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2016: Another lukewarm year for military compensation

January 18, 2016 (Photo Credit: Photo illustration by John Harman/Staff)
 

 

The 2016 Military Times Pay Book is your guide to the complex world of military compensation. And as has been the case for a few years now, the increases in pay and allowances this year are slight.

The lean tenor of the times continues to be symbolized by the most fundamental of military pays — basic pay — which rises by only 1.3 percent this year, barely outpacing the 1 percent pay hikes approved for both 2014 and 2105.

In fact, the last three annual basic pay raises have been the lowest since at least 1962. And the last six annual basic pay raises dating back to 2011, all under 2 percent, have been the smallest in the history of the all-volunteer force created in 1973.

The 2016 raise has something else in common with the minimal 2014 and 2015 increases: It does not keep pace with average private-sector wage growth last year, which was 1.8 percent — making 2014, 2015 and 2016 the only three years since 1999 that the military basic pay raise lagged average civilian wage growth.

That is reviving concerns over the so-called "pay gap" between military and private-sector wages. Under that controversial concept — which military officials have long argued is not a truly representative measure — the gap peaked around 1998-99 at 13.5 percent, a time when military recruiting and retention rates were suffering considerably across the services.

Congress and the Pentagon agreed to a series of higher-than-average military raises over the first few years of the new millennium, narrowing the gap to a low of 2.4 percent. But relatively stable recruiting and retention in recent years have led lawmakers and defense officials to ease off on big military raises, with the result that the gap between average military and private-sector pay, according to those who track it, has grown once again to about 5 percent this year. 

The news is marginally brighter for the second pillar of military compensation, Basic Allowance for Housing. BAH rates went up an average of 3.4 percent on Jan. 1, an average monthly increase of $54 for the 1 million service members who draw that allowance.

And some locations are seeing considerably more robust average increases this year. In fact, a number of housing areas with more than 800 BAH recipients are seeing double-digit increases in their average BAH rates this year: Beale Air Force Base, Sacramento and Travis Air Force Base/Vallejo in California; Denver​ Key West, Florida; Atlanta​; Boston​; St. Louis​; Long Island, New York; Portland, Oregon; Pittsburgh​; and Seattle, Bremerton and Everett in Washington state.

The comparatively good news on BAH comes even as the Pentagon has moved into the second phase of a five-year plan, approved by Congress, to have BAH recipients pay a portion of their housing costs out of their own pockets by slightly paring back their allowance rates.

This year's cost-sharing figure is 2 percent. In other words, service members will need to absorb 2 percent of the national average housing cost by paygrade. Actual cost-sharing amounts vary by grade and dependency status, but range from $24 to $57 a month.

The plan is to continue increasing this cost-sharing formula by 1 percentage point a year for another three years, so that at the end of that time service members are absorbing about 5 percent of their housing costs out of pocket, with BAH covering only 95 percent of the estimated cost of local off-base housing for all troops.

"This rate computation change slows the growth of certain military pay and benefits in a fair, responsible and sustainable way," defense officials say.

The third major pillar of military compensation, Basic Allowance for Subsistence — the monthly food allowance — rises by a miniscule amount this year, by 25 cents per month for officers, to $253.63, and by 37 cents per month for enlisted members, to $368.29.

Those small hikes are largely due to the fact that BAS is linked to, and changes with, the Agriculture Department’s food cost index. WIth inflation virtually nonexistent in 2015, that index has remained almost flat.

The year ahead is likely to bring much more turbulence in the world of military compensation, with the launch of a completely new military retirement system and ongoing reviews aimed at reforming the military health care and commissary systems.

 

 

2016 Basic Pay
All service members received a 1.3 percent increase in basic pay effective Jan. 1. The monthly rates in effect this year:
View the 2016 Basic Pay Chart

2016 Regular Military Compensation
Regular Military Compensation combines basic pay, Basic Allowance for Housing, Basic Allowance for Subsistence, and the tax advantage of those tax-free allowances. It dos not include the overseas housing allowance. The monthly rates listed below represent the average RMC for all service members with the paygrades and years of service shown. A dash indicates that none of the services reported having andyone in that combination of paygrade and service. Average annual military salaries as of Jan. 1
View the 2016 Regular Military Compensation Chart

2016 Involuntarily Separation Pay
Most members involuntarily separated from active duty are eligible for separation pay. The figures shown here are the payments to people who have exactly the number of years of service listed; actual payments are based on both full and partial years of service. A dash in the chart indicates that none of the services reported any members with that combination of years and paygrade. Payment levels for 2016:
View the 2016 Involuntarily Separation Pay Chart

2016 Retirement Pay
Members who retire this year and do not have a disability retirement receive retired pay based on their basic pay. The figures in the table below assume three things: 1) That 2016 retirees with 36 or more completed years of active duty entered the military before Sept. 8, 1980, which puts them under the old plan that pegs retirement pay to a member’s final basic pay; 2) that current-year retirees with less than 35 completed years of active duty entered the military after Sept. 7, 1980, which puts them under the High-3 plan that pegs retirement pay to a member’s average basic pay over the three highest earning years in uniform, almost always the last three years; and 3) that these High-3 retirees spent their final three years at the same grade in which they retired. The figures below assume the exact number of years of service shown; retirement pay is pro-rated for additional months of service. Exact amounts of retirement pay vary by individual and depend on such factors as annual pay raises and dates of longevity pay increases compared to dates of retirement. Monthly retirement pay as of Jan. 1, 2016:
View the 2016 Retirement Pay Chart

 

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