Report to Congress on FY 2025 NDAA Military Basic Pay Reform Proposal

December 31, 2024 12:01 PM

The following is the Dec. 30, 2024, Congressional Research Service Insight Report on the FY2025 NDAA Military Basic Pay Reform Proposal.

From the report

Basic pay is just one component of servicemember compensation. Analysts generally compare military and civilian pay using regular military compensation (RMC), defined in law as the total of “basic pay, basic allowance for housing (BAH), basic allowance for subsistence (BAS), and Federal tax advantage accruing to the aforementioned allowances.” Studies have found that RMC for servicemembers generally exceeds DOD’s benchmark of the 70th percentile for civilians with comparable education and experience. Some analysts have suggested that the 70th percentile benchmark may be too low, given the difficult recruiting environment. The QOL Panel’s report recommended that DOD raise these pay benchmarks to the 80th percentile and the 75th percentile for enlisted and officers, respectively.

While RMC has been found to be comparable to civilian pay, the most-junior enlisted members are more likely to receive benefits in-kind, rather than in cash allowances (e.g., housing in barracks and mess-hall meals). A 2020 CBO report noted that “a system weighted more heavily toward cash compensation would be valued more highly by many service members and thus could be more effective in recruiting and retaining personnel than an extensive noncash system.”

The QOL Panel highlighted several reasons for targeting junior enlisted for basic pay table reform, including military recruiting challenges, self-reported food insecurity among servicemembers, rapid inflation amidst a lagging index for military pay increases, and relatively larger increases in earnings for lower-income civilian workers relative to higher-income workers. There is some evidence that increases in cash compensation are correlated with an increase in the supply of high-quality recruits, and pay is cited as a top motivating factor for service in DOD youth surveys.

Download the document here.

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