My Life As A Military Spouse

Is your service-member 'overpaid'

For the last decade, MOAA and The Military Coalition (TMC) have led successful efforts to make up most of the 13.5% "military pay gap" that was a big factor in the retention problems of the late 1990s.

In the FY2010 Defense Authorization Act approved last year, the House and Senate Armed Services Committees accepted the recommendation by MOAA and the TMC for a 3.4% military pay raise for 2010 (vs. the 2.9% proposed in the defense budget) to reduce the remaining gap to 2.4%.

Now that budgets have gotten tighter, some have questioned (as the same groups did while military pay raises were capped below private sector pay growth repeatedly in the '70s, '80s and '90s) whether any pay gap exists.

The Defense Department says there isn't one, and that their new pay comparability objective - putting each grade/longevity combination at or above the 70th percentile of similarly educated civilians - has been achieved.

The Congressional Budget Office recently issued a report asserting that, with housing allowances improvements over the last decade, military people are now about 10% overpaid compared to their private sector counterparts.

MOAA couldn't disagree more, telling GAO that we need a more transparent system to assess who the appropriate civilian comparison population is, and what the percentile should be, given that the military:

Recruits from the top half of the civilian aptitude population
Finds that only about 25% of America's youth qualify for entry
Requires career-long education and training advancement
Enforces a competitive "up-or-out" promotion system
Imposes severe limits on personal freedoms (e.g., not being able to quit when you want; risking a felony conviction for refusing an order).

Both military pay and allowance principles and service conditions have changed dramatically since development of the Regular Military Compensation (RMC) in the 1960s as the "military equivalent of civilian salary" -- including the value of the federal tax advantage military people receive because their housing and food allowances aren't taxable.

In the 1960s, all members received the same allowances, regardless of location. Now we've turned housing allowances into true reimbursements for housing costs, reflecting actual costs by locality.

Using RMC to assess comparability in today's environment, basic pay - the single most important military compensation element and the only one that drives such important things as retired pay and reenlistment bonuses - would have to "flex" to accommodate other changes.

Because housing and food allowances are now tied to external measures of housing and food costs, and tax rates are determined independently, maintaining a specific RMC total would require bending basic pay to fit whatever amount is left after setting tax and allowance amounts.

Current law says the military should receive a 1.4% raise for 2011. But what if average housing costs (because of disproportional changes in some localities) and tax rates (and thus the value of the tax advantage) both rose significantly? Under the CBO comparison methodology, maintaining a "target comparability" RMC could require reducing basic pay. Would it really make sense to tell military people, in essence, "Your taxes went up, so we have to freeze or cut your basic pay (and future retired pay)?"

Most important, compensation isn't what you're paid. It's what you’re paid divided by what's required of you to earn that pay. If we increase pay 25% but require 100% more sacrifice to earn it, that's not a pay raise.

Today's troops are encountering burdens of sacrifice that were never envisioned 40 years ago by the crafters of the all-volunteer force and the pay and allowances system. Thousands of today's troops have borne cumulative combat deployment time that exceeds the total length of World War II.

The current pay comparability formula proposes a 1.4% military pay raise in 2010 - the smallest in almost 50 years - even while we'll be ordering thousands to a third, fourth or fifth combat tour, incurring ever-increasing risks that they will come back changed, perhaps for the rest of their lives.

Overpaid? Any calculation yielding that result is a wrong one.

posted by LoveMyTanker @ 2:46 PM