Inflation outpacing military pay hike

[CommunityEditor]

A 3.9 percent military pay raise for 2009 seemed generous when lawmakers first proposed it in February, but its luster is dimming as rising inflation threatens to erode service members’ purchasing power.

The 3.9 percent hike lawmakers would like to see take effect Jan. 1. is larger than the 3.4 percent raise requested by the Bush administration for next year, but it may not seem so big to many service members as worsening economic conditions and soaring crude oil prices hit troops — and all other Americans — in the wallet.

The Bureau of Labor Statistics, an arm of the Labor Department, reported July 16 that the Consumer Price Index of goods and services for urban consumers was 5 percent higher in June than at the same time a year ago, with transportation and energy costs comprising the bulk of the increase. Energy costs rose 6.6 percent in one month and are almost 25 percent greater than they were in June 2007. Transportation costs rose 3.8 percent in June and were 12 percent higher than they were a year earlier.

A second version of the CPI, which measures increases for urban wage earners and clerical workers, reported an even higher inflation rate, estimating costs were 5.6 percent higher than in June 2007.

The 3.4 percent military pay raise requested by the Bush administration was set to keep pace with private-sector salaries, following a formula set in law for military and federal civilian employees.

The 3.9 percent raise included in the House and Senate versions of the 2009 defense authorization bill was proposed to continue closing the perceived gap between military and private-sector wages that developed between 1982 and 2000, when military raises were capped.

The pay gap, which had grown as large as 13.5 percent in 1999, has shrunk slowly after seven consecutive years in which Congress approved military raises that were slightly larger than private-sector wage growth.

The pay gap stands at about 3.9 percentage points today — the same figure as the raise pending in Congress — and would drop by half a percentage point if lawmakers have their way.

Over the past decade, military pay increases have been greater than inflation — as measured by the CPI survey of the cost of goods and services — in eight out of 10 years, with the exceptions being 2005 and 2006. Over the decade, military pay rose about 16.1 percentage points more than the CPI, which not only closed the pay gap but boosted troops’ purchasing power.

The difference between military raises and the CPI has, for the last decade, been a source of complaint for military retirees, because cost-of-living increases in military retired pay are based on the CPI.

Military pay is designed to be competitive with wages in the private sector, not to keep pace with inflation, said Steve Strobridge of the Military Officers Association of America and a former compensation director for the Air Force.

For that reason, a military raise that is bigger than the average private-sector increase and that continues closing the pay gap is a good thing for the military, even if it does not keep up with inflation, he said.

Cost-of-living adjustments in retired pay, which also apply to Social Security and federal civilian retired pay, are designed so the annuities do not lose value over time, he said.

Inflation protection
In some ways, service members and their families are protected from price hikes. Tax-free food and housing allowances increase automatically each year to match increases in lodging and food costs. Food costs in June were 5.2 percent higher than 12 months earlier, while housing prices were 3.5 percent higher, according to the Labor Department.

Service members and their families also are exempt or shielded from rising health care costs because members receive free medical care, and health care for their families is either free or has co-payments and other fees that have been frozen for years by Congress, Strobridge said.

Health care costs have gone up 4 percent nationwide in the past year.

Strobridge said high inflation hits service members hard only if it happens at the same time that private-sector wage growth is relatively slow — which is what appears to be happening now. He called this a “double-punch” for service members that also comes when jobs in the private sector are harder to find.

But the areas in which service members are protected from inflation do not come close to offsetting the higher fuel and energy costs that account for the biggest share of the increase in consumer prices.

Gas prices rose 10.1 percent in June and are 32.8 percent higher than a year ago, according to the Labor Department. Overall transportation costs rose less, but only because the cost of new and used vehicles has declined.


Article: http://www.armytimes.com/money/finan...raise_073108w/

Free Medical from a Lt. that has one year of sticking people with a needle... please... I'd rather pay for it so I can get a DOCTOR, not a Care Manager, who knows what being "sick" and having pains actually means. For what we all do, AF, Marines, Navy, Army, we should be getting paid way higher than the slackers on Capitol Hill. They Volunteered to run for office, we volunteered to serve, so why do they make so much money each year, then vote on themselves for their own pay raises? Stop being ignorant to the fact that they military get's paid too little and stop thinking about the "tax free" food, that they actually place a surcharge on to cover for the tax free, so either way we are paying. Go live overseas in a tent in 140 degrees weather for a year or so, then tell me your underpaid.

I agree with ths last post. We don't get paid enough to do what we do. Heck, if you look at the amount of hours we actually put in a week, are pay per hour is probable below minimum wage. Everybody always talks about how we get free housing if we live onbase but most housing areas are a joke. They are run down in some locations and they are in bad parts of town. The school districts are so bad that you are scared to let your kids go to school there and you end up paying out of pocket for private school. I had to move 43 miles round trip from where I work so that my kids could get a good education in a public school. With that being said I am now spending $480 bucks a month in gas because I work seven days a week. So your small ray raise won't even cover my cost in gas.

I do agree with the underpaid statement when you have contractors in the desert making 10 times your pay doing the same thing. However the first poster should not be slamming that LT becuse even civilian doctors have to start somewhere their not born with experince. Just like you have a job and your had to learn to become an expert they do as well. I am not vouging for the helthcare we recieve just stating don't slam your brothers and sisters slam the rule makers.

Military members have been under paid and over worked for years, and to say that you will only grant them 3.9% is a insult. Soldiers train everyday for the stressfull environments in iraqi and in other foreign countries and get paid a extra 500 a month, but an assistance for the president can count six fiqures. You make your own decision in life but the goverment really need to take a closer look at the way funds is being distributed. The economy right now is turned upside down and being told to drop everything that you have and give it to me, and the military is right there with them suffering. If we don't get a handle on the way politics is getting handle you will find more military homeless and/or in contracting jobs in another country. It is sad day, when have soliders that can't even feed there families in there own country, that they defend the rights for.

[kstein94]

I can understand how service members feel that 3.9 percent is not enough. However what they need to understand is that the civilian marketplace is not even going to see that high of a pay increase this year. Companies are having to pay more for expenses due to high fuel costs and less will be able to go to salaries. I believe that service members are believing that the grass is greener on the other side. Companies are cutting down on hiring and are laying off workers. GM for example. I would really appreciate a 3.9% pay increase. The entire country is feeling the pain. Higher pay increases for service members would relate to tax increases and therefore taking more money out of their pocket. Also, every 2 years service members get a time in rank pay increase, start asking your friends, neighbors and civilians you encounter in your day if they get a pay raise every 2 years just for coming to work. Ask if they will be getting a pay raise of 3.9% this year.

Also consider that this year it looks the VA disability compensation will only be going up 2.8 % as things look now.

3.9% is not enough for the stress we go through. Each deployment is more stress on the service member and his/her family back home. But all we deserve is a 3.9% pay raise!!!! I dont want to hear about your taxes being effected. I dont here you complaining about having your freedom. Ever wonder way or even think why you can sleep at night with out mortars landing next to your house, because of the US military providing you and your family that safety. but I guess your familiy is only worth 3.9%.

A 3.9% pay increase is nice, and welcomed. However, every time we get a pay raise the price of the "tax free" food we purchase on base go up. And you can't forget the "surcharge" placed on foods. The price for pretty much everything sold on base goes up. That raise means nothing when you consider that AAFES and the comissaries are going to raise the prices at the begining of the year just because of this pay raise. And it happens every year. For the amount of work that the average Soldier does on a daily basis, we deserve a bigger pay raise. Especially the Soldiers who are serving downrange. Everything revolves around money, so how about helping the military service members by lowering their taxes. Everyone that goes down range are exempt from paying tax (on their salaries). We are a nation at war, are we not. Then why not exempt the entire military service from paying tax? If the government can't help us out by giving us pay raises that would close the gap with the private sector, then help us out another way by not taxing our salaries.

[LQUINONE]

Originally Posted by Unregistered

A 3.9% pay increase is nice, and welcomed. However, every time we get a pay raise the price of the "tax free" food we purchase on base go up. And you can't forget the "surcharge" placed on foods. The price for pretty much everything sold on base goes up. That raise means nothing when you consider that AAFES and the comissaries are going to raise the prices at the begining of the year just because of this pay raise. And it happens every year. For the amount of work that the average Soldier does on a daily basis, we deserve a bigger pay raise. Especially the Soldiers who are serving downrange. Everything revolves around money, so how about helping the military service members by lowering their taxes. Everyone that goes down range are exempt from paying tax (on their salaries). We are a nation at war, are we not. Then why not exempt the entire military service from paying tax? If the government can't help us out by giving us pay raises that would close the gap with the private sector, then help us out another way by not taxing our salaries.

is there a fear of backlash since some posters post unregistered?

[SSgtAllen3381]

To the above: Not only does food go up, haircuts, uniforms..EVERYTHING goes up.

We will never get paid what we are worth. If we do, Congress will quit working because WE will be making more than them.