Scaled-back pay raises called ‘insidious’

By Leo Shane III, Staff writer

Your military paycheck is getting smaller.

It’s happening despite raises in military pay every year, military advocacy groups warn. And they say it will keep shrinking if Pentagon officials get their way.

Critics say the Pentagon’s intensifying zeal to hold military raises under the rate of average private-sector wage growth is threatening to resurrect an old specter: a so-called “pay gap” that some say slowly drains away the purchasing power of military families.

“It’s insidious, because troops are still seeing a ‘raise’ in their pay,” said retired Air Force Col. Mike Hayden, director of government relations for the Military Officers Association of America. “But your dollars don’t go as far. You don’t have the same discretionary income as before.”

Over the years, Pentagon officials have consistently downplayed such concerns, saying basic pay is just one aspect of a robust pay-and-benefits package that stacks up very well against the private sector when considered in total, even with the recent smaller basic pay raises.

During the rollout of the White House’s 2016 defense budget request in early February, Air Force Lt. Gen. Mark Ramsay, the Defense Department’s director of force structure and resources, sought to reassure troops, stating: “We are all about our people.”

But, he added, “Dollars we saved in pay and compensation … help balance out readiness and capability.”

Critics say that won’t matter if troops feel unappreciated and leave the ranks. The Air Force Sergeants Association says the recent pay decisions have “re-opened the wound of a pay gap” and threaten retention. The Association of the U.S. Army has labeled pay equity one of its top concerns in coming years.

Lagging behind?

The 2016 defense budget request calls for a 1.3 percent increase in basic pay, 1 percentage point below the estimate of average private-sector wage growth next year. If approved, it would be the third consecutive year troops would get raises lower than their civilian counterparts.

For 2014 and 2105, service members received a 1 percent bump in basic pay — the two smallest raises in the history of the all-volunteer force, dating back to 1973. Next year’s proposed raise would be the second-smallest in that time period.

According to MOAA’s calculations, the gap has vanished only once, for a single year — 1982, when a massive 14.3 percent catch-up raise for the troops was approved in an effort to compensate for the parsimony of the 1970s. But in 1983 and beyond, military raises again lagged civilian pay growth to an extent that the gap grew as high as 13.5 percent in 1998 and 1999.

Above-average raises again narrowed the gap over the first decade of this century, but it has never been smaller than 2.4 percent, from 2010 through 2013. This year, it has widened for the first time since 1999, growing to 3.2 percent.

MOAA and other critics estimate that a 1.3 percent basic pay raise next year that lags private-sector wage growth would widen the gap between military and civilian pay to around 5 percent, an annual salary difference of about $1,500 for most midlevel enlisted troops and around $3,000 for midlevel officers.

And if the Pentagon’s long-term plans are approved, that gap could rise steadily over the next four years, approaching double digits, MOAA says. Hayden noted that when the gap peaked at over 13 percent in the late 1990s, it took almost a decade of compensation corrections to deflate.

“Once you start capping pay, it becomes so easy to keep doing it until you really hurt retention,” he said.

Hayden said MOAA is already hearing anecdotal evidence of troops bailing out of the service for civilian life mainly because of compensation trims.

Pentagon officials have repeatedly told Congress the lower pay raises are not ideal but are not crippling, and once again are disputing suggestions of a significant gap between military and civilian pay.

They have also noted that a focus on troops’ paychecks does not consider other pillars of military compensation such as housing benefits free health care and heavily discounted prices at base commissaries.

However, the Pentagon’s budget plan calls for further cutbacks in housing allowances so that troops cover about 5 percent of their costs out of their own pockets; suggests that prescription co-pays may rise again under the military’s health plan; and seeks to trim back subsidies for commissaries, driving up prices and shortening store hours.

Taking a fresh look

In testimony before the Senate Armed Services Committee, incoming Defense Secretary Ash Carter noted 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.”

In coming weeks, Carter will return to Capitol Hill for more budget hearings at which he will defend the lower pay raise proposal.

Last year, House members pushed to have the military pay raise at least match private-sector wage growth, but accepted a lower pay raise after negotiations with the Senate.

Members of both chambers promise a fresh look at the issue this year, along with the long-term personnel changes recommended in the Military Compensation and Retirement Modernization Commission report.

Hayden said he is hopeful that his and other groups can successfully lobby lawmakers to block the Pentagon plans this year, even while military leaders argue that the billions saved by the pay changes over coming years could fill critical needs elsewhere.

“The question is, when is enough going to be enough?” Hayden said. “We need the military to speak out about the negative impact this has on their wallets too. Once you start trimming back on pay, you’re starting to threaten readiness.”