July 10, 2013
By Col. Mike Hayden,
Sustaining military pay raises comparable to those of the
average American is a fundamental principle of the all-volunteer force, which is
celebrating its 40th anniversary.
However, the administration, in its FY
2014 budget proposal, has proposed capping the currently serving troops’ pay
raise for FY 2014 at 1 percent, versus the 1.8-percent raise called for in
In 2003, Congress codified military pay raises in law tying
them to private-sector pay growth as measured by the Bureau of Labor Statistics’
Employment Cost Index (ECI).
Over the past 12 years, Congress worked hard
to fix the 13.5-percent pay gap (and resulting retention problems) caused by
repeatedly capping military raises below private-sector pay growth in the 1980s
But with the budget woes facing the Pentagon under
sequestration, it seems like déjà vu all over.
As the Defense
Authorization Bill moves forward, the two chambers don’t see eye-to-eye on the
scheduled pay raise. The House rejected the administration’s pay cap and would
allow a 1.8-percent raise, while the Senate supports the cap of 1 percent.
After all of the pay raises over the past decade that exceeded private-sector
growth, some have asked why make a big deal over 0.8 percent. Shouldn’t the
military do its fair share?
History has shown that once Congress starts
accepting proposals to cap military pay below private-sector growth, pay caps
continue until they have weakened retention and readiness.
appears that is the plan again. In the FY 2013 budget submission, the
administration and the Pentagon rolled out a three-year pay-cap plan below ECI
starting in FY 2015. The FY 2014 plan looks to either accelerate or extend this
cap plan, even though DoD won’t commit one way or the other.
impact of losing 0.8 percent over a servicemember’s career?
an O-4 with 10 years of service would lose an additional $52 a month in FY 2014
without the 0.8-percent raise.
That might not sound like much, until the
power of compounding comes into play.
For the first year, that $52 a
month equates to a loss of $624. Over the remaining years of his or her career,
the O-4 loses nearly $8,000 in pay from this one-year cap (assuming a
2.5-percent inflation factor). Over his or her retirement, by age 85, that
one-year cap costs the servicemember an additional $20,000 in retired pay.
The grand total loss is roughly $28,000.
Compound that with
several years of pay caps, and this shows just the tip of the pay-cap iceberg.
The bottom line: 0.8 percent is a big deal.
Troops’ pay needs to keep pace with that of the private sector.
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