Statement to Senate Banking Committee on Pay Parity for SEC Employees

2/14/2001

Senate Committee on Banking, Housing and Urban Affairs

Last year, the employees of the Securities and Exchange Commission (SEC) elected the National Treasury Employees Union to serve as their representative. Yesterday, following the completion of a unit wide, democratic election, I installed the new officers of the NTEU Chapter at SEC. I was pleased that the turnout in these elections matched or exceeded what we often see in voter turnout for U.S. Senate elections. The employees of the SEC are highly interested in working collectively to improve morale, productivity and working conditions at their agency.

The employees we represent at SEC are hard working and dedicated to their jobs. They perform important work in enforcing the securities laws Congress passes and in protecting consumers and investors. Every SEC employee I have spoken with, from examiners, to attorneys, to accountants like myself, to the support staff, tell me one thing B they take great pride in their work but they are well aware that their pay and benefits lag significantly behind the levels set by the private market. And as employees of the public agency that interacts most closely with the private market, it would be almost impossible for them not to be aware of this.

Brain Carroll, an attorney in the SEC Philadelphia field office has said AI am tired of going to retirement parties. In the last three months, three of my colleagues B an attorney, an accountant and an examiner, have left for higher paying jobs in the private sector.@ Charles Chaney, an NTEU member working at the Denver SEC office told me how his mentor and supervisor left the SEC for a better paying job after his wife chose to remain home to care for their newborn child. John Graubard in New York City tells me that in his branch, they have had a 100% turnover in the last three years. John also told me that AI know of highly qualified attorneys who work at FDIC who would love to work at SEC but would have to take a pay cut.@

SEC has seen an exodus of personnel in recent years. In the last two years one quarter of the attorneys, accountants and examiners have left the staff. In 1999 alone, 14% of the staff left. This departure is not surprising. A second year attorney at SEC can earn no more than $66,000. A first year securities lawyer in the private sector earns $125,000 - $150,000. This excessive turnover robs the SEC of productive and experienced employees. The agency is forced to spend time training new staff and new employees often barely finish the learning curve in their position when they are enticed away to other employment. No private sector company would tolerate this situation without taking action to correct it and nor should the SEC.

Congress, and particularly this Committee, is not unaware of the distinct situation federal financial service institutions work under. Under FIRREA and other acts, the Banking Committee has recognized the exceptional personnel situation of other FIRREA agencies. For example, at the Federal Deposit Insurance Commission (FDIC), the NTEU represented employees there are offered a pay and benefit package that attracts a stable and professional workforce with a turnover rate of less than 5% a year. Given the reality that FDIC and SEC employees sometimes work side by side doing similar work or meet each other at NTEU gatherings, SEC employees are cognizant of this difference and it has a significant negative impact on SEC employee morale.

The legislation the Committee has before it has a sound solution to these problems. S. 143 includes a provision (Section 6) to allow SEC to achieve pay and benefit comparability with other FIRREA agencies . NTEU strongly endorses this provision and urges the Banking Committee to act quickly and deliberately. Pay comparability is the needed answer to the problems of retention and morale. It will allow the very agency which regulates the market, to be able to respond to market demands with its own workforce and personnel.

Let me add that I appreciate the strong support Chairman Gramm, Senator Sarbanes and other members of this Committee gave pay comparability in the last Congress. The employees at SEC are grateful to the attention and awareness of the Banking Committee to their situation. Employees and management are developing a great new partnership at SEC and we are confident that with the support of the Banking Committee we can develop a model agency in efficiency, productivity, and service to industry and consumer.