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The Honolulu Advertiser
Posted on: Monday, July 9, 2007

Lag in military pay eliminated

By Rick Maze
Army Times

A recently released congressional report appears to undercut efforts in Congress to approve bigger military pay raises by concluding that the "gap" between military and civilian pay, which lawmakers are trying to close, no longer exists.

The report, released last month by the Congressional Budget Office, the nonpartisan analytical arm of Congress, is not surprising.

Budget analysts for Congress, the White House and the Pentagon have claimed for years that the pay gap — measured by comparing military and private-sector wage growth over the past two decades — is a flawed and inadequate way to measure military compensation because it counts only basic pay, which is only a small part of the direct and indirect compensation received by service members.

Basic pay, food and housing allowances, and the monetary advantage that derives from the fact that both of those allowances are tax-free, resulted in a 21 percent boost in total compensation for the average enlisted member over the past six years, according to the CBO report.

And that doesn't include the value of deferred compensation, such as retired pay and health benefits for retirees and their families, or the value of noncash fringe benefits, such as subsidized on-base shopping, child-care and other community services, the report says.

The report was done at the request of the Senate Budget Committee, which asked specifically for a comparison of military to civilian rates of pay for enlisted personnel, who make up about 83 percent of the armed forces, said CBO Director Peter Orszag.

CBO analyst Matthew Goldberg said it is difficult to compare military and civilian occupations because there are many unique aspects to military life. But when using a broad definition of military compensation, it appears military people are paid at a rate equal to the 75th percentile of private-sector workers with similar education levels. In other words, service members are paid, on average, more than 75 percent of private-sector workers with similar education levels.

That is slightly better than the standard set by the Defense Department, which has strived to set military pay so that it matches salaries for the 70th percentile of private-sector workers.

Military payroll costs are a major budget issue, with Pentagon and service officials warning pay and benefits for active, reserve and retired personnel and their family members have reached the point where they are squeezing weapons modernization projects out of the budget. The squeeze is only going to get worse, Goldberg said, warning that the planned buildup of Army active-duty strength over the next few years will add $5 billion a year to the defense budget by 2013.