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Congressional Research Service (CRS)

 

Military Pay: Key Questions and Answers

Lawrence Kapp, Specialist in Military Manpower Policy

Barbara Salazar Torreon, Information Research Specialist

January 20, 2015

http://www.fas.org/sgp/crs/natsec/RL33446.pdf

[full-text, 24 pages]

 

Summary

From the earliest days of the republic, America’s armed forces have been compensated for their

services by the federal government. While the original pay structure was fairly simple, over time

a more complex system of compensation has evolved. Today’s military compensation includes

cash payments such as basic pay, special and incentive pays, and various allowances.

Servicemembers also receive non-cash benefits such as health care and access to commissaries

and recreational facilities, and may eventually qualify for deferred compensation in the form of

retired pay and other retirement benefits. This report provides an overview of military

compensation generally, but focuses on cash compensation for current servicemembers.

 

Since the advent of the all-volunteer force in 1973, Congress has used military pay and

allowances to improve recruiting, retention and the overall quality of the force. Congressional

interest in the sustaining the all-volunteer force during a time of sustained combat operations led

to substantial increases in compensation in the decade following the September 11th attacks. More

recently, concerns over government spending have generated congressional interest in slowing the

rate of growth in military compensation.

 

Some have raised concerns about the impact of personnel costs on the overall defense budget,

arguing that they decrease the amount of funds available for modernizing equipment and

sustaining readiness. Others argue that robust compensation is essential to maintaining a highquality

force that is vigorous, well-trained, experienced, and able to function effectively in austere

and volatile environments. The availability of funding to prosecute wars in Iraq and Afghanistan

mitigated the pressure to trade-off personnel, readiness, and equipment costs, but the current

budgetary environment appears to have brought these trade-offs to the fore again.

 

The average cost to compensate an active duty servicemember—to include cash, benefits, and

contributions to retirement programs—is estimated at about $90,000- $100,000 per year, although

some estimates are higher (methodologies vary). However, gross compensation figures do not tell

the full story, as military compensation relative to civilian compensation is a key factor in an

individual’s decision to join or stay in the military. Thus, the issue of comparability between

military and civilian pay is an often-discussed topic. Some analysts and advocacy groups have

argued that a substantial “pay gap” has existed for decades —with military personnel earning less

than their civilian counterparts—although they generally concede that this gap is fairly small

today. Others argue that the methodology behind this “pay gap” is flawed and does not provide a

suitable estimate of pay comparability. Still others believe that military personnel, in general, are

better compensated than their civilian counterparts. This latter perspective has become more

prominent in the past few years. The Department of Defense takes a different approach to pay

comparability. The 9th Quadrennial Review of Military Compensation (QRMC), published in

2002, argued that compensation for servicemembers should be around the 70th percentile of

wages for civilian employees with similar education and experience. However, according to the

11th QRMC, published in 2012, it had reached the 83% level for officers and the 90% level for

enlisted personnel.

 

On February 1, the congressionally established Military Compensation and Retirement

Modernization Commission is due to deliver its report, which will likely include a variety of

recommendations for restructuring military compensation and adjusting compensation levels that

Congress may choose to consider.

 

Contents

Introduction ...................................................................................................................................... 1

Key Questions and Answers ............................................................................................................ 1

1. How are military personnel compensated? ............................................................................ 1

2. What is Regular Military Compensation (RMC)? How much do Servicemembers receive in RMC? ............................. 2

Regular Military Compensation (RMC) .............................................................................. 2

3. How Are Each Year’s Increases in Basic Pay, BAH, and BAS Computed? .......................... 8

Basic Pay: Increases Are Linked to Increases in the Employment Cost Index (ECI).................................................. 8

Basic Allowance for Housing: Increases are Linked to Increases in Housing Costs .......... 9

Basic Allowance for Subsistence: Increases are Linked to Increases in Food Costs ........ 11

4. What Have Been the Annual Percentage Increases in Active Duty Military Basic Pay Since 1994? What Were Each Year’s Major Executive and Legislative Branch Proposals and Actions on the Annual Percentage Increase in Military Basic Pay? .............. 11

5. What Is An “Adequate” Level of Military Pay? .................................................................. 13

6. Is There a “Pay Gap” Between Military and Civilian Pay? Do Military Personnel Make More or Less Than Their Civilian Counterparts? ......... 14

Measuring and Confirming a “Gap” ................................................................................. 15

Estimates of a Military-Civilian Pay Gap ......................................................................... 16

If There Is a Pay Gap, Does It Necessarily Matter? .......................................................... 17

7. What Additional Benefits Are Available For Military Personnel Serving in Iraq and Afghanistan? .................................. 18

Hostile Fire/Imminent Danger Pay.................................................................................... 18

Hardship Duty Pay ............................................................................................................ 19

Family Separation Allowance ........................................................................................... 19

Per Diem ............................................................................................................................ 19

Combat Zone Tax Exclusion ............................................................................................. 19

Savings Deposit Program .................................................................................................. 20

8. What Benefits Are Available to the Survivors of Military Personnel Killed in Iraq or Afghanistan?........................ 20

 

Tables

Table 1. Major Compensation Elements Provided to All Active Duty Personnel ........................... 3

Table 2. Average Regular Military Compensation for Selected Paygrades ..................................... 8

 

Contacts

Author Contact Information........................................................................................................... 21

 

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