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Military Pay Comparability

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February 5, 2014

Issue: Uniformed service members' basic pay must be reasonably comparable with private sector pay scales and adjusted annually as necessary to restore/maintain comparability with private sector pay increases.

Background:
Military pay tables were overhauled in 1971 with the advent of the all-volunteer force to set military pay rates at levels of reasonable comparability with private sector pay for civilian workers with similar skills, education and experience. But military raises were capped for budgetary reasons during the 1970s, and serious retention and readiness shortfalls followed. These problems were addressed with double-digit raises in 1981 and 1982, which were generally acknowledged to have restored military pay to levels "reasonably comparable" with private sector pay.

Despite this hard-learned lesson, the extended retention rebound of the 1980's, coupled with rising budget deficits, led multiple Administrations and Congress to continue capping military raises below private sector pay growth, as measured by the government’s Employment Cost Index (ECI) in 12 of the next 16 years. By 1999, the cumulative military pay raise shortfall had reached 13.5%--predictably accompanied by a new retention and readiness crisis.

Congress responded with law changes aimed at closing the pay gap over a period of years. The Executive Branch and Congress subsequently have approved military pay raises at least .5% above private sector pay growth for most of the last decade.

In 2013, President Obama used executive authority to notify Congress of an alternative pay adjustment affecting active duty military pay. The President is able to do so if the adjustment is considered necessary due to national emergency or economic concerns. The President has told Congress that he is using his authority under law to cap the active duty military pay raise at 1 percent. Under current law, the active duty pay raise would have been 1.8 percent.

 

The challenge now will be to sustain military pay raises equal to private-sector pay growth during projected periods of budget austerity.
Past experience in the 1970s, ‘80s, and ‘90s has been that tight budgets have driven caps on military pay raises, and that those caps have continued until they undermine retention and readiness.

 
MOAA’s hope is that we can learn from past experience that sustaining pay comparability is important to prevent retention problems.

Key Bills: No bills have been introduced in the second session of the 113th Congress.

MOAA Position: MOAA believes sustaining comparability with private sector pay is a fundamental underpinning of the all-volunteer force, and is essential for long-term retention and readiness and will work with Congress to prevent repeating past hard-learned lessons.