President’s Budget Undercuts Uniformed Services’ Pay

May 26, 2017

DoD's fiscal balancing act is troubling. According to the May 2017 release of the DoD's Office of The Comptroller's Defense Budget Overview, personnel costs have remained relatively constant at approximately one-third of the total defense budget. However, in an attempt to find balance and funding for other costly programs like readiness, training, equipment, and modernization, DoD submitted a military pay raise request of 2.1 percent. It aimed to match last year's raise but the proposal falls 0.3 percent below the Employment Cost Index, the legislated benchmark for military pay raises. 

If signed into law later this year, the cumulative gap between military and civilian pay will increase to 2.9 percent; the last time the pay gap was at zero was 2013. From 1988-2001 the pay-raise gap each year averaged 11.9 percent. It took nearly a decade of extensive work and lobbying to get out of that hole - solving the gap from a shallow hole is much preferable.

So what difference does 0.3 percent make? To DoD it equals $200 million the first year and a projected $1.4 billion over five years. To a servicemember, the impact appears to be negligible, and that is our concern: The cumulative effect is worth noting. Looking at the chart below, you will see the annual impact of 0.3 percent for an E-6 with 14 years of service is only $135 a year, but the cumulative gap shows the true picture of what those little bites add up to -  more than $1,300 for the same individual. A more permanent impact is noted for those eligible for retirement. Given the chart below, if an E-8 was to retire under the projected pay gap at 50 percent of base pay, her base-pay retirement would be shortened by $890 a year for the rest of her life. Add that up and it equals $35,600 if she lives 40 years after retirement. And these are the small numbers. Imagine the impact of a double-digit pay gap.

Military pay chart

 

The gap in pay matters. It grows over time and has a permanent effect on retirement. Small, incremental amounts, to help the larger cause, might seem tolerable now, but this elementary math reveals the true, substantial impact on the individual and their family down the road.

Legislation ties military pay raises to the civilian sector's Employment Cost Index, but the president has the authority to propose a lesser amount. Both chambers of Congress now will have their chance to accept or change what the administration proposed as a benchmark. Let your member of Congress know you are concerned about the cumulative effect of these cuts and ask them to include the full 2.4-percent pay raise in the defense bill.

 

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