at a minimum, attrition is being relied upon to reduce personnel on duty. Federal employees are sensitive to the pressure of this situation. Many of them could help the attrition process if they should be permitted to retire after they have served the Government for 30 years. This in turn would make jobs available for younger persons and would open up opportunities for promotion which would be calculated to improve and strengthen the Federal service. Mr. Chairman, one of the biggest problems, probably the biggest problem, facing our Nation is the problem of unemployment. There is every indication that this problem will become more vexatious as young people leaving our schools and colleges seek employment and the span of life increases. This problem will not be solved by a 30-year optional retirement, but legislation permitting 30-year optional retirement will contribute to the solution of the problem. The impact of automation, technological change, changes in mission, closing of installations and the like is going to be felt in all departments and agencies of the Federal Government in varying degrees. The older employees in the departments and agencies particularly are going to be hard hit by these changes which are taking place. Much of the electronic data processing and automation which was started a few years ago has now reached the point where greater numbers of employees are being displaced. The hardships resulting from these current and impending changes would be somewhat ameliorated for those employees who have had long periods of service, if they could retire after having served 30 years. If this legislation should be enacted, it is not believed that there will result an excessive additional turnover in the Federal service. Many Federal employees who have had 30 years of service will not exercise the option to retire. The cost of this legislation should not, therefore, be figured on the basis that every employee who has had 30 years of service will retire. It would be a distinct advantage to the Government for many of them to continue to work. Some would be difficult to replace. Some have experience and skills that are extremely valuable to the various departments and agencies in which they work. On the other hand, there are some situations where the employee who has served for 30 years could not very well develop the new skills required to perform the work in the agency in which he is employed. Where there is a situation of this kind, which could result in frustration and uncertainty and a contaminating loss of morale, the opportunity to retire could prove helpful to both the employee and the service. We appreciate the interest of the chairman and of the subcommittee. in this desirable legislation, and we urge a favorable report on a bill |