Military pay raise plans could pinch troops' wallets
February 17, 2012
WASHINGTON — Troops could see their lowest pay raises in four decades — far below what their civilian peers will get — if proposed changes are made in the way military raises are calculated.
Since 1999, defense officials have tied the annual military pay raise to the Employment Cost Index, the Department of Labor’s calculation in the rise in private sector wages. Military raises for 2013 and 2014 would be tied to the ECI but separated from the index in 2015, dropping to a flat 0.5 percent rate. That would be the lowest annual pay increase troops have seen since the start of the all-volunteer military in 1973.
In 2016, the rate would rise to 1 percent, not linked to the ECI. In 2017, it’d be 1.5 percent, regardless of private-sector rates.
For a mid-career enlisted servicemember, for example, the raise would be more than $1,000 a year less under the new formula. For most officers with 10 years’ experience, it’s $2,000 less a year.
Pentagon officials said last week that the plans are only tentative. The pay raises will not be official until Congress approves them each year.
But they said they’re making the plans public now to “give time for military personnel to accommodate these changes.” And unless the Defense Department sees dramatic changes in its budget realities, the lower pay raises will be needed to help rein in personnel costs and reach almost $500 billion in savings over the next decade.
Pentagon comptroller Robert Hale said officials aren’t considering any pay reductions or freezes, only limits on the annual raises. But for troops who have seen only modest pay hikes in recent years, the moves will mean almost stagnant wages as the cost of living continues to rise.
For the last decade, troops have seen pay hikes above the ECI, as lawmakers worked to close the gap between troops’ basic pay and civilian salaries. Next year’s proposed 1.7 percent military pay jump matches the national compensation rates, leaving troop pay raises on par with those of their civilian peers.
The ECI projection for 2014 is 2 percent. The raises would hit 3.3 percent in 2015 and 3.5 percent for the four years after that, if Congressional Budget Office predictions hold true.
Using the unlinked military raises for 2015 through 2017 could create a gap worth thousands of dollars between troops and their civilian peers.
In unveiling the numbers to reporters last week, Hale quipped that “the out years never come” in budget planning. He said he hopes to find ways to protect troops’ future paychecks.
“If it turns out that we don’t believe we can attract and retain the people we need with those lower raises, we’ll find a way to not do them in the out years,” he said. “At the moment, we think we can, and therefore it’s a reasonable proposal.”
Todd Harrison, senior fellow for defense studies at the Center for Strategic and Budgetary Assessments, said the big concern for troops shouldn’t be the specific numbers Hale cited, but the reality that there are few ways officials can bring down personnel costs.
“If not pay, then maybe they have to start looking at the number of troops they have instead, or at other benefits,” he said. “And there are limits to how much they want to do to those other things.”
The fiscal 2013 pay raise of 1.7 percent adds $1.1 billion to the defense budget’s personnel bottom line and creates recurring costs in the future. Hale estimated that the reduced pay raise plan would save $16.5 billion over five years.
Steve Strobridge, director of government relations for Military Officers Association of America, said he is frustrated that the Pentagon would even consider decoupling the raises from private sector figures.
“Granted, right now it’s years out in the future, but any time they talk about lower pay raises, it’s a huge red flag,” he said.
“Pay comparability is the underpinning of the all-volunteer force. Just because retention is fine now, that’s not an excuse. We’ve seen the big pay gaps before. That’s why we had to have all the plus-ups over the last decade.”