Pentagon report backs quality-of-life tweaks, not major pay changes

Pentagon leaders are recommending regular quality-of-life reviews for military families’ finances and expanding non-cash benefits like child care assistance as part of a periodic review of military compensation, but are also defending current troops’ salaries as “strongly competitive with the civilian labor market.”

The report — the 14th Quadrennial Review of Military Compensation — is the result of nearly two years of research by Defense Department officials into how military pay compares to civilian wages and benefits.

Typically, it serves as a benchmark every four years for discussions about ways to adjust servicemember salaries and financial support in an effort to strengthen recruiting and retention efforts.

However, this year’s report — which argues that military paychecks need minor adjustments, not a major overhaul — comes about a month after members of Congress voted for dramatic increases in junior enlisted pay later this year, rejecting that Pentagon assessment even before it was announced.

Starting in April, around 500,000 troops ranked E-4 and below will see their base salaries boosted by 10%, a move that will bring the annual salary for nearly all servicemembers above $30,000. Lawmakers said the move was needed to ensure young troops aren’t faced with financial hardship due to the demands of military life.

Basic pay isn’t the only compensation troops receive. Benefits like housing stipends, cost-of-living adjustments and food allowances are also included in family finances, although troops have less flexibility to use those offerings for emergency expenses or household needs.

Defense officials in the report found that how those benefits fit into total troop compensation is still not fully understood or appreciated by most servicemembers, indicating more financial education is needed throughout the ranks.

But they aren’t recommending hiking troops’ pay further, especially in light of the recent salary increases approved by Congress. On top of the targeted junior enlisted salary changes, all troops saw a 4.5% pay increase at the start of this year.

According to department analysis, most officers are in the 75th percentile for financial compensation among other Americans with similar education backgrounds and career experience. Junior troops are in the 93rd percentile, and will jump to the 95th percentile after the April boost.

Instead, the defense report recommends non-cash compensation to improve military finances, to include new retirement savings options, child care support, and new employment initiatives, arguing they “may offer better returns on investment for service members and military families.”

The report also recommends raising the benchmark for military pay rates to the 75th percentile of civilian wages; updating housing stipend methodology; and improving how cost-of-living for stateside and overseas troops are calculated.

Officials also want a periodic quality-of-life review, similar to the panel convened by House lawmakers last year, to survey troops on issues like health care, child care and other family-centric issues.

Defense officials have already offered support for the recommendations, but an implementation plan likely won’t come until later this spring, when the full QRMC report is expected to be released.

Meanwhile, lawmakers in the House and Senate are likely to use portions of the report to begin drafting their own military personnel policy changes later this spring, as part of the annual defense authorization legislation.