Military Pay Increases Exceed Civilian Wage Increases
For fiscal years 2000 through 2004, Congress provided average raises in
military basic pay that exceeded the average wage increases found for
all private-sector employees (see table 2).[Footnote 12] For example,
in fiscal year 2002, raises for active duty personnel increased 0.4 to
5.4 percentage points more than did the raises of the average private-sector worker, and in fiscal years 2003 and 2004, the military averaged
0.7 and 0.45 percentage points more in their raises, respectively, than
did those working in the private sector. For fiscal year 2005, DOD's
budget request includes a 3.5 percent increase in basic pay, which
matches the raise determined by the statutory formula. Thus, military
basic pay raises have been greater than the raises in wages for the
average private-sector employee for the 5 years since the 1999 data on
bankruptcies among active duty military were gathered.
Table 2: Changes in Military Basic Pay for Fiscal Years 2000-2005:
Annual percent increase in active duty military pay
Percent indicated by statutory formula
Percent actually provided
4.15 average, with a range of 3.7 to 6.25.
4.8 average, with a range of 4.1 to 6.5.
6.9 average, with a range of 5.0 to 10.0.
4.1 average, with an initial 3.7 across the
board, plus a later targeted raise that averaged 0.4.
6.2 average, with an initial 4.8 across the
board, plus a later targeted raise that averaged 1.4.
Sources: Congressional Research Service and DOD.
Note: The Congressional Research Service noted that targeted and
variable increases were typically keyed to pay grade groups. In fiscal
years 2000 and 2001, Congress authorized additional targeted increases
and they became effective on July 1 of those respective years, whereas
the other raises took effect earlier in the fiscal years.
 See Congressional Research Service, The Library of Congress,
Military Pay and Benefits: Key Questions and Answers, Order Code
IB10089 (Washington, D.C.: Jan. 15, 2004). That report noted that
upward adjustments to military basic pay are linked--but not identical--to the raises calculated with the statutory formula for determining
pay increases for federal General Schedule employees. 37 U.S.C. section
1009 requires the President to increase military basic pay to match any
annual pay increase for federal General Service employees as mandated
by the statutory formula specified in 5 U.S.C. section 5303(a). This
statutory formula is based on the Employment Cost Index, which is
calculated by the Department of Labor's Bureau of Statistics and
measures annual percentage increases in wages for all private-sector