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Analysts say military pay growth could be slowed

Authors point to recruitment success, comparison to civilian wages

By Alison Knezevich, The Baltimore Sun

9:42 AM EDT, August 12, 2012

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The military could slow pay increases without harming the armed forces, analysts tell the Defense Department in a new report.

The authors of the Rand Corp. study point to the services' ability in recent years to meet recruiting targets, the withdrawals from Iraq and Afghanistan, and the fact that military pay is high compared with civilian earnings.

Nonetheless, they warn, moving to limit compensation would carry a political cost.

"Service members and their families are likely to find a decrease in the rate of growth of military pay unwelcome," Beth J. Asch, James R. Hosek and Michael G. Mattock write in the technical report commissioned by the Pentagon.

"A reduction during wartime might be interpreted as a signal of waning support for the war effort and a lack of appreciation for the personal sacrifices of service members and their families."

The study comes as the Defense Department plans to limit pay increases starting in 2015. Annual raises have been tied to growth in private-sector wages. But starting in 2015, the raises could be less than that.

Pentagon spokeswoman Eileen Lainez said the proposed increases would "maintain the balance of competitive pay with our responsibility to the American taxpayers."

In the late 1990s, military pay lagged behind that of the private sector, and Congress authorized a series of pay increases to help close the gap.

From 2000 to 2011, regular military compensation — which includes basic pay, housing and meal allowances, and tax savings — went up 40 percent for enlisted members and 25 percent for officers when adjusted for inflation. Civilian wages fell during the same period.

Basic pay is now $17,892 a year for a new private, airman basic or seaman recruit and $230,000 or more for an experienced four-star general or admiral. Service members receive additional money for hazardous duty, time at sea and other circumstances.

On average, enlisted personnel and officers with a bachelor's degree now out-earn at least 80 percent of similarly credentialed civilians, according to the authors. Those with more than a bachelor's degree out-earn 75 percent of their civilian peers.

"Recruiting and retention are going extremely well," Asch said. "Military pay is well above the pay of civilians, and that gap has grown."

Tom Tarantino, chief policy officer for the Iraq and Afghanistan Veterans of America, said that the numbers the authors cite don't tell the whole story.

While military pay is competitive compared to that of civilians, Tarantino said, people leaving the service have a tougher time finding a job than others do. Many veterans rely on the financial cushion they built up in the service while they're looking for a new job, he said.

"That's a lot harder to quantify," he said. When comparing civilian to military pay, he said, people should think about the amount of work required.

"Being in the military is not a 9 to 5 job," he said. "It's an all-encompassing life commitment."

Annual military raises are based on the Employment Cost Index, a measure of increases in private-sector wages. The report's authors suggest three ways the military could slow pay growth: A one-time increase in basic pay that is set at half a percentage point below the ECI; a one-year freeze in basic pay; or a series of increases below the ECI.

Savings could range from $5 billion to $17 billion over the next decade, the Rand authors say.

Tarantino emphasized that no one can predict what future national security issues could require the military to step up recruitment.

"We have to not just plan for the snapshot of the military that we have today," Tarantino said. "We also have to take into account the long term."

Asch and Hosek said it's important to balance cost savings with steps to ensure that the military meets its recruitment and retention goals, and that the issue of pay should be continually evaluated.

alisonk@baltsun.com

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By the numbers



•Basic pay is $17,892 a year for a new private, airman basic or seaman recruit and $230,000 or more for an experienced four-star general or admiral.

•Regular Military Compensation, which includes pay, tax savings and allowances, grew an average of 40 percent from 2000 to 2011 for enlisted members and 25 percent for officers when adjusted for inflation.

Enlisted personnel and officers with a bachelor's degree out-earn at least 80 percent of similarly credentialed civilians.