Show t The Voice of Business Federal pay what t tare are the incentives By Dy Richard L L. L Lesher President of the Chamber of or Commerce of the United States i When asked to describe the single most moot serious deficiency In the U. U S. S Postal Service Senator Hiram Fong m R R- R Hawaii replied The main problem is that the Postmaster General docs does not have his own money invested in IL it What the Senator meant of oC course Is that any management bc becomes omes much more concerned about cost control and efficiency efficiency ef cr ef- ef when It has a direct financial incentive to do so And therein might lie a clue to better control of the federal budget IN PRIVATE industry a manager gains fame and success by contributing to an increase in profits There are many paths to that objective but they trey all amount in one way or another to increasing efficiency ef that is to serving the customer better at a lower relative cost In a bureaucracy though the incentives are entirely dif dif- ferent The importance of a bureaucrat is measured by the size of the budget he com corn commands mands and by the rate of its growth Congress contributes to this order of precedence in the federal government by using the size of appropriations as an indication of its degree of concern for hot national problems NOW HIGHLY Y motivated capable people will seek to advance by the rules of the game they are playing laying And there are a lot of good people in inthe inthe inthe the federal bureaucracy So it itis itis itis is only natural that they should strive mightily to increase not reduce their budgets As long as that is the best route to high higher r pay and promotion how can we expect them to behave otherwise All of which brings me to the topic of the federal pay scale Whether it should be increased decreased juggled or left alone is the subject of much debate in Washington these days Average pay for a worker in the private sector In 1973 was a year Av Average rage pay for Cor a federal civil servant at that time was While that sounds as though the government government government govern govern- ment worker is overpaid defenders of oC the system point out nut that the mix of oC federal jobs is not the same as that In the private sector ON TilE THE other hand critics of the system say that while federal pay has been raised to tomake tomake tomake make it comparable to pay in certain sector private-sector jobs federal fringe benefits are considerably better than those available elsewhere making the total package favor Cavor the civil service And another the board civil service pay raise is in the offing with debate centering on whether it should be five percent percent percent per per- cent as the President proposes or percent as advocated ted by bythe bythe bythe the Civil Service Commission and the Office of Management and Budget or something else Meanwhile the salary at the top levels of the civil service has been frozen for a variety of reasons at for the last five years PERSONALLY I suspect that the average American taxpayer thinks the civil service service service ser ser- vice pay scale looks pretty generous already And yet Im I'm sure most people would agree that what any individual civil servant makes within reason is less important than the total cost of the system Which is what started me thinking about incentives Right now those people stuck at the ceiling cant can't have much of an incentive of any kind But just giving them a straight raise will perpetuate the old system where more people get more money by hiring more people to spend more money Well arent aren't we smart enough to devise some system whereby the pay of the top civil servants at least is determined in part by their ability to increase output on the same budget or maintain output on a lower budget It might pay to give it some thought |