Neglected military pay slowly begins to improve

Old habits die hard, and that could explain the next complaint you hear from a military colleague about an "erosion of benefits." But in light of compensation gains approved by Congress over the past two years, the statement shouldn’t pass unchallenged.

Military pay still doesn’t stack up well against compensation offered by some burgeoning sectors of the U.S. economy. Pilots, skilled technicians and others continue to be enticed into civilian life by higher salaries, shorter workweeks, more creature comforts and reduced danger. Despite a tough recruiting environment, the military hasn’t received in recent years the kind of double-digit, catch-up raises that in 1980 and 1981 rescued the all-volunteer force.

For all of that, the competitive trend line for military compensation is rising, thanks to wide-ranging pay increases and benefit reforms passed in the year 2000 and 2001 defense authorization bills. As Vice Adm. Norbert Ryan, chief of naval personnel, explained in a recent interview, the services are in a "war for talent" and, with help, are becoming better armed.

Highlights from last year’s defense bill included January’s 4.8 percent pay raise and a commitment to set annual raises through 2005 a half percentage point above wage growth in the private sector. The services also got a targeted raise in July to "reform" the military pay table and a sharp boost in the value of military retirement for those who entered service for the first time on or after July 31, 1986.

Besides these gains, Congress last year pumped an added $225 million into Basic Allowance for Housing (BAH), enhanced many special pays and bonuses, authorized a military tax-deferred Thrift Savings Plan and ended dual compensation penalties on retired officers working as federal employees.

In the fiscal 2001 defense bill, which President Clinton is expected to sign this month, Congress focused again on pay and allowances but also on health care benefits. As described in recent Military Updates, lawmakers passed a Tricare-for-Life package with enhanced pharmacy benefits that will cost an estimated $60 billion over the next decade.

The bill contains other improvements for service people including:

A 3.7 percent basic pay raise for Jan. 1, 2001.

A special July 1, 2001, raise for midgrade enlisted members. It will be $59 a month for E-7s, $51 a month for E-6s and $32 for E-5s.

Basic Allowance for Housing increases. As endorsed by Defense Secretary William Cohen, BAH rates will rise Jan. 1, and enough not only to keep pace with local housing costs but to reduce members’ out-of-pocket expense.

A special boost in junior enlisted BAH. By July 1, 2001, all members in grades E-1 through E-4 living live off base will fall under the same local BAH rate and that rate must be higher than current BAH for E-4s.

New authority for the Navy to pay BAH for the first time to single shipboard E-4s. Only single sailors in grade E-5 or above are allowed to live off ship while in homeport. The privilege will be extended to E-4s. The Navy plan is to allow them to live in barracks or, if unavailable, to receive BAH to rent off base. The Navy doesn’t expect to have money to start the program before October 2001 but it could begin moving some shipboard E-4s into barracks sooner than that.

Restructuring career sea pay. Sea pay used to equal 18 percent of regular military compensation. The value, through inflation, has slipped to 7 percent since 1988 when rates last were adjusted. When money becomes available, Navy officials said, they will use the new authority to boost sea pay.

Final authority to begin a military Thrift Savings Plan, to shelter from taxes up to $10,500 a year in basic pay or bonuses. The likely start date is Oct. 1, 2001.

Expansion of eligibility for special compensation for severely disabled retirees to include persons retired for disability by their service (Chapter 61 retirees). Initially, only severely disabled rated by the Department of Veterans Affairs qualified. Starting Oct. 1, 2001, an estimated 6,000 to 12,000 people retired on disability from their own service will begin receiving payments of $100 to $300 a month. Payment will be automatic but they must meet all other program requirements. For example, they must have served at least 20 years before retiring and have a current disability rating of 70 percent or higher. Also, a rating of at least 70 percent must have been awarded within four years of retirement.

An increase in the ceiling on Special Duty Assignment Pay to $600 a month.

The current maximum is $275 for most recipients, $375 for recruiters. Service and Defense officials still must decide how the higher ceiling should be used.

Flexibility in payment of officer and enlisted continuation bonuses including authority to replace annual payments with full lump amounts to improve sign up rates. The services are studying what to do with the new authority.

As Congress adjourns, it leaves military problems unsolved like the intense pace of operations, shortages in spare parts, dwindling inventories of ships and aircraft. But recent votes on behalf of service people suggest the erosion of benefits has ended, and the war for talent has intensified.