thedrifter
07-09-07, 07:33 AM
Advocates do the math and get different answers
Bigger raises still needed, MOAA rep says
By William H. McMichael - bmcmichael@militarytimes.com
Posted : July 16, 2007
Despite the findings of a new Congressional Budget Office study of military compensation, the “pay gap” between average military and private-sector wages has not yet been closed, an advocate for retirees says.
The CBO study, published in late June, concluded that, contrary to previous studies, the pay gap has been overcome by a long string of pay raises that began in 1980. The finding provides fuel for the Bush administration’s contention that its proposed 3 percent pay raise for 2008 is adequate and that Congress’ push to beef that up is unnecessary.
But according to the Defense Department’s 1982 comparability standard — 1982 being the last year it was generally agreed that rough parity existed between military and private-sector wages — a 4 percent pay gap still exists, according to Steve Strobridge, spokesman for the Military Officers Association of America.
“We’re not comfortable with saying, ‘OK, close enough,’” Strobridge said.
Strobridge calculates the gap by comparing compounded increases in the Labor Department’s Employment Cost Index to the compounded military raises from 1982 through 2007. Making up the difference, he said, would require an additional 4 percent raise, on top of the 3 percent the administration proposes, in 2008.
No one’s proposing that sort of increase. Both the House and Senate are calling for a 3.5 percent raise for next year. In addition, the House wants to peg military base pay to changes in the ECI, plus 0.5 percent, for the next five years, in order to continue closing the pay gap.
According to 2002’s 9th Quadrennial Review of Military Compensation, overall regular military compensation — the sum of all cash earnings plus the tax benefit of non-taxable allowances — should equal that of at least the 70th percentile of civilians with some college education, meaning that service members should make more than 70 percent of their civilian peers. The figure was chosen because the study group found that, based on historical data, the military did not have recruiting or retention problems when pay was at this level.
In its new study, CBO found that in 2006, compensation for the average enlisted service member actually topped the 75th percentile, when cash allowances and federal tax advantages are included.
“CBO’s analysis suggests that the goal has been achieved,” the report states.
While Strobridge agrees with the Pentagon’s use of ECI to calculate base pay increases — a calculus stamped into permanent law since 2004 — he says the Defense Department’s primary base pay assumption — the 70th percentile — is too opaque.
“How did you calculate the 70th percentile?” he asked. “I want a transparent standard.”
Joe Barnes, spokesman for the Fleet Reserve Association, says he thinks the current base pay index works.
“We agree, the 70th percentile is a reasonable benchmark,” he said. “But it becomes challenging when you look at military service compared to civilian specialties. Military service is much different than working in the civilian world. The approach must take that into account.”
The data in the CBO study, Barnes said, “is a useful reference. But the value of the service is really significant.”
A unique lifestyle
CBO acknowledges that pay comparisons do not take into account the difficulties of military life, such as combat and long family separations. It also notes that those features “require a compensation package that is distinctly different from civilian systems.” But it doesn’t suggest how to calculate the difficulties of military life, saying only that the topic “is the subject of extensive research and debate.”
Barnes favors more targeted pay raises, such as the series of increases begun in 2002 and concluded in April that boosted pay for midgrade noncommissioned officers and most warrant officers, an effort aimed at meeting the 70th percentile.
“The right direction,” Barnes said, but added: “We contend that there’s still about a 4 percent gap. We still need more targeting.”
That probably won’t happen anytime soon. Pentagon officials say basic pay is right where they want it.
No Defense Department official agreed to comment on the CBO report. But administration budget officials say President Bush “strongly opposes” efforts in Congress to boost the size of his proposed military pay raises, calling it “unnecessary.”
And on May 24, Defense Secretary Robert Gates said there are “competing interests” for defense dollars, citing the coming purchase of more than 20,000 Mine Resistant Ambush Protected vehicles for the Army and Marine Corps. Gates said a 3 percent raise is “about the right number” and “a fair increase in compensation.”
But today’s recruiting and retention market is a tough one, Barnes said, pointing out that the Navy is boosting the number of recruiters on the street even in the midst of a drawdown.
“The propensity of young folks to join is really low,” Barnes said. “Those that are coming forward are not looking at their tax advantages. They’re looking at their pay.”
Staff writer Rick Maze contributed to this report.
Ellie
Bigger raises still needed, MOAA rep says
By William H. McMichael - bmcmichael@militarytimes.com
Posted : July 16, 2007
Despite the findings of a new Congressional Budget Office study of military compensation, the “pay gap” between average military and private-sector wages has not yet been closed, an advocate for retirees says.
The CBO study, published in late June, concluded that, contrary to previous studies, the pay gap has been overcome by a long string of pay raises that began in 1980. The finding provides fuel for the Bush administration’s contention that its proposed 3 percent pay raise for 2008 is adequate and that Congress’ push to beef that up is unnecessary.
But according to the Defense Department’s 1982 comparability standard — 1982 being the last year it was generally agreed that rough parity existed between military and private-sector wages — a 4 percent pay gap still exists, according to Steve Strobridge, spokesman for the Military Officers Association of America.
“We’re not comfortable with saying, ‘OK, close enough,’” Strobridge said.
Strobridge calculates the gap by comparing compounded increases in the Labor Department’s Employment Cost Index to the compounded military raises from 1982 through 2007. Making up the difference, he said, would require an additional 4 percent raise, on top of the 3 percent the administration proposes, in 2008.
No one’s proposing that sort of increase. Both the House and Senate are calling for a 3.5 percent raise for next year. In addition, the House wants to peg military base pay to changes in the ECI, plus 0.5 percent, for the next five years, in order to continue closing the pay gap.
According to 2002’s 9th Quadrennial Review of Military Compensation, overall regular military compensation — the sum of all cash earnings plus the tax benefit of non-taxable allowances — should equal that of at least the 70th percentile of civilians with some college education, meaning that service members should make more than 70 percent of their civilian peers. The figure was chosen because the study group found that, based on historical data, the military did not have recruiting or retention problems when pay was at this level.
In its new study, CBO found that in 2006, compensation for the average enlisted service member actually topped the 75th percentile, when cash allowances and federal tax advantages are included.
“CBO’s analysis suggests that the goal has been achieved,” the report states.
While Strobridge agrees with the Pentagon’s use of ECI to calculate base pay increases — a calculus stamped into permanent law since 2004 — he says the Defense Department’s primary base pay assumption — the 70th percentile — is too opaque.
“How did you calculate the 70th percentile?” he asked. “I want a transparent standard.”
Joe Barnes, spokesman for the Fleet Reserve Association, says he thinks the current base pay index works.
“We agree, the 70th percentile is a reasonable benchmark,” he said. “But it becomes challenging when you look at military service compared to civilian specialties. Military service is much different than working in the civilian world. The approach must take that into account.”
The data in the CBO study, Barnes said, “is a useful reference. But the value of the service is really significant.”
A unique lifestyle
CBO acknowledges that pay comparisons do not take into account the difficulties of military life, such as combat and long family separations. It also notes that those features “require a compensation package that is distinctly different from civilian systems.” But it doesn’t suggest how to calculate the difficulties of military life, saying only that the topic “is the subject of extensive research and debate.”
Barnes favors more targeted pay raises, such as the series of increases begun in 2002 and concluded in April that boosted pay for midgrade noncommissioned officers and most warrant officers, an effort aimed at meeting the 70th percentile.
“The right direction,” Barnes said, but added: “We contend that there’s still about a 4 percent gap. We still need more targeting.”
That probably won’t happen anytime soon. Pentagon officials say basic pay is right where they want it.
No Defense Department official agreed to comment on the CBO report. But administration budget officials say President Bush “strongly opposes” efforts in Congress to boost the size of his proposed military pay raises, calling it “unnecessary.”
And on May 24, Defense Secretary Robert Gates said there are “competing interests” for defense dollars, citing the coming purchase of more than 20,000 Mine Resistant Ambush Protected vehicles for the Army and Marine Corps. Gates said a 3 percent raise is “about the right number” and “a fair increase in compensation.”
But today’s recruiting and retention market is a tough one, Barnes said, pointing out that the Navy is boosting the number of recruiters on the street even in the midst of a drawdown.
“The propensity of young folks to join is really low,” Barnes said. “Those that are coming forward are not looking at their tax advantages. They’re looking at their pay.”
Staff writer Rick Maze contributed to this report.
Ellie