By Dena Levitz
Federal News Radio

While the nature of warfare and who serves in the military have changed drastically in recent decades, many components of military compensation have not.

To remedy this imbalance, a full slate of recommendations on ways to modernize military pay and benefits is due to the President and Congress in February 2015. But, in the meantime, the specially-formed Military Compensation and Retirement Modernization Commission released an interim report.

The 300-plus-page document is a review of laws, regulations and policies pertaining to hundreds of military pay, benefits and retirement programs and categories. The report also details seismic shifts both in the armed forces and in civilian life that have played out since 1973, the year when the U.S. switched to an all-volunteer military. These changes will also factor into the final recommendations.

“Today’s force is, in many respects, very different from the one for which many pay and benefits programs were developed and implemented,” the report states. “Consequently, compensation programs may no longer be structured in ways that cost-effectively align with the interests and motivations of today’s current and potential service members.”

More women, married and educated service members

The nation’s unprecedented 13 uninterrupted years of war has meant that service members are facing lengthier and sometimes multiple deployments. In particular, the report emphasizes the increasing reliance on National Guard and Reserve members as much more than just back-up forces.

Even though there aren’t outright recommendations given in the interim report, experts who commission members interviewed suggested examining benefits to this subgroup.

“Numerous Guardsman, Reservists, and subject matter experts explained to the Commission how current compensation programs do not adequately address these operational requirements, specifically noting inflexibilities in health care benefits during Guard and Reserve mobilization and demobilization,” the report states.

In fiscal year 2013, the military was made up of 1.43 million active-duty members and 840,000 reserve members, with 83 percent of those reflecting enlisted personnel and the other 17 percent officers, according the report.

Demographically, the level of education and the proportion of both female and married service members has surged since the 1970s.

In 1973, the percentage of active-duty recruits who graduated from high school was 66 percent—compared to 98 percent in 2013. During that same time span, the percentage of women in the military has grown from a mere 2 percent when conscription ended, to 14.5 percent of the active-duty enlisted members last year and 16 percent of officers.

Marriage, and especially soldiers with dependents, are ever-increasing to the extent that 68 percent of all active-duty officers were married in 2013.

This new makeup means serious considerations for benefits and retention of service members, which Dan Goure, vice president of the Lexington Institute, hopes the commission addresses.

“You have the issue of compensation for couples, how do you deal with child care? It’s significant,” he says.

‘Out of skew’ with civilian pay

Goure also would like to see members of the commission consolidate the large number of benefits programs and to more actively compare military pay with the commercial sphere. Right now the compensation system is “out of skew” with the private sector, especially in terms of pay boosts, he says.

“For example, we give pay raises to the military, including people who have never deployed to combat, never have, never will, at a higher rate typically than the compensation in civilian jobs,” Goure says. “You can talk to people in the auto industry. They weren’t getting raises yet the military has been giving raises, not only in years when we’ve been in combat but when we’ve been out of combat.”

A persistent area of confusion has been that compensation funding has climbed the past 16 years. At the same time, as a percentage of the Defense Department budget, military compensation funding has remained steady over time.

The takeaway here, according to Goure, is that compensation for military personnel has risen higher than its equivalents in the civilian world.

“It’s becoming increasingly expensive to put a person in uniform and keep them there,” he says. “The reason that the cost of personnel has stayed relatively the same is because we’ve cut the number of military in half. In truth, the real message is, it’s twice as expensive today as it was 20 years ago to have an active-duty person. Therefore, if you want to actually reduce the cost of military personnel and you’re not willing to make common-sense changes, the only way to do that is to continually cut the size of the military.”

Origins of the commission

The Military Compensation and Retirement Modernization Commission was established by Congress in February 2013. At that time, Congress tasked the group with examining a few distinct subjects:

• the long-term viability of an all-volunteer military
• the quality of life of members of the armed forces
• how to achieve fiscal sustainability for the compensation and retirement systems for the military going forward

Goure says the formation of the commission is part of a larger push toward accountability of defense dollars.

“The subject of the cost of military personnel has become a real hot one in the last couple of years as defense budgets have come down,” he said. “The Department of Defense is looking for ways to better allocate scarce resources between people, equipment and operations… One area that has been targeted for the past three or four secretaries of state, by congressional committees, by outside experts, is this broad category of military compensation. That’s pay, additional benefits, even retirement.”

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