CBO Study: Evaluating Military Compensation   [open pdf - 3MB]

"To attract and retain the military personnel it needs, the Department of Defense (DoD) must offer a competitive compensation package--one that adequately rewards service members for the rigors of military life. After reenlistment rates declined in the late 1990s, lawmakers and DoD began increasing cash and non-cash elements of military compensation. In 2000, for example, they authorized that basic pay for service members would rise 0.5 percentage points faster than wages in the civilian sector through 2006. Housing allowances and other compensation were also increased. As a result, the Congressional Budget Office (CBO) estimates, regular military compensation adjusted for inflation--basic pay, allowances for food and housing, and the tax advantage that arises because those allowances are not subject to federal income tax--grew by 21 percent for the active-duty enlisted force as a whole between 2000 and 2006. This study looks at compensation for the 83 percent of active-duty U.S. service members who are enlisted personnel. It considers various ways to measure military compensation and examines common methods of-- and problems with--comparing that compensation with pay and benefits in the civilian sector. The analysis also explores the connection between the components of military compensation and the military's recruiting and retention of personnel. Finally, the study discusses possible options to make the military compensation system visible to service members and decision makers and more efficient."

Report Number:
Congressional Budget Office Publication No. 2665
Public Domain
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