Experts: Military pay gap no longer exists

By Tom Philpott: Military Update

Every witness before a Senate subcommittee hearing last week on military compensation — all experts on service pay and benefits — called directly or indirectly for Congress to end its 12-year run of voting for annual military pay raises that exceed wage growth in the private sector.

No witness suggested that future raises each January shouldn’t match annual wage gains for private sector workers as measured by the government Employment Cost Index (ECI).

Sen. James Webb (D-Va.), chairman of the Senate armed services personnel subcommittee, opened the hearing by saying the cost of military personnel — including pay, allowances, non-cash benefits like health care and deferred benefits like retirement — “continues to rise at disturbing rates.”

But he adjourned giving assurances “we are very committed to making sure our military people are well compensated [and that] we retain the quality and the expertise” to keep this “the finest military in the world.”

William J. Carr, deputy under secretary of defense for military personnel policy, noted that to match civilian wage growth as measured by the ECI, the Obama administration proposes a 1.4 percent pay raise for 2011. Service associations want that raise bumped, again by half of a percentage point, to 1.9 percent.

Congress has been backing basic pay raises above the ECI for the past decade to narrow a perceived gap with private sector pay. But CBO’s Murray said the pay gap no longer exists if pay comparisons take into account gains in military allowances over a decade.

Brenda S. Farrell, the Government Accountability Office’s director for defense capabilities and management, led a team of analysts who reported to Congress last month on the adequacy of military compensation. Farrell testified that service pay and benefits now “are generous” compared to compensation packages offered in the private sector.

Farrell said comparing military and civilian compensation is always a challenge given the unique factors of service life and difficulty of comparing benefits like health care or deferred compensation like retirement.

But GAO agreed with the 10th QRMC that the Department of Defense should begin to weigh the value of retirement and health care compensation in making pay comparisons with other Americans.

On this point, DoD’s Carr disagreed, saying military people have become accustomed to comparing Regular Military Compensation (RMC) — basic pay, housing and food allowances plus the federal tax advantage on those tax-free allowances — with civilian wages. RMC now exceeds wage levels for 70 percent of civilian workers of similar age and work experience.