Military Pay Freeze Coming?

The long standing assumption is that military members have long been paid less than their civilian counterparts. For a long time, this was true – stories of military members receiving food stamps were common, as were military members and their families living in sub-standard housing because that was all they could afford. But the government has come a long way in recent years to bring pay and benefits up to par with civilian standards. Now, some groups are wondering if they have gone too far, leading some to question whether the government should slow the pay raise cycle, or even put a one year freeze on military pay raises.

Will the Military Reduce or Stop Pay Raises?

Military Pay Raise Freeze Coming?Of course, it is way too early to give a definitive answer now, but this is something to track. Military pay and benefits are taking up an increasingly large part of the military budget each year, and the Department of Defense is looking at all possibilities available to reduce costs across the board, and this includes things like ay and benefits, less frequent permanent changes of station, and cutting weapons systems acquisitions. The government has also recently discussed changes to the military retirement system as well as possible changes to Guard and Reserve drill pay.

How Could Military Pay Change?

This article is based upon a study from the Rand Corp, and independent think tank. They were tasked with examining the military pay system and comparing it to various factors such as civilian pay, retention numbers, force strength, future military needs, and other internal and external factors. What they discovered was that the military pay system has grown quickly over the last decade plus (basic pay is up 45 percent since 2000), and many military members are now compensated more than civilians with comparable education and experience (there will of course, always be outliers, depending on which job someone does in the military vs. the civilian world; the study is based upon a total overview of the military, not individual jobs).

Some of the options they proposed include:

  • Setting the basic pay increase at half a percentage point below the ECI for one year
  • Freezing basic pay for one year
  • Instituting a series of below-ECI increases, such as ECI minus half a percentage point for four years.

When Would Changes Take Place?

Secretary of Defense Leon Panetta made recommendations to Congress to “provide more limited pay raises beginning in 2015.” Keep in mind, this is only a recommendation, and no actual legislation has been introduced. The Department of Defense is in a tough spot, as they have been tasked to help reduce our nation’s deficit by cutting hundreds of billions of dollars from their budgets in the coming years. Reducing pay rate increases would only be a small part of the necessary cuts, along with possible cuts to health care, retirement benefits, National Guard and Reserve Drill Pay, and other benefits.





Will These Pay Raise Reductions Happen?

The study isn’t just running numbers and recommending cuts. They are taking other factors into account. They recognize there could be backlash from the military and civilian communities if these pay raise cuts take place, and they note there could be political aspects to consider (I know I wouldn’t want to be the Congressman who puts a proposal like this together!).

Here are some observations from the report:

Choosing among these options requires balancing two effects of any rollback in pay, whether brief or prolonged. The first is the amount of money saved. The second is the level of concern that might be voiced in Congress, in the military, and in the public at large over what may be perceived as a devaluing of military service or a failure to appreciate the sacrifices of service members during a time of war. Thus, policymakers will need to weigh the advantages and disadvantages of each option before deciding on a course of action.

Here is another link to the report.

What are your thoughts about these potential changes to military pay raises? Fair, or too much?




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Date published: August 7, 2012.

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Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years in the USAF and also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google

Comments

  1. Sure, pay is up 45% since 2000 and deployments are up 1000%, while manpower authorizations are down (at least in the Air Force–Force Shaping) by a significant percentage. Being in the military is nothing like the “good ol’ days” before these wars when money and manning were fat. Leave our pay alone. We deserve every cent we get. Start drug testing for welfare checks and get the money to cut government spending from that pot. You can compare our compensation to civilian compensation just as soon as you start sending civilians to war zones & separating them from their families for years on end. They should do a poll to see how many civilians have missed the birth of their own children or volunteer to live on the other side of the globe from all friends & family for middle-class salary. My husband is in a war zone for the 6th time in 5 years. He deserves to make more money than civilians and to have a comfortable retirement.

  2. Guy Slater says:

    I’m one of the “old *****” that will be least affected by any reduction to increase percentages for the coming few years. I am not in “fat city,” but I am comfortable enough. That’s what getting old(er) does for one. Objectively, slowing down the raises (not eliminating them) will save some money for DOD, as will winding down Afghanistan, and procurement. What would save most would be drastic. Phase out dependents by not allowing the service member to be married. As it stands, being married garners an increase in pay for the service member, and reduces efficiency. (I say that after having been married while on active duty to two different wives, both of whom were AD. My loyalty while in an overseas, dependent location, was not to the military first, it was to my wife and kids. If DOD were to eliminate being married, there would be no need (eventually) for dependent housing/quarters pay. All troops would be required to live in the “barracks.” It would also decrease the need for certain medical specialties, like OB/GYN. There would be no need for “rations” pay, as everyone would be eating in the mess (oops! How un-PC of me. The “dinning facility.”). When the military is not on a war-time footing, and not putting out brush fires (or involved in “police” actions), maintenance on military posts/bases could well be taken over by the service member. (It seems that this is already occurring at Ft. Campbell, where MP’s are now manning the gates instead of the hired civilian police force that has been there for at least the last 6 years.) I’m sure that this will never happen in totality, and that the screams and cries of anguish if it were officially proposed would be heard Nation-wide. BTW When I say that DOD should eliminate the ability to be married, I do not mean a system that is similar to that of the late 1800′s, where the enlisted could not be, but the officers could. NOBODY would be allowed to be married! It would have to be grandfathered in, allowing the current marrieds to remain until retirement, but it would be a start. It goes back to the Biblical, “a man cannot serve two masters.” And if a spouse isn’t a “master,” I would seriously have to question the validity of the marriage.

    • Stephen Foster says:

      This has to be the most illogical post I have ever read. There are 2,315,958 in the armed forces combined, including reservists. Let’s tell those people that they can’t marry or have kids while they are in the military. How long do you think someone is going to want to be in the military if they have to live in the barracks their entire career. Retention would be at an all time low. And to say you wouldn’t need OB/GYN doctors is way off base. You have women in the services and they need to be seen by those doctors regularly. Would you have wanted to spend your career living in a barracks with 20 or 30 other guys and not be allowed to get married? Not be able to bring a date home with you since you live in the barracks? To have no privacy or separation between work and liberty. Morale would be at an all time low and nobody would be happy.

  3. I do not feel that the military pay system is the first place that the Government should be looking for money savings. When you look at the total compensation package and not just base pay the militayr is very well compensated. The medical coverage that we recieve through tricare is absolutely amazing (we pay nothing for this). Also the tax free allowances that we recieve for housing and food cannot be beat. The problem that many people have is that they only look at the “base pay”.

    As far as certain jobs (technical) being underpaid many of these are compensated more come re-enlistment time with bonuses. These bonuses can range from a few thousand dollars to 50+K depending on skills and needs of the service.

    Also let us not forget that retirement system as it is now. After 20 years of service you are entitled to 50% of your base pay (yes I know high 3 makes it a little less than 50 of the last year but let’s make this easy). There are very few jobs out there that have a retirement system like this in place. Also you have the opportunity to invest even more money for retirement in the TSP in either Roth or traditional accounts.

    Are we underpaid for what we do (put our lives in danger in a foreign country)? Sure but then so are most public service persons. Police, Firefighters, school teachers, EMTs, should all be paid more but you have to remember that we are being paid by our neighbors, friends, family, and the rest of the American public.

  4. Wow! To think that the individuals in power would even think of such a thing as to mess with the Military and its pay and benefits. It should not even be considered! I guarantee if it is messed with there would be major problems. Example: throughout the force there would be no shows to duty and that would cause command issues. There would be uprisings in the masses across the Military force. Where do the $ cuts need to happen? In the powers of the highest leaders , the ones who would vote on this type of cut. Wake up! We all need to ensure this don’t happen and hold those in charge accountable for extreme spending. Just think it was estimated that a billion $’s was spent in campaigning for recent election and really was it all $ raised by fund raising (more like our tax dollars). And all the misuse of $ for the security, transportation/logistics and etc for the campaigning. I think all need to wake up as to the fraud, waste and abuse of $ in this country and by those we elected to office. Meanwhile we all suffer for the fraud, waste and abuse by them in power.

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