pie chartAccording to the First Command Financial Behaviors Index, 6 out of 10 Americans with a minimum household income of $50,000 believe that military compensationincluding base pay plus allowancesis lower than civilian salaries for comparable jobs in the broader marketplace. This data surprisingly contrasts with that of the Congressional Budget Office, which reported that military pay has “outstripped inflation and private sector compensation by more than 25 percent during the past decade.” Also, the Department of Defense reported that the average servicemember receives $5,400 more in annual compensation than a comparable civilian.

According to a story by Stars and Stripes, the Pentagon was expected to include a 1.7 percent pay raise for servicemembers for 2014, yet officials have recently proposed a 1 percent pay increase to decrease overall costs.

The RAND Corporation proposed numerous options for slowing the increase in military pay. If the Defense department takes some action, survey respondents said the best of the proposed choices would be:

  •   A four-year series of smaller raises set at the Employment Cost Index minus a half percentage point (44 percent of respondents).
  •  A single-year pay freeze, meaning no pay rate increase for one year (39 percent).
  •  A one-time increase in pay set at half a percent below the Employment Cost Index (17 percent).

“Servicemembers and their families are worried about how defense downsizing will affect their pay, benefits and career opportunities,” Scott Spiker, CEO of First Command Financial Services, said. “Half of surveyed households anticipate a reduction in their military retirement benefits and increased responsibility for healthcare costs. Many believe they are less likely to be promoted and more likely to experience early separation. The result is an uncertain economic future for many military families.”

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