A significant gap in wages and benefits offered to commissary workers and exchange employees doing the same jobs appears to be rooted in a simple fact: The Defense Commissary Agency is funded by taxpayer dollars, while the exchanges are self-supporting businesses that pay their employees out of store profits.
Converting commissary employees to the same pay scale as exchange employees — the nonappropriated fund system — would save DeCA about $110 million a year in staffing costs, according to a recommendation from the Military Compensation and Retirement Modernization Commission.
That proposal is part of a broader commission recommendation to consolidate back-office functions, logistics systems and staffing of the commissaries and exchanges into a single defense retail organization.
The commission suggested converting "some or all" commissary staff to NAF status — although those wages and benefits would continue to be paid with taxpayer dollars. In that way, the stores would not necessarily have to raise consumer prices to cover employee salaries.
This idea is apparently gaining traction within DoD. At a weeklong meeting of officials from commissaries, exchanges and others within DoD, one of the recommendations was to convert commissary employees to NAF, according to a source familiar with the discussions. Recommendations will be considered by DoD leadership.
It's also is being reviewed in great detail in a congressionally mandated study of some cost-cutting options for DeCA.
Researchers are looking at the impacts on personnel, funding, operations and customer savings, as well as on existing exchange and morale, welfare and recreation wage rate and retirement systems. It's unclear whether this study also is looking at the possibility of continuing to use taxpayer dollars to fund NAF-converted commissary employees.
DeCA has been under increasing pressure from defense officials to drastically cut its budget. But the idea of converting government employees to NAF is raising concerns about the effects of lower salaries and benefits on those employees, a group that includes a number of military spouses.
Converting DeCA employees to NAF status "will cause significant hardship" for the commissary workforce, wrote Beth Moten, legislative and political director for the American Federation of Government Employees, in a letter to the leaders of the House and Senate Armed Services committees.
AFGE is a union that represents about 650,000 federal employees, including tens of thousands of civilian employees in commissaries and exchanges.
Moten said "NAF-ing" the DeCA workforce would mean "a whopping pay cut for many employees doing the same work."
According to an internal position paper from the Army and Air Force Exchange Service obtained by Military Times, the wage scale of commissary employees is about 25 percent to 30 percent higher than that of the exchanges.
According to AFGE's comparison, in one example a cashier starting in a NAF job in Charleston, South Carolina, makes about 47 percent less than a DeCA cashier starting in in that location. In the best-case scenario, the highest-paid NAF cashiers there still earn 10 percent less than their DeCA counterparts.
AFGE compared salaries of employees who performed similar jobs at commissaries and exchanges in 10 localities.
"These trends play out all over the nation, from locality to locality — prevailing rates for NAF employees are consistently lower than for appropriated-fund employees," Moten wrote in her letter.
"It's the way the two [systems] are funded," said Candace Archer, labor management relations specialist for AFGE. "The exchanges are funded based on a business model, and are self-supporting. The commissary system is closer to a government agency, and they are full federal employees."
For exchanges and other NAF activities, revenue covers salaries in a business that not only must fund its own operations, but also contribute dividends out of profits to morale, welfare and recreation programs on military bases.
NAF wages are set using local wage surveys conducted in surrounding communities. Commissary salaries also vary by locality, but employees are subject to federal civil service rules on hiring, pay, promotion and retirement.
Military spouses make up about 28 percent of DeCA's worldwide workforce.
Spouses and other family members are also an important part of the military exchanges' workforces. About 24 percent of Army and Air Force Exchange Service employees are military family members.
In that context, the compensation commission's proposal "would hurt the military families it ostensibly wants to protect. ... 'Walmartizing' the DeCA workforce in order to generate fake and punitive economies at the expense of American workers is wrong," Moten wrote.
But the issue is not just about salaries, AFGE and others have noted. "DeCA employees would have their benefits cut significantly even as they perform the same work," Moten wrote.
DeCA employees are eligible for the Federal Employees Health Benefits program; NAF employees have fewer health coverage options, Moten noted.
The NAF retirement program also makes lower employer contributions and has higher retirement ages, according to AFGE. DeCA employees also would lose civil service protections against job loss.
"NAF employees are 'at-will' employees subject to business-based actions, which means management can change their hours and employment conditions at will," Moten wrote.
Joyce Raezer, executive director of the National Military Family Association, said the "big issue in all of this is how to protect the pay and benefits of current employees" who are government civil service workers.
"If Congress goes along with this, they have to put in protections for current employees," Raezer said. "Right now, it's in the hands of Congress."
House lawmakers have not included the provision in their initial draft of the fiscal 2016 defense authorization bill that is taking shape, but have noted they will consider proposals regarding the commissary after they have received the congressionally mandated study in September.
Raezer said she is not surprised that cashiers at exchanges are paid less than their commissary counterparts, given the differences in the sources of funding and the fact that exchanges must be self-supporting businesses.
But others question the basic wage disparity. "I don't see any ethical reason why people in the government sector should make more than people in the private sector," said Chris Edwards, an economist at the Cato Institute think tank.
Noting that many commissary and exchange jobs are directly analogous to private-sector jobs in every community in the nation, Edwards said, "It seems that these are not unique jobs that make it difficult to compare to the private sector."
Military installations generally provide a boost to local economies, and the demand for employees would push up wages and benefits, he said. Thus, even cashiers in the surrounding community likely would be making more than cashiers in a community without a military presence.
AFGE contends good-paying, stable government jobs are good for the community. "Do we want military services to be provided by people who can't afford to pay the rent?" Archer said.