Do Military Obligation Enlistments end up costing more to the federal budget then expected?

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Seventh
Quadrennial
Review of
Military
Compensation
DTIC
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Basic Pay
Major Topical Summary (MTS) 2
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August 1992
93-11978
DiSCLAIMEi NOTICE
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1. AGENCY USE ONLY (Leave blank) j. REPORT DATE .. 3. REPORT TYPE AND DATES COVEREO
AUG 92 Final
4. TITLE AND SUBTITLE 5. FUNDING NUMBERS
Basic Pay
Major Topical Summary (MTS) 2
6. Tngaer General James W. McIntyre, USAF
Executive Director, Seventh Quadrennial Review of Military
Compensation (7th QRMC)
7. PERFORMING ORGANIZATION NAME(S) AND ADORESS(ES) 8. PERFORMING ORGANIZATION
REPORT NUMBER
The Seventh Quadrennial Review of Military Compensation
The Pentagon, Room 3D820
Washington, DC 20301-4000
92 SPONSORING/'MONITORING AGENCY NAME(S) AND ADDRESSW|S) 10. SPONSORING/MONITORING
AGENCY REPORT NUMBER
Office of the Assistant Secretary of Defense
(Force Management and Personnel)
The Pentagon, Room 3E764
Washington, DC 20301-4000
11. SUPPLEMENTARY NOTES
12a. D!STRISBUTION /AVAILABILITY STATEMENT 12b. DISTRIBUTION CODE
Available to the public.
13. ABSTRACT ''aximuirn 200 words)
This MTS of the 7th QRMC addresses issues involving the basic pay table of the seven
uniformed services. The QRMC found that ad hoc changes to the pay table over the past forty
years have distorted its original intent and undermined its effectiveness. In addition, pay
compression exists between the senior and junior pay grades, and the table tends to weight
longevity more than promotion. The QRMC's proposal for a new pay tabie inciudes analysis of
prior-service, warrant and flag officer categories and addresses such topics as a time-in-grade vs
time-in-service pay table format and comparability with nonmilitary pay systems.
114. SUBJECT TERMS 1S. NUMBER OF P'AGES
compensation, pay table, military pay, basic pay, time in grade, 240
time in service, pay grade, pay compression
17. SECURITY CLASSIFICATION 18- SECURITY CLASSIFICATION 19. $SfCURITY CLASSIFICATION 20. LIMITATION OF ABSTRACT
OF REPORT Of THIS PACE OF ABSTRACT
I inclassified Unclassified Unclassified
NSN 7•40-0;-280-SS00 Sta-datd o"0• 298 ),v 2 891
298 L.
BASIC PAY:
A Strategy for Rewarding Promotion Over Longevity
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Seventh Quadrennial Review of Military Compensation
BASIC PAY:
A Strategy for Rewarding Promotion Over Longevity
7' QRMC Major Topical Summary (MTS) 2
August 1992
Basic Pay:
A Strategy for Rewarding Promotion Over Longevity
Major Topical Summary (MTS) 2
A staff paper of the Seventh Quadrennial Review of Military Compensation
August 1992
Office of the Assistant Secretary of Defense
(Force Management and Personnel)
The Pentagon, Room 3E764
Washington, DC 20301-4000
7TH QRMC STAFF ANALYSES
The full set of the 7' QRMC study documentation includes this report and the
71 QRMC Staff Analyses, which form a series of stand-alone reports. The reports in the Staff
Analyses provide detailed facts and logic of interest to the small audience of staff specialists
who may require a more complete understanding of the findings and recommendations in
our official report.
There are two types of documents in the Staff Analyses: Major Topical Summaries
(MTSs) and Global Subject Papers (GSPs). MTSs cover primary areas of investigation, such as
basic pay and allowances, while GSPs cover either theoretical considerations, such as the
principles of compensation, or special research subjects, such as foreign military
compensation systems. All other QRMC staff documents are internal working papers that do
not necessarily represent the official views of the QRMC. The Staff Analyses consist of the
following documents:
MAJOR TOPICAL SUMMARIES (MTSs)
Compensation Structure ................................................ M TS 1
Basic Pay ............................................................ M TS 2
A llow ances .......................................................... M TS 3
Special and Incentive Pays .............................................. M TS 4
Annual Pay Adjustm ent ................................................ M TS 5
Integration and Transition ............................................... M TS 6
GLOBAL SUBJECT PAPERS (GSPs)
Foreign Military Compensation Systems Review ............................. GSP A
The Target Force ...................................................... GSP B
Modeling, Logic, and Theory ........................................... GSP C
Tax Issues .......................................................... G SP D
Cost Analysis M ethods ................................................. GSP E
Principles of Military Compensation ....................................... GSP F
D raw dow n ......................................................... GSP G
Service Comments on the Draft Report .................................... GSP H
v
BASIC PAY
CONTENTS
LIST OF PARTICIPANTS ................................................ xvii
CHAPTER 1-INTRODUCTION ........................................... 1-1
CHAPTER 2-RESULTS IN BRIEF ......................................... 2-1
Background ...................................................... 2-1
Assumptions .................................................... 2-1
Pay Table Proposal ................................................ 2-3
Recom m endation .................................................. 2-3
CHAPTER 3-BASIC PAY TABLE ISSUES ................................... 3-1
Single or M ultiple Tables ............................................ 3-1
Pay Table Form at .................................................. 3-1
Promotion-Longevity Balance ........................................ 3-2
Level or Structure ................................................ 3-3
Comparisons with Other Pay Systems .................................. 3-3
Public Sector .................................................. 3-4
Foreign M ilitary Services ......................................... 3-5
Private Sector .................................................. 3-6
Reserve Component Considerations .................................... 3-9
Long-Term Pay Table Management .................................... 3-9
CHAPTER 4-CRITIQUE OF CURRENT TABLE .............................. 4-1
Comparison to 1949 Table ........................................... 4-1
Enlisted Promotion/Longevity Differentials .............................. 4-2
Longevity Differentials ........................................... 4-2
E-1 >4 Months Longevity Raise .................................... 4-3
Pay Inversions .................................................... 4-3
Officer Promotion/Longevity Differentials ............................... 4-3
CHAPTER 5-DESIGN GUIDELINES AND EVALUATION CRITERIA ............ 5-1
Development of Design Guidelines .................................... 5-1
Design and Evaluation Process ....................................... 5-1
Evaluation Criteria ................................................. 5-2
CHAPTER 6-DEVELOPMENT OF PROPOSED ENLISTED TABLE ............... 6-1
Promotion/Longevity Differentials .................................... 6-1
Prom otion Differentials .......................................... 6-1
Longevity Differentials ........................................... 6-1
First-term pay ............................................... 6-1
>4-month longevity raise ...................................... 6-2
Over-24, -26, and -28-year longevity raises ......................... 6-3
Longevity raise ending points ................................... 6-5
Reserve component considerations ............................... 6-6
vii
Personnel Im pacts ................................................. 6-7
M ethodology .................................................. 6-7
Present value of cumulative career earnings ........................... 6-7
Force structure impacts .......................................... 6-9
Pay Inversions .................................................... 6-9
C osts .......................................................... 6-10
CHAPTER 7-DEVELOPMENT OF PROPOSED OFFICER TABLE ................ 7-1
Internal Structure .................................................. 7-1
Promotion/Longevity Differentials .................................... 7-3
Longevity Differentials ........................................... 7-4
>1 and >3 YOS longevity raises ................................. 7-4
>8 YOS longevity raise ........................................ 7-4
Reserve component considerations ............................... 7-5
Force Structure Im pacts ............................................. 7-6
M ethodology .................................................. 7-7
Present value of cumulative career earnings ........................... 7-7
C osts ........................................................... 7-8
CHAPTER 8-PRIOR-SERVICE, WARRANT, AND FLAG OFFICER PAY .......... 8-1
Prior-Service Officer Pay Table ....................................... 8-1
Background .................................................. 8-1
Development of the prior-service pay table ........................... 8-1
W arrant Officer Pay Table ........................................... 8-2
Background ................................................... 8-2
Development of warrant officer pay table ............................ 8-3
Internal relationships ......................................... 8-4
Relationship to enlisted pay ................................... 8-4
Relationship to prior-service officer pay ........................... 8-5
Relationship to NPS officer pay ................................. 8-5
Flag Officei Pay Table ............................................. 8-7
Background ................................................... 8-7
Development of flag officer pay table ................................ 8-8
CHAPTER 9-RECOMMENDED TABLES ................................... 9-1
BIBLIOGRAPHY ..................................................... Bib-1
APPENDIX A-EVOLUTION OF THE CURRENT TABLE ....................... A-1
APPENDIX B-TIME-IN-GRADE (TIG) PAY TABLE ANALYSIS ................. B-1
APPENDIX C-CALCULATION OF THE PROMOTION/LONGEVITY RATIO ...... C-1
APPENDIX D-CHARTS SUPPORTING PAY TABLE ANALYSIS ................ D-1
APPENDIX E-PUBLIC SECTOR PAY COMPARISONS ........................ E-1
viii
APPENDIX F-WARRANT OFFICER PAY TABLE DEVELOPMENT .............. F-1
APPENDIX G-FLAG OFFICER PAY TABLE DEVELOPMENT ................... G-1
APPENDIX H-BASIC PAY AND THE RESERVE COMPONENTS ............... H-1
APPENDIX I-SUMMARY OF PRIOR STUDIES RELEVANT TO BASIC PAY ...... I-1
APPENDIX J-PAY TABLE DESIGN GUIDELINES ............................ J-1
APPENDIX K-PROPOSED CHANGES TO LONGEVITY INCREASES ............ K-1
APPENDIX L-PRIOR-SERVICE OFFICER PAY TABLE DEVELOPMENT .......... L-1
ix
BASIC PAY
FIGURES
Figure 3-1. Basic Pay tables ............................................. 3-2
Figure 3-2. Internal pay table relationships .................................. 3-2
Figure 3-3. Military compensation (notional) ................................ 3-4
Figure 3-4. Military personnel distribution .................................. 3-4
Figure 3-5. Civil service personnel distribution (GS) ........................... 3-5
Figure 3-6. Washington, D.C. Police Department pay lines ...................... 3-6
Figure 3-7. Foreign service pay level and slope comparison ..................... 3-7
Figure 3-8. Private sector pay line comparison ............................... 3-7
Figure 3-9. Hay job content comparison .................................... 3-8
Figure 4-1. Enlisted Pay Steps-1949 & 1991 ................................ 4-1
Figure 4-2. Promotion/longevity increases for FY 1991 enlisted table .............. 4-2
Figure 4-3. E-7 longevity differentials, 1991 basic pay table ..................... 4-3
Figure 4-4. E-6 to E-7 pay inversion, current table in FY 1994 ................... 4-3
Figure 4-5. Monthly promotion/longevity increases, FY 1991 officer pay table ....... 4-4
Figure 6-1. Enlisted promotion/longevity comparison, current vs proposed
pay table ................................................ 6-2
Figure 6-2. Comparison of longevity raises in notional pay structures ............. 6-3
Figure 6-3. Actual DOD retirements, 1989 .................................. 64
Figure 6-4. E-7 longevity raise comparison, proposed vs current pay table .......... 6-6
Figure 6-5. Cumulative career earnings comparison (enlisted personnel) ........... 6-8
Figure 6-6. Steady-state inventory comparison ............................... 6-9
Figure 6-7. Improved quality retention .................................... 6-10
Figure 6-8. Pay inversion comparison ..................................... 6-10
Figure 7-1. 1991 Officer pay lines ......................................... 7-2
Figure 7-2. Problem: 03/04 pay compression ................................ 7-2
Figure 7-3. Officer promotion/longevity comparison, current vs proposed pay table . 7-3
Figure 7-4. Hay job point spread ratio ..................................... 7-5
Figure 7-5. Annual pay comparison, current vs proposed pay table ............... 7-6
Figure 7-6. Present value of cumulative career earnings ........................ 7-7
Figure 7-7. Steady-state inventory comparison ............................... 7-8
Figure 7-8. Improved quality retention ..................................... 7-9
Figure 8-1. FY 1991 O-3E longevity increases and population distribution .......... 8-2
Figure 8-2. Proposed prior-enlisted officer vs proposed officer tables
(using 1991 pay rateF) ...................................... 8-3
Figure 8-3. Proposed warrant officer pay lines (using 1991 pay rates) ............. 8-5
Figure 8-4. Proposed warrant officer and enlisted pay line comparison
(using 1991 pay rates) ...................................... 8-6
Figure 8-5. Proposed warrant vs prior-service officer pay lines
(using 1991 pay rates) ...................................... 8-6
Figure 8-6. Proposed warrant vs non-prior-service officer pay lines ............... 8-7
Figure 8-7. Flag officer distribution ....................................... 8-8
Figure 8-8. Current flag officer pay lines ................................... 8-ý,
x
Figure 8-9. Comparison of proposed vs current flag officer pay lines ............. 8-10
Figure B-1. Comparison oi Promotion and Longevity Raises for Officer Promoted
at Service-Average Points (1990 Promotion Timing and 1991 Pay Table). B-2
Figure B-2. Comparison of Advancement Through Notional TIS and TIC
Pay Tables . .............................................. B-4
Figure B-3. Proposed Enlisted TIG Pay Table Promotion/Longevity Relationships .... B-6
Figure 3-4. Proposed Officer TIC Pay Table Promotion/Longevity Relationships..... B-6
Figure B-5. Cumulative Career Earnings Comparisons for Candidate TIC Pay Table... B-7
Figure B-6. Service Average Promotion Timing Through E-5 Pay Grade............ B-8
Figure B-7. Average Promotion Timing for Fast and Slow Grades Within the Navy,
Compared to Service Average .............................. B-8
Figure C-1. Cumulative promotion to longevity comparison, on-time DOD FY 1991... C-6
Figure C-2. Cumulative promotion to longevity comparison, on-time DOD
proposed .......................................... --. C-6
Figure C-3. Cumulative promotion to longevity comparison, on-time Army FY 1991 ... C-7
Figure C-4. Cumulative promotion to longevity comparison, on-time Army
proposed . ............................................... C -7
Figure C-5. Cumulative promotion to ! ngevity comparison, on-time Navy FY 1991... C-8
Figure C-6. Cumulative promotion to longevity comparison, on-time Navy
proposed . ............................................... C -8
Figure C-7. Cumulative promotion to longevity comparison, on-time Marine
FY 1991 ............................................... C-9
Figure C-8. Cumulative promotion to longevity comparison, on-time Marine
proposed . ............................................... C -9
Figure C-9. Cumulative promotion to longevity comparison, on-time Air Force
FY 1991 . ............................................... C -10
Figure C-10. Cumulative prcmotion to longevity comparison, on-time Air Force
proposed . .............................................. C -10
Figure C-11. Cumulative promotion to longevity comparison, DOPMA promotion
tim ing, current table ....................................... C-13
Figure C-12. Cumulative promotion to longevity comparison, DOPMA promotion
tim ing, proposed table ..................................... C-13
Figure C- 13. Cumulative promotion to longevity comparison, Army promotion
tim ing, current table ................................. .... C-14
Figure C-14. Cumulative promotion to longevity comparison, Army promotion
timing, proposed table .................................... C-14
Figure C-15. Cumulative promotion to longevity comparison, Navy promotion
tim ing, current table ....................................... C -15
Figure C-16. Cumulative promotion to longevity comparison, Navy promotion
timing, proposed table ..................................... C-15
Figure C-17. Cumulative promotion to longevity comparison, Marines promotion
tim ing, current table ....................................... C-16
Figure C-18. Cumulative promotion to longevity comparison, Marines promotion
tim ing, proposed table ..................................... C-16
Figure C-19. Cumulative promotion to longevity comparison, Air Force promotion
tim ing, current table ... ................................... C-17
Figure C-20. Cumulative promotion to longevity comparison, Air Force promotion
tim ing, proposed table ............................ ........ C-17
xi
Figure D-1. E-2 Longevity Differentials (1994) ............................... D-20
Figure D-2. E-3 Longevity Differentials (1994) ............................... D-20
Figure D-3. E-4 Longevity Differentials (1994) .............................. D-21
Figure D-4. E-5 Longevity Differentials (1994) ............................... D-21
Figure D-5. E-6 Longevity Differentials (1994) ............................... D-22
Figure D-6. E-7 Longevity Differentials (1994) ............................... D-22
Figure D-7. E-8 Longevity Differentials (1994) ............................... D-23
Figure D-8. E-9 Longevity Differentials (1994) ............................... D-23
Figure D-9. W-1 Longevity Differentials (1994) .............................. D-24
Figure D-10. W-2 Longevity Differentials (1994) .............................. D-24
Figure D-11. W-3 Longevity Differentials (1994) .............................. D-25
Figure D-12. W-4 Longevity Differentials (1994) .............................. D-25
Figure D-13. W-5 Longevity Differentials (1994) ............................. D-26
Figure D-14. O-1E Longevity Differentials (1994) ............................. D-26
Figure D-15. O-2E Longevity Differentials (1994) ............................. D-27
Figure D-16. 0-3E Longevity Differentials (1994) ............................. D-27
Figure D-17. 0-1 Longevity Differentials (1994) .............................. D-28
Figure D-18. 0-2 Longevity Differentials (1994) .............................. D-28
Figure D-19. 0-3 Longevity Differentials (1994) .............................. D-29
Figure D-20. 0-4 Longevity Differentials (1994) .............................. D-29
Figure D-21. 0-5 Longevity Differentials (1994) .............................. D-30
Figure D-22. 0-6 Longevity Differentials (1994) .............................. D-30
Figure D-23. 0-7 Longevity Differentials (1994) .............................. D-31
Figure D-24. 0-8 Longevity Differentials (1994) .............................. D-31
Figure D-25. 0-9 Longevity Differentials (1994) .............................. D-32
Figure D-26. 0-10 Longevity Differentials (1994) .............................. D-32
Figure D-27. Promotion and Longevity Differentials, DOD Average Promotion,
Current and Proposed Basic Pay Tables in FY 1994 ............... D-33
Figure D-28. Promotion and Longevity Differentials, DOD Early Promotion, Current
and Proposed Basic Pay Tables in FY 1994 ..................... D-34
Figure D-29. Promotion and Longevity Differentials, DOD Late Promotion, Current
and Proposed Basic Pay Tables in FY 1994 ..................... D-35
Figure D-30. Promotion and Longevity Differentials, DOPMA Promotion, Current
and Proposed Basic Pay Tables in FY 1994 ..................... D-36
Figure D-31. Promotion and Longevity Differentials, DOD Early Promotion, Current
and Proposed Basic Pay Tables in FY 1994 ..................... D-37
Figure D-32. Promotion and Longevity Differentials, DOD Late Promotion, Current
and Proposed Basic Pay Tables in FY 1994 ..................... D-38
Figure E-1. Pay Grade Distribution in Federal Civil Service, Office of Personnel
Management, September, 1990 ................................ E-2
Figure E-2. Washington, D.C., Metropolitan Police and Fire Departments'
Manpower by Rank, 1990 .................................... E-3
Figure E-3. Cash Compensation for U.S. Fire Fighters, 1991
(International Association of Fire Fighters) ....................... E-7
Figure E-4. Three Possible Career Paths in Washington D.C., Police Department ...... E-7
Figure F-i. Service Warrant Officer Personnel Programs ........................ F-4
Figure F-2. Movement of Warrant Officers Into Non-Prior Service and Prior Service
Officer Pay Tables ........................................ F-5
xii
Figure F-3. Relationships Between Warrant Officer Table and All Other Tables ....... F-6
Figure F4. Warrant Officer Pay Table Pay lines .............................. F-7
Figure F-5. Relationship of E-9 Pay line to W-1, W-2, W-3 Pay lines ............... F-8
Figure F-6. 1991 Prior-Service Officer and Warrant Officer ...................... F-9
Figure F-7. 1991 Officer and Warrant Officer Pay ............................ F-10
Figure F-8. Proposed Warrant Officer Pay ................................. F-1 2
Figure F-9. Proposed Warrant Officers Pay in Relationship to Enlisted ............ F-1 3
Figure F-10. Proposed Warrant Officer Pay in relationship to Prior-Service Officer ... F-14
Figure F-11. Proposed Warrant Officer Pay in relationship to Officers ............. F-14
Figure G-1. Current basic pay rates for general and flag officers .................. G-2
Figure G-2. General and flag officer inventory, FY 1990 ........................ G-3
Figure G-3. General and flag officer inventory, FY 1990, from 20 to 30 years
of service ................................................ G 4
Figure G-4. General and flag officers by service .............................. G-4
Figure G-5. Current pay table for general and flag officers ...................... G-6
Figure G -6. O ption 1 ................................................... G -7
Figure G-7. O ption 2 ................................................... G -8
Figure H-1. Basic pay as percentage of total annual cash pay .................... H-2
Figure H-2. Reserve officer promotion timing - ROPA ......................... H-6
Figure L-1. FY 1991 O-1E !ongevity increases and population distribution .......... L-5
Figure L-2. FY 1991 O-2E longevity increases and population distribution .......... L-5
Figure L-3. FY 1991 O-3E longevity increases and population distribution .......... L-5
Figure L-4. 1991 Pay line comparison--O-1E to Officers ........................ L-6
Figure L-5. 1991 Pay line comparison--O-2E to Officers ........................ L-6
Figure L-6. 1991 Pay line comparison--O-3E to Officers ........................ L-6
Figure L-7. 1991 Pay line comparison-O-1E to Enlisted ........................ L-7
Figure L-8. Enlisted to OE table transition-DOD ............................ L-10
Figure L-9. Proposed Pay Lines and Enlisted to Officer accessions ......... ,..... L-10
Figure L-10. Proposed OE vs 0 Pay Lines .................................. L-11
XHii
BASIC PAY
TABLES
Table 6-1. Average training times and time to promotion to E-2 by service ........ 6-3
Table 8-1. Characteristics of warrant officers, by service ....................... 8-4
Table 8-2. Flag officer promotion timing ................................... 8-8
Table 9-1. Proposed Pay Tables .......................................... 9-2
Table B-1. Proposed Time-in-Grade Pay Table .............................. B-5
Table C-1. Enlisted Promotion to Longevity Comparison ...................... C4
Table C-2. Enlisted promotion timing for each of the services and the
Department of Defense .................................... C-5
Table C-3. Officer promotion to longevity comparison ....................... C-11
Table C4. Timings used for Officer comparisons, FY 1991 values ............... C-12
Table D-1. 1994 Current Pay Table ........................................ D-4
Table D-2. 1994 Proposed Pay Table (BAS Not Incorporated) ................... D-5
Table D-3. Difference Between Proposed Pay Table and Current Pay Table in 1994. .. D-6
Table D-4. Horizontal Dollar ($) Differences, 1994 Current Pay Table ............. D-7
Table D-5. Vertical Dollar ($) Differences, 1994 Current Pay Table ............... D-8
Table D-6. Horizontal Percentage (%) Difference, 1994 Current Pay Table .......... D-9
Table D-7. Vertical Percentage (%) Differences, 1994 Current Pay Table .......... D-10
Table D-8. Horizontal Dollar ($) Differences, 1994 Proposed Pay Table
(BAS Not Incorporated) .................................... D-1I
Table D-9. Vertical Dollar ($) Difference, 1994 Proposed Pay Table
(BAS Not Incorporated) .................................... D-12
Table D-10. Horizontal Percentage (%) Difference, 1994 Proposed Pay Table
BAS Not Incorporated) .................................... D-13
Table D-11. Vertical Percentage (%) Differences, 1994 Proposed Pay Table
(BAS Not Incorporated) .................................... D-14
Table D-12. Pay in Each Cell Indexed to E-1 <4 Pay, FY94 Current Pay Table ....... D-1 5
Table D-13. Pay in Each Cell Indexed to E-1 Pay, 1994 Proposed Pay Table
(BAS Not Incorporated) .................................... D-16
Table D-14. Pay in Each Cell Indexed to Entry Pay in Each Individual Pay Table,
1994 Current Pay Table ................................... D-17
Table D-15. Pay in Each Cell Indexed to Entry Pay in Each Individual Pay Table,
1994 Proposed Pay Table (BAS Not Incorporated) ................ D-18
Table D-16. Service high years of tenure ................................... D-19
Table E-1. Washington, D.C., Police Department TIC Pay Scale
(Regular In-Step Annual Pay, October, 1989) ..................... E-4
Table E-2. Washington, D.C., Fire Department TIC Pay Scale
(Regular In-Step Annual Pay Raises, October, 1989) ................ E-5
Table E-3. Los Angeles Police Department TIG Pay Scale (Annual Rate, 1990) ....... E-6
Table E-4. Chicago Fire Department TIC and TIS Pay Scale (Monthly Rates, 1990). .. E-6
Table F-i. Service Warrant Officer Program Requirements and Accessions .......... F-4
Table G-1. Current statistics ............................................. C -5
Table H-i. Active component members in certain pay table cells ................. H-4
xiv
Table H-2. Selected Reserve members in certain pay table cells .................. H-5
Table H-3. Comparison of ROPA and DOPMA promotion timing ................ H-7
Table H-4. Longevity raise (fogey) ending points ............................. H-7
Table K-1. Horizontal cell-to-cell percentage differences in the current pay table .... K-2
Table K-2. Average training times and time to promotion to E-2 by service.
Source: DoD OASD(FMP) Military Manpower Training Report, FY92.. K-7
Table L-1. Linkages between O-1E and 0-1 in the 1991 pay table ................. L-3
Table L-2. Linkages between O-2E and 0-2 in the 1991 pay table ................ L-3
Table L-3. Linkages between O-3E and 0-3 the in 1991 pay table ................ L-4
Table L-4. Proposed Pay Table-Linkages between Non-Prior-Service (0-1)
and Prior-Service (O-1E) Officer Tables ......................... L-9
Table L-5. Proposed Pay Table-Linkages between Non-Prior-Service (0-2)
and Prior-Service (O-2E) Officer Tables ......................... L-9
Table L-6. Proposed Pay Table-Linkages between Non-Prior-Service (0-3)
and Prior-Service (O-3E) Officer Tables ........................ L-10
Table L-7. Consolidated Non Prior Service and Prior Service Officer Pay Table .... L-12
xv
BASIC PAY
LIST OF PARTICIPANTS
BASIC PAY DIVISION
Lieutenant Colonel Jon M. Vetterlein, USAF
Chief (March 91 - July 92)
Lieutenant Colonel Bobbie S. Gervais, USAF
Chief (August 90 - February 91)
Lieutenant Colonel Douglas C. Shelton, ANG
Compensation Analyst
Major Daniel J. Arena, USA
Compensation Analyst (August 90 - February 91)
Major Daniel L. McGary, USAF
Compensation Analyst (March 91 - July 92)
Lieutenant Curtis D. Pope, USN
Compensation Analyst
CONCEPTS AND INTEGRATION
Colonel Carl F. Witschonke, USA
Director
Captain Eric A. Hawes, USMC
Operations Research Analyst
QRMC SUPPORT
Mr. William H. Warnock
Director
xvii
BASIC PAY
CHAPTER I-INTRODUCTION
The basic pay tables for enlisted and officer personnel have served the military well for
over four decades. However, ad hoc changes over the years have distorted the pay tables'
original intent and undermined their effectiveness in several ways. For one, relatively larger
pay raises targeted to junior members and pay caps for senior officers have, over time,
compressed the pay categories between top and bottom. Moreover, today's pay tables favor
length of service relative to promotion, thus rewarding experience more than productivity.
Most important, as the military payroll shrinks in the 1990s, pay table reforms may be
needed to achieve force management objectives.
The Seventh Quadrennial Review of Military Compensation (7t QRMC) attempted to
determine whether the basic pay tables support personnel and quality objectives for the
active and reserve forces. In this process the 7th QRMC wrestled with the issues surrounding
a longstanding quandary: should military personnel be compensated on the basis of time-ingrade
or time-in-service?
The assumptions and findings of this analysis are summarized in the following section.
Salient policy issues, including comparability with nonmilitary pay systems, are discussed in
detail in Chapter 3. The current basic pay tables are critiqued in Chapter 4. The 7' QRMC
lays out its evaluative criteria in Chapter 5, then applies them in Chapters 6 and 7 to trace
the development of proposed new enlisted and officer pay tables, respectively. Special
considerations affecting prior-service, warrant, and flag officer categories are treated in
Chapter 8. Recommended new pay tables are presented in Chapter 9.
1-1
BASIC PAY
CHAPTER 2-RESULTS IN BRIEF
BACKGROUND
The purpose of basic pay, together with the other elements of military compensation, is to
attract and retain the right numbers of high-quality people with the right skills to support
national defense objectives. As the largest and most visible element of cash compensation,'
the basic pay table therefore should provide the member a stable and predictable basis for his
or her career decisions.
The uniformed services have used common basic pay tables for enlisted and officer
personnel, following a time-in-service format, since 1922. The current basic pay tables were
established in 1949, based on the recommendations of the 1948 Hook Commission. Although
their fundamental structure has not changed since then, a number of ad hoc changes have
skewed elements of the tables. These changes resulted from legislation directing various pay
adjustments, targeted pay raises, pay caps, and the creation of new pay grades.2 Perhaps
because past studies failed to establish specific enough guidelines for the levels and
relationships of pay differentials within the basic pay table, Congress applied no consistent
logic in legislating these changes.
ASSUMPTIONS
Before tackling the internal structure of the pay tables, the 7' QRMC made some
fundamental decisions:
" Paying members of the seven uniformed services from a single set of pay tables
continues to be appropriate. In the QRMC's view, the increasingly joint nature of
military duty demands uniform treatment of members across services.
" The time-in-service pay table format is the most appropriate for the military services.
The main arguments advanced for a time-in-grade alternative have focused on its
potential to enhance performance by increasing the recognition and reward for
promotion. But a table based on time in service can do this as well. This, and the fact
'About two-thirds. Allowances make up about 30 percent, special and incentive pays about 5 percent, of cash
compensation.
2See Appendix A-Evolution of the Current Table.
2-1
that the services differ in their promotion timing, led the QRMC to recommend
retaining the time-in-service format.
Examining the internal structure of the current pay table, the 7' QRMC noted the
following problems:
"* Compression-the distinction between pays of different grades at similar years of
service is too small to provide a clear reward or incentive for promotion.
" Inconsistent relationships between pay differentials--for example, promotion-triggered
pay raises range from 2.75 to 38.17 percent; longevity raises, from 1.15 to 21.77
percent; with no apparent reasons for the differences.
"• Promotion/longevity imbalance-years of service weigh more heavily than promotion
for the due-course member, weakening monetary incentives for performance.
An imbalance in emphasis between promotion and longevity weakens the system. The
pay tables are closely linked to the promotion process in the military because pay is
differentiated by rank rather than by job. Moving from one rank to another represents a clear
increase in an individual's responsibility, visible to all in the change of insignia.
The structure of compensation across hierarchical levels should be such that
compensation rises with rank. This structure motivates greater skill
development, better worker/job matches, and possibly greater retention. In
addition, when compensation is contingent on performance, motivation
increases as well.3
Yet the basic pay tables do not clearly support the promotion system. Some specific
promotion differentials are insignificant in comparison to longevity differentials or to other
promotion differentials. Granted, longevity pay can be very important at certain key career
decision points; but some longevity differentials in the current pay tables are either
meaningless, or usurp the role of promotion in rewarding members' performance. The
7' QRMC believes the basic pay table should be corrected to support the promotion system
by rewarding productive performance and discouraging retention of less productive
members.
Finally, we recognized that there are constraints: budgetary, links to retirement, and
service differences. The 7' QRMC blended these considerations into its development of our
proposed pay tables in the following way. First, pay tables were built to be cost-neutral. That
is, the proposed tables cost roughly the same as the current tables, evaluated as if
implemented in 1994, using service-provided inventory projections and DOD Comptroller
costing methodology including retirement accrual. Second, QRMC-proposed tables take into
3Beth J. Asch and James R. Hosek, Designing Military Pay: Contributions and Implications from the Economics Literature,
(RAND (WD-5734-FMP), 1991), 61.
2-2
account the level of retirement pay and its impact on members' retention decisions.4 Finally,
the QRMC estimated impacts on members' earnings and modeled potential retention effects
using the annualized cost of leaving (ACOL) methodology to ensure advantages to members
in each service.
PAY TABLE PROPOSAL
The 7' QRMC's proposed pay tables (see Chapter 9) relieve compression between grades
by restoring significance to every promotion relative to longevity pay increases; eliminate
inconsistencies in the current pay tables; and shift the balance in emphasis of the current pay
table toward promotion, while retaining meaningful and consistent longevity raises.
Specifically, in the proposed pay tables:
"* The member promoted at average or faster timing is better off than under the current
table (net plus to cumulative career earnings).
"* The member promoted at slower than average timing is less well off than under the
current table (net minus to cumulative career earnings).
"• Retention of average and faster promotees is improved while overall retention is
sustained.
" Longevity differentials for average promotees by service are uniform and smaller than
promotion differentials.
" Promotion differentials for average promotees by service increase with rank and
exceed longevity differentials.
"* Instances and magnitude of pay inversions are reduced from current pay table.
"* Changes to the current table ensure long-term viability of the military force.
RECOMMENDATION
The 7*" QRMC recommends that its proposed time-in-service pay tables be implemented
to achieve a consistent and appropriately weighted promotion and longevity structure across
all grades, and that future changes adhere to the structure and principles underlying the proposed
table.
'In addition, the QRMC factored the present value of retirement pay in when integrating the proposed changes
to allowances with changes to basic pay. This was necessary in order to adequately capture the impact on the
member.
2-3
BASIC PAY
CHAPTER 3-BASIC PAY TABLE ISSUES
SINGLE OR MULTIPLE TABLES
It has been suggested that separate tables for each of the uniformed services might better
take into account each service's distinct personnel policies, promotion timing, retention
patterns, and force profiles. Further, the services react differently to force structure and other
constraints imposed by the Congress in response to changing economic and political events.
For these reasons, separate pay tables tailored to the promotion goals of each service, for
example, might allow more precise support of service personnel policies than the current
system of a single table for all services.
On the other hand, institutional aspects of military service impose a blanket of
commonality over all members of the military regardless of rank, skill, or duty location. For
example, members of different services often serve side by si te in joint operations'--a
condition the QRMC expects to occur more often as the military becomes smaller and more
flexible? One consequence of separate pay tables is that members of different services who
retire with the same rank and years of service could receive widely divergent lifetime
earnings under today's laws linking retired pay to basic pay. While laws can be changed, it is
apparent that a shift to separate pay tables would have implications for the military fabric
extending beyond the realm of compensation.
Having achieved its pay table design goals within the current system of unified pay
tables for enlisted and officer personnel, the 7'J QRMC recommends that as a matter of
policy the services continue to use a common basic pay table.
PAY TABLE FORMAT
The basic pay table takes the form of a matrix describing pay for various combinations of
grade and years-of-service completed (Figure 3-1). The typical member enters the schedule at
the lower left-hand cell and progresses in steps upward and to the right with rank and time
in service (TIS).
'E.g., when they are assigned to the Office of the Secretary of Defense (OSD) or Joint Chiefs of Staff (JCS) duty,
and during both normal and special operations like Desert Shield/Storm.
'The Joint Chiefs of Staff stress the increasing importance of jointness in modem warfare, throughout Joint Pub 1,
Joint Warfare of the US Armed Forces, (Washington, DC, Nevember 11, 1991); which has been given exceptionally broad
distribution throughout the services.
3-1
A controversial alternative,
the time-in-grade (TIG) pay Years of service
table format, would determine Commissioned officers
longevity raises on the basis of .... .............
time since promotion to the
current grade rather than time With over 4 years as enlisted member or warrant officer
since entering the service. The _ i i f i I ;
main argument favoring TIG is Warrant officers
that it would emphasize
promotion relative to longevity Enisted members
as a basis of pay increases. The
main argument against TIG is
that it would ignore differences ..............
in promotion timing across and
within services that are
unrelated to the quality of Figure 3-1. Basic Pay tables
promotees. The danger of the
TIG alternative is that promotions might be speeded up, raising pay, and thereby
undermining the integrity of the promotion system.
The 7k" QRMC finds that a TIS table can be designed to place greater emphasis on
promotion relative to longevity; it is not necessary to convert to the TIG format to accomplish
this. Furthermore, a TIG table would significantly decrease career pay of members in slowerpromoting
services at current promotion timing.
Therefore, the QRMC finds no compelling reason to convert to a TIG format. Appendix B
contains a complete description of the TIG/TIS analysis.
PROMOTION-LONGEVITY BALANCE
The balance between
promotion and longevity increases Longevity
is key to the methodology used for Years of service completed
pay table construction and . 2 2 4 6.10.12 14 1616•*20 V 26
evaluation (Figure 3-2). Promotion
steps are explicitly intended to [ ... . L... -.
encourage productivity, while f-4
longevity steps recognize the value 4: 1, -
of the member's experience and Promotion
commitment.
The Navy's estimate that the
current basic pay table weights Figure 3-2. Internal pay table relationships
3-2
longevity to promotion at a 60/40 ratio3 brought attention to this issue; using the same
methodology the QRMC estimates the ratio to be close to 50/50 for the enlisted table (DODwide)
and 63/37 for the officer table.4 Whereas the Hook Commission recommended greater
reward for promotion in recognition of increased responsibility,5 the current emphasis is on
stimulating current and future productivity.
A critic might argue that there is no right balance-what's important is that the military
retain enough people, then sort among them to find and advance the best ones. The current
pay table tends to support the retaining part, but not the finding and advancing the best part.
While both promotion and longevity are reasonable proxies for productivity, promotion
undeniably recognizes performance. In contrast, productivity gains may or may not
accompany increased experience. The 7' QRMC therefore would argue that the basic pay table
ought to reward promotion at a minimum more than the current 50/50 ratio relative to longevity.6
LEVEL OR STRUCTURE
A distinction should be drawn between the overall level of basic pay and the internal
structure of the basic pay table. The overall level of pay should be sufficient to attract and
retain members with the right skills and experience-at least roughly comparable with pay of
civilians when all elements of compensation are taken into account. The internal structure of
the pay table refers to the relationships between different cells of the table-for example, the
pay in any cell as a percentage of entry-level pay.7 The 7' QRMC did not ignore level of pay
(see below and Chapter 2), but concentrated its analysis on the internal pay table structure.
COMPARISONS WITH OTHER PAY SYSTEMS
The 7' QRMC compared both the level and slope of military pay with pay in the private
sector, public sector, and in foreign military services. Regular military compensation (RMC),
shown notionally in Figure 3-3, was the military pay comparator-not basic pay-because it
captures the closest thing to civilian wages and salaries.8
"3Navy, A Military Compensation Strategy, Unpublished report from U.S. Navy with data from Resource Consultants,
Inc.,(Washington, 1989), 3.
4Methodology at Appendix C-Calculation of the Promotion/Longevity Ratio.
sAdvisory Commission on Service Pay, (Hook Commission), Career Compensation for the Uniformed Forces: Report
of the Advisory Commission on Service Pay, Charles R. Hook, Chairman (Washington, 1948), 2.
'"The pay gap across levels should be greater than the pay gap within a level.", Asch and Hosek, Designing Military
Pay, 63.
'See Appendix D for this kind of a breakout.
'See 7' QRMC Staff Analyses MTS 5--Annual Pay Adjustment, for more discussion.
3-3
Detailed results are at Tax
Appendix E for public sector Special & Benefits Advantage
Incentive Pay
comparisons and GSP A for .....
foreign service comparisons. Alowances
None of these comparisons is R.9u1&r Moitoar
fully satisfactory owing to the Basic Pay Comnponsetior (RMC)
uniqueness of the military
personnel system and the lack of
data with which to make the VYers of Service
desired comparisons. Therefore,
the 7' QRMC does not Figure 3-3. Military compensation (notional)
recommend adjusting overall
levels of basic pay on the basis of these comparative analyses.
Public Sector
The QRMC looked at the federal civil service and police and fire departments of several
large cities. The grade distribution of federal civil service workers is instructive, when
compared to that of the military services, pointing up two essential differences: the civil
service is not a closed personnel system,
nor is there a policy comparable to the
military's up or out, which prevents
stagnation in lower grades. The result of
these two differences is that there is no
definable career path that the typical civil .a
service member follows; thus, it is not
possible to make an overall comparison
of military with civil service pay lines.
Figure 3-4 shows the typical military
personnel distribution by years-ofservice
(YOS). The largest number is the
cohort entering on the left; each
successive year that cohort becomes Figure 3-4. Military personnel distribution
smaller due to attrition.
Figure 3-5 shows the federal civil service grade distribution." The cohorts at the lowest
grades are extremely small; in addition, cohort size varies tremendously across grades.
Because of these major dissimilarities, the QRMC did not pursue this comparison further.
9Federal civil service inventory is not available by YOS, nor would that be a particularly meaningful breakout for
a system allowing entry at any point. In the military distribution, year of service corresponds to grade fairly closely.
3-4
As for the structure of the civil
service pay table, it is a 2501 ........ ...... . ....... ......
generalization of ooth the TIS
and TIG formats--a step-in-grade 200o . . ...
table. For analysis of tables with
steps based on time in grade, see
Appendix B. The issue of ? too - ... i ......
conditioning pay steps on some
other basis than longevity is a 5 ,.
candidate for future study.
In addition to the federal civil -
service, the QRMC examined pay
of large, hierarchical public sector Grade
organizations such as police and Figure 3-5. Civil service personnel distribution (GS)
fire departments.' Figure 3-6
shows three representative Washington, DC, Police Department career paths. In one, the
member begins as a private and remains a private over his whole career; in another, the
member progresses to the ranks of detective and sergeant; in the third, the member achieves
Lieutenant and Captain. There is yet a higher track, to Police Chief and Commissioner, which
are political appointments. Again, the absence of an up-or-out policy allows a variety of
career paths and makes direct comparison with the military unsatisfactory.
In summary, the QRMC learned from these comparisons that most other public sector
pay/personnel systems:
Are TIG-based
- Permit lateral entry
- Do not have up-or-out policies
- Permit a wider range of career and pay progression paths than does the military.
Foreign Military Services
Another dimension considered was the pay of foreign military services of countries
similar to the United States economically and politically. Figure 3-7 compares Regular
Military Compensation (RMC), with military salaries in Canada, the United Kingdom, and
"0The QRMC collected data from police and fire departments of Washington, DC, Los Angel -s, and Chicago; also
the Fraternal Order of Police and the International Association of Firefighters. The data shown for the D.C. Police
Department are representative.
3-5
Australia." The top charts $70-
compare the levels of entry pay
for enlisted and officers; the Career #3
lower charts compare the overall ,' Capt•
slope of pay, with the pay lines $60-
anchored at zero. Note that entry Lieutenant
pay in the U.S. military is not
inconsistent with what is found C
in these countries; and overall CO Career #2
slope of U.S. RMC falls within 0$50-
the range of pay line slopes in Sergeant, /
these countries.
Piivate Sector U) $40- Detective " Pvt
The 7t' QRMC took several
approaches to private sector pay
comparisons. One approach was Private
to compare cross-sectional wage $30-
and salary data obtained from
the Bureau of Labor Statistics'
Current Population Survey (CPS)
withRMC, matching the $20 I i I I I
populations by age and 0 2 4 6 8 [login to see] [login to see] 30
education. The other approach Years of Service
was to compare RMC with pay of Year oSice
civilians in jobs possessing Figure 3-6. Washington, D.C. Police Department pay lines
characteristics similar to those of
military jobs.
In Figure 3-8, the dark solid line on both the officer and enlisted charts represents RMC.