Military Pay Raises Not Keeping Pace with Private Sector

Although the 2016 Defense budget calls for a 1.3 percent raise in basic pay for soldiers and their families, the paychecks for military members are still getting smaller according to Col. Mike Hayden (USAF, ret.), the director of government relations for the Military Officers Association of America.

Although the 1.3 percent raise is a better than the 2014 and 2015 raises (both of which were 1 percent - the two smallest raises since the Army has been an all-volunteer force) it lags behind the estimated private-sector wage growth for next year, which is estimated to be a full percentage point higher.

The worry of Col. Hayden, the MOAA, and other organizations is that this "pay gap" between civilian and military families - which is already at 3.2% this year - will increase to around 5% for next year. If the long-term compensation plans by the Pentagon are approved, it could increase even more, approaching double-digits by 2020. This gap peaked at 13.5 percent back in 1998 and 1999, and only once - in 1982 - has it disappeared completely. Since 1999, the gap consistently narrowed (although never has it been smaller than 2.4%) until the 2014 pay raises fell short of soldiers' civilian counterparts.

Although the Pentagon has told Congress that the lower pay raises are not crippling - thanks to the other compensation military members and their families receive, some of that other compensation may be on the chopping block as well. The Basic Housing Allowance (BAH) compensation has dropped from 100% to 99% this year, and may drop down to 95% in the coming years. Prescription co-pays may also be headed for an increase, and the commissary subsidies may increase prices and decrease the stores open hours.

The new Defense Secretary, Ash Carter, in testifying to the Senate Armed Services Committee said that it's important that "compensation and benefit costs must be balanced with readiness and modernization requirements to ensure we maintain the highest quality, ready, and modern military force." Although this years Defense budget pay increase doesn't match the private sector, members of both the House and Senate have promised to look into the issue of military compensation again this year, as well as other long-term changes that were recommended in the Military Compensation and Retirement Modernization report.