Pentagon & Congress

Rising military personnel costs may mean future cuts in troop numbers

Despite White House and Pentagon suggestions that military end strength should continue to grow in coming years, the total number of personnel is likely to stay flat or start shrinking due to budget pressures on the Defense Department, according to a new financial analysis.

The report from the Center for Strategic and International Studies, released over the weekend, details expected fiscal 2021 military budget and projected defense spending in coming years.

While the number has risen consistently in recent budget cycles — totaling more than $716 billion for the fiscal year that starts in October — the authors of the report said rising expenses and federal deficit concerns are likely to hold down significant growth in defense spending over the next five years.

Author Todd Harrison, director of Defense Budget Analysis for CSIS, noted that of particular concern is the expected rise in military personnel costs.

Those items — including troops’ pay, housing stipends and other compensation — grew by nearly 5 percent from fiscal 2020 to fiscal 2021, even though the total number of personnel rose by just 1 percent.

“The higher costs of military personnel projected in this budget are not in proportion to the growth in the size of the force,” the report stated. “The FY 2021 budget does not position DoD to grow force structure substantially, as the Trump administration previously indicated it planned to do.”

President Donald Trump has repeatedly requested sizable increases in service end strengths in recent years despite his stated goal of returning more troops from overseas combat zones and overseas bases at allied countries.

Congress has scaled back those requests somewhat, but still added several thousand service members to the Army and Navy as the defense budget surpassed the $700-billion mark.

Harrison noted that past defense budget projections predicted lower annual pay raises and smaller allowances than Congress and the economy provided, adding to the overall personnel cost increase.

“The cost per person is going back up,” Harrison said, noting similar financial challenges for the department in the early 2000s. “The fact that personnel costs are growing limits the ability to grow the number of personnel in the future.

“That means that in a flat budget, DOD isn’t going to be able to grow the number of personnel, if the cost per person keeps growing … And if we get into a declining budget, then yes, they’re going to have to cut personnel. There will be no way around it.”

In the final years of President Barack Obama’s administration, Pentagon leaders proposed cuts to military pay raises (putting them 0.5 percent below the rate of civilian wage growth) and personnel trims to help save money for other modernization and procurement priorities.

But those moves prompted outrage from military family advocates, who said the decision amounted to making troops absorb the costs of more expensive equipment and training decisions.

The pay raise for next January is expected to be 3.0 percent, equal to the predicted civilian wage increase and the first time in a decade that troops have seen a pay boost of 3.0 or more in consecutive years in a decade.

But that adds additional costs in paychecks and retirement payouts in subsequent years, the report notes. Harrison said without ways to keep down those costs, Pentagon planners “are going to have to cut personnel over time or make sacrifices in other parts of the budget, like modernization.”

The full report is available on the CSIS web site.

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