Table Of ContentSALARY SETTING- IN GOVERNMENTAL AGENCIES
THE PREVAILING WAGE SURVEY
A Thesis
Presented -to
the Faculty of the School of Public Adm inistration
The U niversity of Southern C alifornia
In P artial F ulfillm ent
of the Requirements for the Degree
Master of Science in Public Adm inistration
by
Harold S. Rosen
February 1950
UMI Number: FP64488
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This thesis, written by
HAROLD S* ROSEN
under the guidance of h..%&.. Faculty Committee,
and approved by all its members, has been
presented to and accepted by the Council on
Graduate Study and Research in partial fulfill
ment of the requirements for the degree of
MASTER OF SCIENCE IN PUBLIC ADMINISTRATION
Date..
ommittee
TABLE OF CONTENTS
CHAPTER PAGE
I. THE PROBLEM AND ITS IMPORTANCE................................ 1
The problem * • • _ . • • . . . » • • • » ♦ 2
Statement of the problem ♦ ♦ .......................... 2
Importance of the study . . . . . . . . 2
II. BACKGROUND TO THE PROBLEM . . . . . . . . . 5
Government P rinting O ffice wages . . . . * 6
Navy Yard sa la ries . . . . . . . . . . . . 7
Federal service ............................................. 7
Statutory sa la ries . . .............................. 9
Summary .............................. 10
III. THEORETICAL CONCEPTS OF. WAGES AND SALARIES . 12
The subsistence wage . . . . . . . . . . . 12
The efficien cy wage • • • • • . • • • • • 14
L iving wage ..................... 15
Summary . . . . . . . . . . . . ..................... 18
IV. SALARY-SETTING METHODS.................................................... 21
Incentive plans . . . . . . . . . . . . . 21
Wage systems based on o u tp u t.......................... 21
Incentive pay in public service . . . . 23
Summary ........................................ 25
V. SALARY-SETTING METHODS IN GOVERNMENT SERVICE 26
P osition c la ssific a tio n • • • • • . • • • 26
Job evaluation ............................................................. 29
Factor comparison 32
CHAPTER PAGE
Point system . . . . . . . . . . . . . 33
Factor w eighting • • • • • • • • • • • 33
Evaluation p r o c e s s ...............................* . . 36
Factor selectio n .............................. 3?
Factor v a l i d i t y ......................... 38
Factor duplication • » • • • • • • • • 39
Prevailing rate c o n flic ts . . . . . . 40
C o st-o f-liv in g salary plans .......................... 42
Summary . . . ...................... • .............................. 47
VI. THE PREVAILING WAGE SURVEY . . . . . . . . 50
The Joint Wage and Salary Survey . . . . 51
D efinition of prevailing wage . . . . . 51
Survey m eth od s......................... 54
Selection of key jobs . . . . . . . . 54
Developing key job descriptions . . . 57
Selection of firms • • • • • • • • * • 58
Developing the schedule . . . . . . . 65
Obtaining the inform ation . . . . . . 66
Reporting the data 67
Summary . . . . . . . . . . . . . . . . 70
VII. PERQUISITES .................................................... 72
Summary . . . . . . . . . . . . . . . . 79
V III. CONCLUSIONS.......................................... 80
BIBLIOGRAPHY............................................. 83
APPENDIX .............................. 89
CHAPTER I,
THE PROBLEM AND ITS IMPORTANCE
Each year governmental agencies, lo c a l, state and
federal, pay m illions of dollars in sa la ries and wages to
th eir employees# In the M etropolitan Los Angeles area
alone, fiv e government agencies— State of C alifornia,
County of Los Angeles, City of Los Angeles, Los Angeles
City School D istr ic ts, and the Los Angeles City Housing
Authority— employ approximately 75,000 workers with a
combined to ta l annual payroll of #250,000,000.1 Such
im pressive figures indicate the scope and magnitude of
the salary problems which face the respective salary-
fix in g bodies of the lo ca l agencies. The problem is
even more forcib ly brought into focus when one rea lizes
that sa la ries for lo ca l public agencies con stitu te more
than tw o-thirds of th eir to ta l operating expenses. This
tremendous outlay of tax monies warrants the most system
a tic , objective and v a lid plan of expenditure that the
combined sciences of public personnel adm inistration and
psychom etrics can produce.
1
Unpublished Town Hall report, Wage S e tting Methods
in the Local Government Ju risd iction s of the Los Angeles
Area TLos Angeles, May,"* 1949) p. 1.
2
I. THE PROBLEM
Statement of the problem. The purpose of th is study
is to in vestigate current p ractices and methods of settin g
sa la ries in governmental agencies. S p ecifica lly , it is
intended to analyze the method used by the Los Angeles
C ity Seho.ol D istricts; namely, the prevailing wage survey,
and to evaluate the application of such a plan to the
c la ssifie d service of the Los Angeles City School D istricts.
II. IMPORTANCE OF THE STUDY
With the Impetus of s tr ic t war man-power u tiliz a tio n ,
the public personnel fie ld has, in the past few years, seen
an intensive review of examination techniques, job an alysis,
job evaluation, and other appropriate segments of personnel
adm inistration. Yet, there have been proportionately
few published a r tic le s or books on what is one of the most
important phases of personnel; the problem of wage and
salary determ ination. One authority, for example, says
of the r ela tiv e importance of th is personnel function
that:
H....w a g es are far more than merely m atters of
d ollars and cen ts. They are the most tangible expres
sion of a com plicated relation sh ip . As such, they
are accepted, by both managements and employees, as
symptomatic of the whole sp ir it of the cooperative
relation sh ip . It is for th is reason that wage policy
3
is a m atter of major concern to every management
and every em ployee."2
Although the fie ld has been deluged with "voluminous d is
cussions of service ratin gs and th eir relation s to salary
adm inistration, the number and amount of increments w ithin
a range and sim ilar su b jects," 3 l i t t l e d etailed information
has been published regarding the techniques of salary
surveys and th eir application. M aintaining a current pay
plan n ecessita tes accurate and up-to-date information
regarding community salary rates and p ractices. Yet, the
methods foregathering such data are usually relegated to
a secondary p osition w ith a statement such as "the com
munity should be surveyed in order to determine the pre
v a ilin g rate*" The only problems which remain after th is
proclamation are what is meant by (1) the community, (2)
the prevailing rate, and (3 ) how such a survey should be
conducted in order to insure v alid and relia b le resu lts,
Richey in d icates that personnel technicians may have
"become lo s t in a forest of overlapping ranges, maintenance
charges, co st of liv in g in d ices, geographic d iffe r e n tia ls,
and m athem atically integrated compensation structures."^
g .
Dale Yoder, Personnel Management and Industrial
R elations, (New York: P rentice-H all, In c., 1948), p. 358,
3
Carl'’Richey, "Determining Pay Policy," Public
Personnel Review; 3:21, January, 1942.
^Loc. c it.
4
It .appears, therefore, that there is s t i l l oppor
tunity for in vestigation and research in the fie ld of .
public personnel compensation with the major emphasis on
a d etailed analysis of methodology and procedure. The
resu lts of such an in vestigation should prove fru itfu l
for the adm inistrator who is asked to prepare or approve
salary recommendations ?/hich may require that tax le v ie s
be increased “ during a period of economic strain in order
to finance the expanded budget. It should provide for
the technician a check l i s t against which h is own methods
may be compared. I t should provide employees with a guide
to v alid and relia b le methods of compensation research so
that confidence in the personnel s ta ff may be measurably
increased. I t should clear some of the prevailing atmos
phere of its secrecy and m ysticism so that the factual
gathering and s ta tis tic a l treatment of wage data may align
it s e lf with other s c ie n tific techniques of fact-fin d in g,
and reporting. F in ally, the in vestigation should furnish
an analysis and evaluation of the progress and resu lts
of one agency which uses the p revailin g salary survey as
i t s primary sals.ry-settin g method.
CHAPTER II.
BACKGROUND TO THE PROBLEM
The problem of wages and sa la r ie s, obviously, is
not an innovation introduced by th e,so cia l revolutions
and reform programs of recent years. This complicated
and frequently d istressin g matter has been a problem since
the beginning of th is country. The evidence contained in
the e a r lie st colon ial reports in which references to wages
1
are found, indicate that the employers of the seventeenth
century were beset by the same fears and suspicions of
labor and la b o r’s gain as are employers of today. L etters
and reports from agents of B ritish companies engaged in
colon ial settlem ent and from the early colon ial governors
express "consternation amounting to d is tr e s s .over the
2
exorbitant demands of craftsmen and la b o rers.” A colon ial
treasurer of the V irginia Colony declared about 1625, that
the wages paid there were "intolerable and much in excess
3
of the sum paid to the same class of persons in England.”
H istory of Wages in the United'TStates, U.S. Dept, of
Labor, Bureau of Labor S ta tis tic s , Washington, D.C., 1934, p .7.
2
Loc* c l t .
3 .
Loc. c l t . citin g : Bruce, P h ilip A., Economic H istory
of V irginia in the Seventeenth Century. Vol. II, p. 40.
