Every witness before a Senate subcommittee hearing last week on military compensation — all experts on service pay and benefits — called directly or indirectly for Congress to end its 12-year run of voting for annual military pay raises that exceed wage growth in the private sector.
No witness suggested that future raises each January shouldn’t match annual wage gains for private sector workers as measured by the government Employment Cost Index.
But with personnel costs soaring to sustain a quality all-volunteer force in its ninth year war, lawmakers such as Sen. Jim Webb, D-Va., chairman of the Senate armed services personnel subcommittee, are investigating ways to make military compensation overall more efficient.
A common theme raised at this hearing was the need for more targeted pay, such as bonuses and incentives, versus continuing a string of beefier across-the-board raises, which were deemed inefficient and a catalyst for driving up basic pay and retirement costs.
Webb opened the hearing by saying the cost of military personnel — including pay, allowances, noncash benefits such as health care and deferred benefits such as retirement — “continues to rise at disturbing rates.”
But he adjourned giving assurances “we are very committed to making sure our military people are well compensated (and that) we retain the quality and the expertise” to keep this the finest military in the world.
William Carr, deputy under secretary of defense for military personnel policy, noted that to match civilian wage growth, the Obama administration proposes a 1.4 percent pay raise for 2011. Service associations want that raise bumped, again by half of a percentage point, to 1.9 percent.
Webb didn’t tip his hand on what he will support. But his witnesses this day said the extra 0.5 percent in basic pay would add $350 million to personnel costs in fiscal 2011 and $2.4 billion over five years, and the benefit for recruiting and retention would be small. A more efficient approach, senators were told, would be to add a more modest sum to re-enlistment bonuses for members having job skills that the services most need.
“Unlike pay raises, bonuses do not compound from year to year or affect retirement pay and other elements of cash compensation,” said Carla Tighe Murray, a senior analyst for the Congressional Budget Office.
Webb even referred to this argument of “tailing costs” tied to the practice by Congress of boosting basic pay by a little extra each year.
Carr noted in his written testimony that the extra $350 million some lawmakers want to pump into basic pay in January could be used instead to pay $30,000 bonuses to 11,000 more personnel with critically needed skills.
Congress has been backing basic pay raises for the past decade to narrow a perceived gap with private sector pay. But Murray said the pay gap no longer exists if pay comparisons take into account gains in military allowances over a decade.
“Using a broader measure, one that includes housing and subsistence allowances, indicates that the cumulative increase in military compensation has exceeded the cumulative increase in civilian wages and salaries by 11 percent since 1982,” Murray testified.
Brenda Farrell, the Government Accountability Office’s director for defense capabilities and management, led a team of analysts who reported to Congress last month on the adequacy of military compensation. Farrell testified that service pay and benefits now “are generous” compared to compensation packages offered in the private sector.
She added that across-the-board pay raises “may not be seen as the most efficient recruiting and retention mechanism.” She called targeted bonuses “more appropriate” to keep sufficient personnel in critical skills.
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