This Key Indicator Offers a Glimpse at Your Future Pay Raise

This Key Indicator Offers a Glimpse at Your Future Pay Raise
Capt. Matthew Sneddon, USA, fires a machine gun during training at Fort Bliss, Texas. (Photo by Spc. Daniel Mariscal/Army)

The Bureau of Labor and Statistics (BLS) unmasked its quarterly Employment Cost Index (ECI) figures Oct. 30, giving a glimpse at the pay raise military members likely will receive at the start of 2022.

 

MOAA closely tracks ECI reports because, by statute, military pay raises are tied to the index unless the administration or Congress intervenes to change the law. The ECI for private-sector wages and salaries for the third quarter of calendar year 2020 is 2.7%, which is understandably down from last year’s 3.0% increase.

 

Last year’s ECI set the benchmark for the 3.0% pay raise included in both the House and Senate versions of the FY 2021 National Defense Authorization Act (NDAA). A conference committee is working to craft a compromise bill, which will all but certainly include that figure when it heads to the president’s desk for signature.

 

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The recent ECI release will inform the FY 2022 NDAA, which would include the pay raise that goes into effect Jan. 1, 2022. Here’s a look at the correlation since 2008:

  • ECI third quarter, 2008: 2.9%, informing a 3.4% military pay raise in the FY 2010 NDAA.
  • ECI Q3 2009: 1.4%, FY 2011 raise: 1.4%
  • ECI Q3 2010: 1.6%, FY 2012 raise: 1.6%
  • ECI Q3 2011: 1.7%, FY 2013 raise: 1.7%
  • ECI Q3 2012: 1.8%, FY 2014 raise: 1.0%
  • ECI Q3 2013: 1.8%, FY 2015 raise: 1.0%
  • ECI Q3 2014: 2.3%, FY 2016 raise: 1.3%
  • ECI Q3 2015: 2.1%, FY 2017 raise: 2.1%
  • ECI Q3 2016: 2.4%, FY 2018 raise: 2.4%
  • ECI Q3 2017: 2.6%, FY 2019 raise: 2.6%
  • ECI Q3 2018: 3.1%, FY 2020 raise: 3.1%
  • ECI Q3 2019: 3.0%, FY 2021 raise: 3.0% (pending NDAA)
  • ECI Q3 2020: 2.7%, Expected FY 2022 raise: ?

 

In the current environment, it is important to take a minute to be thankful that our military pay raise is grounded to a standard. Military pay was not always tied to ECI, and it is not something we should take for granted: From 2014 to 2016, the military pay raise fell a total of 2.6 percentage points behind ECI before realigning with the index in 2017.

 

[RELATED: Financial Resources From MOAA]

 

With a looming $3 trillion deficit and further pandemic recovery measures to come, appropriations will be a challenging environment for the next few years. Lawmakers are already discussing flat DoD budgets and will surely look for savings in the future.

 

Vigilantly monitoring the military pay and protecting service-earned benefits will require our continued focus and concentration. Keep up with the latest MOAA advocacy news at MOAA.org and by following MOAA on Facebook and other social media outlets.

 

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About the Author

Lt. Col. Mark Belinsky, USA (Ret)
Lt. Col. Mark Belinsky, USA (Ret)

Belinsky retired in 2019 after serving 22 years, with overseas tours to Afghanistan, Iraq, the Republic of Korea, and Germany. He joined the MOAA team in 2019 as Director, Currently Serving and Retired Affairs.