Content Manager posted on January 04, 2010 09:09
(NAVY TIMES 11 JAN 10) ... Chuck Vinch
The 2010 Pay Book is your guide to the highly complex world of military compensation.
Compared with 2009, the coming year will bring comparatively leaner increases in the three pillars of military compensation than troops have become used to in recent years.
The Jan. 1 basic pay raise for all active-duty members and drilling reservists is 3.4 percent, marking the 11th consecutive year that military raises have been at least half a percentage point higher than the average increase in private-sector wages.
Congress approved the bigger raise as part of a multiyear effort to close the "pay gap" between average military and civilian wages that some analysts say has grown since 1982, when rough parity was last thought to have existed.
The gap, which peaked at 13.5 percent in the late 1990s, is now down to about 2.4 percent, according to those who track it, including the Military Coalition, an umbrella group of more than 30 military-related associations.
But the still-weak economy and job market may spell the end of above-average military raises, at least for the near future.
A recent report by the nonpartisan Congressional Budget Office supports the Pentagon's long-held view that any "gap" between military and private-sector pay vanished some time ago. The pay gap compares only military basic pay and private-sector wages; CBO noted that when tax-free military housing and food allowances are added to the equation, average military compensation probably surpassed average private-sector wages at least seven years ago.
That situation was fueled by a change in compensation policy in which military housing and food allowances were linked to real-world cost indexes — so as the cost of housing and food rose throughout the first part of this decade, so, too, did the military allowances.
Even as recently as last year, military housing allowances rose an average of 6.9 percent, while the military food allowance rose a full 10 percent.
But the recession has finally taken hold, and the increases in those two allowances for 2010 are far smaller.
Driven by a downturn in the private-sector housing market, the Basic Allowance for Housing rises by a nationwide average of just 2.5 percent effective Jan. 1, almost two-thirds less than the 2009 increase.
And the Basic Allowance for Subsistence, which is linked to the Agriculture Department's food-cost index, will not increase at all in 2010 — a reflection of recent deflation in the costs of common goods and services, including food. This is the same deflationary trend that knocked out the possibility of a cost-of-living adjustment in military retired pay in 2010.
The Obama administration has yet to unveil its budget plans for 2011, but White House officials have talked of only maintaining "parity" between military and private-sector pay, further fueling speculation that extra-half-point basic pay raises may be at an end, at least for now.