Troops Are Paid Fairly, But Differently, Study Shows

By Stephen Barr
Monday, March 24, 2008

It is one of the most politically sensitive questions on Capitol Hill: Are the troops getting paid the right amount?

A new Defense Department study suggests that the answer is yes, when basic pay, cash allowances, free health care, pensions and tax breaks are taken into consideration.

When those elements are combined, military officers and enlisted personnel are compensated as well or better than 80 percent of their counterparts in the private sector of similar ages and educations, the study said.

That runs contrary to popular perceptions, shaped in the late 1970s, when military pay fell behind private-sector wages, and reinforced in the early 1990s by reports that several thousand military families relied on food stamps to make ends meet.

Congress became concerned about such perceptions and realized that pay comparable with the private sector is critical to maintaining an all-volunteer force, so it began pumping up military salaries.

Over the past decade, Congress usually has set military pay raises at one-half of a percentage point above the average annual private-sector wage increase. Since 2001, the Pentagon calculates, average basic pay has grown by 32 percent.

But there is more to military compensation than pay, and the Pentagon's study, released this month, emphasizes the importance of benefits -- a departure from previous pay studies, known as quadrennial reviews of military compensation.

The study was headed by Jan D. "Denny" Eakle, a retired brigadier general who served for 29 years in the Air Force. When she retired, she was deputy director of the Defense Finance and Accounting Service, which is responsible for paying more than 5 million people.

One of the study's goals is to help educate military personnel about compensation so that they better understand what kind of income they will need to maintain their standard of living if they leave the armed forces, Eakle said in an interview.

The study begins with regular military compensation -- basic pay, housing and food allowances and an estimate of the federal income tax advantage gained by receiving tax-free allowances. It then adds an estimated value for the free health care received by the military, the value of retirement benefits and additional savings for being able to avoid state and Social Security taxes.

"Military members who focus solely on cash compensation will tend to systematically undervalue the compensation package they receive," the study said.

For example, an officer who is a college graduate with four years of service and who decides to leave the military will need to carefully review job offers, Eakle said.

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