New study suggests pay changes

By Tom Philpott: CNJ Columnist

A new Department of Defense study of military compensation finds no pay gap exists today between service members and civilian peers.

But the study, conducted over the last two years, advises Defense leaders to adopt a new tool for comparing military and private sector compensation so that service members learn to appreciate the full value of their more favorable package of pay, benefits, allowances and tax breaks.

The study of the 10th Quadrennial Review of Military Compensation (QRMC) also calls for changes to key elements of cash compensation:
• Basic Allowance for Housing (BAH) paid to members without dependents living off base in stateside areas should be raised, as budgets permit, so that over time their BAH covers the full cost of rent and utilities for housing comparable to units rented by civilian peers.

• Partial BAH paid to single members living in barracks or aboard ship should be raised and made variable, based on the type of quarters they live in.

• New Constructive Credit authority would allow the services to raise permanently the basic pay of members advanced ahead of their peers. This would be done by assuming, for pay purposes only, that top performers entered service a year earlier than they did so that they would reach longevity steps built into the military pay table sooner than peers. The same authority could be used to make more competitive pay offers to physicians.

By law, the president must direct a review of military compensation every four years.

Defense officials will study the recommendations and decide what changes the administration wants to embrace, seek new legislative authority where needed to make compensation more flexible or efficient.

Dr. Jan “Denny” Eakle, a retired Air Force brigadier general and former deputy director of the Defense Finance and Accounting Service, has served as 10th QRMC director since it began work in February 2006.

In an interview she said “it’s a bit disingenuous” to still refer to a 3.5 percent pay gap today between the military and private sector, based on wage growth since 1981 when officials declared military pay had reached “comparability” with private sector civilians.

These pay gap claims are based solely on basic pay and ignore hefty increases in housing allowances, a major element of military compensation. Eakle said that when allowances are counted, cumulative growth in military compensation since 1981 has exceeded civilian pay growth by 6.5 percent.

But military people need a new tool to recognize the “real value” of their pay and benefits, she said.