Military Pay Competitive With Private Sector

By Lisa Daniel
American Forces Press Service

April 28, 2010 - Military compensation is competing well against the private sector, as evidenced by the high rate of recruitment and retention, a Defense Department official told a Senate subcommittee today.

Therefore, the department is focusing on targeted special pays and bonuses as an efficient means to give incentives for people to sign up for hard-to-fill and hard-to-retain specialties, William J. Carr, deputy undersecretary of defense for personnel policy, told the Senate Armed Services Committee's personnel subcommittee.

Using regular military compensation – basic pay combined with housing and food allowances and federal tax advantages - as a comparison, military members are paid higher than 70 percent of their private-sector peers of similar education and experience, Carr said.

A $340 million investment in such pays could provide $30,000 bonuses to more than 11,000 servicemembers the military especially needs, Carr said, while the same amount would buy only a 0.5 percent across-the-board basic pay raise for all servicemembers. At the same time, however, it is important to ensure regular compensation remains competitive, he said, noting the department's request for a 1.4 percent across-the-board pay increase for next year.

Carr called specialty and incentive pays "essential," especially for special operations forces and people with medical, dentistry, mental health, aviation and nuclear skills. The services paid out $6.4 billion in specialty pays last year, comprising 4.4 percent of the personnel budget. The department is requesting $5.6 billion for 2011.

The decrease does not mean such targeted incentives are less important, Carr said. Rather, he explained, it reflects less need to use them during the slow economic recovery.

When recruiting and retention dropped in the strong job market of the late 1990s, Congress and Defense Department officials reacted quickly, Carr said. Since 2002, pay has risen 42 percent, housing allowance has gone up by 83 percent, and the subsistence allowance has grown by 40 percent, he said, compared to a 32 percent rise in private-sector salaries.

Three outside military experts - Brenda Farrell of the Government Accountability Office, Carla Tighe Murray of the Congressional Budget Office and James Hosek of the RAND Corporation think tank's national security division - testified with Carr and agreed that the overall military compensation package compares well against the private sector, with some studies placing military compensation equal to or greater than 80 percent of their civilian counterparts.

Virginia Sen. Jim Webb, a former Navy secretary who chairs the subcommittee, said military pay has risen dramatically in the three decades of the all-volunteer force.