On this Veterans Day, about 180,000 members of the National Guard and reserves are serving on active military duty. Surveys show that 40 percent of them make less money while mobilized than they earn in their civilian jobs.
Congress has been wrangling over how to address the "pay gap" for 18 months, mostly without success. A number of proposals that would require the government and other employers to make up the difference between civilian and military pay have been blocked or stripped out of defense bills, apparently because of their cost.
But the compensation issue probably will come up again next week when Congress flies in for its lame-duck session. A coalition of 35 military and veterans organizations is pressing the House for prompt action on legislation that would permit Guard and reserve members to make penalty-free withdrawals from their employer-sponsored retirement plans to help them cope with any financial squeeze.
More than 410,000 members of the National Guard and reserves have been activated for duty in Afghanistan, Iraq and elsewhere since Sept. 11, 2001, when terrorists slammed hijacked jetliners into the Pentagon and the World Trade Center.
Of the 120,000 federal employees in the reserves, about 21,000 will serve on active duty in fiscal 2005, according to a congressional estimate.
No data indicate how many federal employees called to active duty suffer a reduction in pay. Surveys of all Guard and reserve personnel found that among mobilized troops whose pay was cut, the average reduction was $3,000, although some took pay cuts in the tens of thousands.
"These citizen-soldiers and their employers need and deserve some financial relief from the disruption of active military service," the Military Coalition, which represents more than 5.5 million current and former service members and families, said this week in a letter to House leaders urging approval of the bill that would allow activated troops to avoid tax penalties if they tap their retirement funds.
The coalition urged House Speaker J. Dennis Hastert (R-Ill.) and House Minority Leader Nancy Pelosi (D-Calif.) to schedule a quick vote on the legislation, sponsored by Rep. Bob Beauprez (R-Colo.) and amended by Sen. Mary Landrieu (D-La.).
In addition to allowing penalty-free withdrawals from retirement accounts, the legislation would give members of the Guard and reserves up to two years after leaving active duty to reimburse their retirement plans for any withdrawals. The bill also would let mobilized employees who work for companies that make up the difference in their pay to invest differential pay in their retirement plans.
Under the bill, small businesses would receive a 50 percent tax credit on any salary they provided to make up the difference between activated employees' military and civilian pay.
"This is a very practical benefit," said Bob Norton, deputy director for government relations at the Military Officers Association of America. "This is a very good bill and one that ought to be passed."
Critics, however, say the legislation falls short of providing the financial relief that numerous Guard and reserve members need. Rep. Tom Lantos (D-Calif.), who has pushed legislation that would require federal agencies to make up the difference between civil service pay and military pay for activated employees, probably will speak out again next week on the financial woes facing many members of the Guard and reserves, an aide said.
The most recent attempt to address the pay gap fell apart last month, when House and Senate negotiators for the fiscal 2005 defense authorization bill removed provisions that would have replaced income for certain reservists and would have required federal agencies to pay any difference between military and civil service compensation for federal employees called to active duty.
The provisions were not included in the bill, which was signed Oct. 29 by President Bush, because "funding was not appropriated," according to a House-Senate report placed in the Congressional Record. The measure does provide some aid for activated federal employees. It allows agencies to continue paying health insurance benefits on behalf of employees mobilized for active military duty for 24 months, up from 18 months.
Although a survey by Bucks Consultants, a subsidiary of Mellon Financial Corp., found that two-thirds of employers are making salary adjustments to help mobilized employees, Pentagon officials privately contend that making up differences in pay for civil service employees would harm military morale. The officials said they fear that they could end up with a soldier and a reservist of the same rank in the same foxhole who are paid differently by the federal government.