Military Pay and Benefits: Key Questions and Answers

Publication Date: February 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Military and defense

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Abstract:

In the late 1990s, the military services were facing considerable recruiting and career retention problems. In responding, Congress was mindful of how inadequate pay had contributed to decreased recruit quality in the late 1970s. It authorized larger pay raises, increased special pays and bonuses, more recruiting resources, and repeal of planned military retired pay reductions for future retirees.

In the midst of these efforts, the terrorist attacks of September 11, 2001, took place, providing a sense of national unity and military purpose. The 9/11 attacks and the programmatic changes noted above initially helped recruiting substantially in the early 2000s. However, the grueling pace of deployments to and from Iraq and Afghanistan, combined with the dangers of combat, have finally begun to cause long-anticipated recruiting problems. In 2005, the Army, Army National Guard, and Army Reserve all fell short of their recruiting goals. Career retention is difficult to measure, due to the suspended separation and retirement of many personnel since September 11, 2001, but so far retention has been more than satisfactory.

Debate continues over what kinds of pay and benefit increases are best for improving recruiting and retention. Of particular interest is the balance between across-the-board pay raises on the one hand, and ones targeted by grade, years of service, and occupational skill, on the other; and between cash compensation on the one hand and improvements in benefits such as housing, health care, and installation services on the other.

Basic Pay. The across-the-board increases in military pay discussed each year relate to military basic pay, which is the one element of military compensation that all military personnel in the same pay grade and with the same number of years of service receive. However, numerous other elements are in the total military compensation “package.” These other elements are important in determining whether a “pay gap” exists between military and civilian pay that favors civilians, because the numerous different elements of military pay make it difficult to compare to civilian salaries and other benefits.

Since the early 1990s, numerous changes in benefits have greatly favored individual members. These include changes in the cash allowance received by personnel not living in military housing; a drastic overhaul of military health care; and repeal of military retired pay cuts first enacted in 1986.

2006 and Proposed 2007 Military Pay Raises. President Bush’s FY2006 budget, requested a 3.1% across-the-board military pay raise, effective January 1, 2006. The House version of the FY2006 National Defense Authorization Act (NDAA) includes the Administration request of 3.1%. The Senate accepted the House version in conference and it was subsequently enacted into the FY2006 NDAA.

Based upon the September, 2004 to September, 2005 Employment Cost Index (ECI), a 2007 pay raise of 2.2% is anticipated without further congressional action.