MILITARY UPDATE
Study was basis for military's targeted pay raises

Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

By Tom Philpott

A new Defense Department study on pay confirms the common complaint among military spouses that frequent moves limit employment opportunities and earnings, compared with jobs and incomes of civilian peers.

The Ninth Quadrennial Review of Military Compensation brings more upbeat news from military retirees. While they earn less in second careers than civilian peers, combined income — retired pay on top of civilian earnings — is "substantially above the average of comparable civilian earnings."

"In fact," the report says, "the overwhelming majority of military retirees have been satisfied with their military careers and their civilian life as well."

Other highlights from the 216-page report, released May 17:

• The military needed to change — and now has changed — the way it adjusts basic pay, taking into account that the force is better educated today.
• New compensation tools, such as assignment incentive pay and deployment pay, perhaps even separate pay scales and alternative career lengths for critical specialties, could add new flexibility to the current mix of special and incentive pay.
• Junior enlisted pay is above average compared with pay of civilian peers.
• Few military families are on food stamps, despite press and political attention. Eligibility is no more than a "temporary phenomenon" for some people with unusually large families while still junior in rank and experience.
• Allowing transfer of Montgomery GI Bill benefits to family members in return for members extending their service time seems to be an inefficient retention tool, compared with re-enlistment bonuses. But testing this is a good idea.

By law, the Pentagon must conduct a study of military pay and allowances every four years and report to Congress on actions needed to ensure a quality force. Past reviews have been of uneven quality, producing mixed success.

What makes the 9th QRMC unique, wrote Defense Secretary Donald Rumsfeld in the preface, is that major recommendations — on reforming basic pay through targeted pay raises — were accepted and enacted before the final report was released.

Early analysis of basic pay confirmed a problem. For years, the services had assumed enlisted pay was adequate if kept near the 70 percentile of earnings reported by civilian high-school graduates of the same age. That was how to keep military pay above average.

Missed, however, was the effect of rising educational attainment inside the military over the past decade. Pay of mid-grade enlisted should be compared, not to high school graduates, but to civilians of equal age with at least a year of college. The pay of some senior enlisted — E-8s and E-9s — should match that of equal-age college graduates. Officers, particularly O-3s and O-4s, showed similar pay disparities, given their degrees and levels of responsibility.

Worried about recruiting and retention, Rumsfeld and his leadership team embraced the QRMC findings on basic pay early last year. They helped bring about the targeted pay raise enacted in January, the largest military increase in two decades.

Some of the more interesting report chapters examine the financial well-being of service people, without making recommendations.

For example, it says a new study by the RAND Corp., found that 74 percent of military wives worked some time during the year, compared with 82 percent of civilian wives. Forty-eight percent of military wives work full time versus 59 percent of civilian wives. Military wives who work full time earn, on average, $4,000 less per year than civilian peers, based on surveys from 1987 to 1999.

The disparity is traced to the frequency and distance of moves, the rural location of many military installations and the demands of service life.

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