The RAND Corporation recently issued a research report for the Office of the Secretary of Defense, titled “Should the Increase in Military Pay Be Slowed?” The intent of the report was to answer the following questions:
- How well are recruiting and retention doing?
- How does military pay compare with civilian pay?
- Do manpower supply and pay conditions indicate that a slower rate of increase in military pay is reasonable?
- If so, how might this be done?
The researchers found that recruiting and retention are in good shape and the services anticipate reducing both over the next few years. They also found that military pay and compensation are up when compared to civilian pay. (See the report for more details)
Essentially, the report states that conditions are favorable for slowing the increase in military pay. Furthermore, the report suggests the steps that DoD could take to do so, which include the following options:
- A one-time increase in pay set at half a percent below the Employment Cost Index.
- A single-year pay freeze. (No pay rate increase for one year)
- A four-year series of smaller raises set at the ECI minus half a percentage point.
The authors acknowledged that although the second and third options would provide about $17 billion over the next ten years in cost savings, those steps “may be politically more costly.”
The report also recommends that DoD use the Current Population Survey (CPS) median wage series instead of the ECI for determining future the basic pay raises. According to RAND, the CPS median wage is more sensitive to changes in civilian wages.
Earlier this year Secretary of Defense Leon Panetta talked about a plan to "provide more limited pay raises beginning in 2015." The DoD has not announced any decisions based on the reports findings; it is likely that any steps associated with this report would factor into budget planning process for FY2015.
Read the report brief and full report on the RAND Corporation website.
