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Smaller Military Pay Raise Unlikely to Impact Retention

President Obama recently announced that he was ordering a 1.6 percent raise in military base pay starting in January 2017. This is lower than the 2.1 percent raise stipulated by current law and represents the fourth consecutive year that military pay raises have failed to keep pace with private sector wages. Perhaps not coincidentally, this will also be the fourth defense budget enacted since the Budget Control Act implemented caps on defense spending.

Compensation is an important component of a military career, but data suggests that service members are generally pleased with current pay levels.

While U.S. law requires that military pay raises be linked to the private-sector Employment Cost Index, the president has the authority to order alternative pay adjustments if he determines a “national emergency or serious economic conditions” warrant such actions. In his letter to Congress, Obama stated that the smaller pay increase “will not materially affect the Federal Government’s ability to attract and retain well-qualified members for uniformed services.” BPC analysis shows that while a smaller military pay raise, on its own, is unlikely to have an impact on military recruiting or retention, many other aspects of military personnel policy strongly influence service members when deciding to join or stay in the military.

Compensation is an important component of a military career, but data suggests that service members are generally pleased with current pay levels. In the most recent DOD survey of active duty service members, only 23 percent reported being dissatisfied with their total compensation. This is the result of a concerted effort by policymakers to ensure military compensation is competitive with the private sector. Meanwhile other factors that contribute to military recruiting and retention, like deployment tempo and influence over future assignments, are areas of concern for service members and military families.