What “percentage” are you, based on income? Do you think you are adequately compensated?

MAJ Private RallyPoint Member — Wed, 25 Mar 2015 15:18:07 -0400

Do you think you are adequately compensated in comparison to your civilian “peers” or do you think the military personnel are under-paid? If you think military personnel are underpaid, why? If you think you, in particular, are underpaid, why?

Even if one ONLY CONSIDERS BASE PAY, military compensation compares really well to nationwide averages.

Personally, I’d be quite happy with more pay; why not? But I’d assess that the total compensation package is both adequate and logical, as it provides relatively good pay and additional compensation for education (via special pays and increased rank/promotion for higher education levels), skills (again, via special pays), experience (time in service), and leadership (higher compensation levels for increased responsibility).

Search “pay” on Rallypoint, and you’ll see literally hundreds of questions and threads on the topic of military pay. In these questions and threads, and elsewhere (just search the internet and you’ll be inundated with articles about changes to military pay and compensation, for example), you’ll come across two general themes: 1) military personnel are under-compensated; and, the alternative, 2) military personnel are over-compensated.

There are, of course, plenty of studies about military pay and compensation.

The ones by the Government, as expected, tend to assert that military personnel are more than adequately compensated. These types of studies generally focus on total military compensation, which is quite a bit different than pay. One study by the Congressional Budget Office estimated that the average Servicemember earns a total compensation package worth $99,000 (http://www.goarmy.com/benefits/total-compensation.html). I suspect many of you share my doubts about the methodology used to make such calculations. I’m especially averse to data on “average” Servicemembers; it is unclear to me what an “average” Servicemember is, given the disparity in compensation between the newest E-1 and the Chairman of the Joint Chiefs of Staff, especially as I can’t find a description of what the Government characterizes as the “average” Servicemember (age, rank/grade, marital status, location, dependents, education level, etc, etc). If you want, though, you can use this calculator (http://militarypay.defense.gov/mpcalcs/Calculators/RMC.aspx) to see how much the Government believes your total compensation package to be. For another example, see the Center for Naval Analysis’ report comparing military and civilian compensation (https://www.cna.org/sites/default/files/news/2010/Comparing%20Military%20and%20Civilian%20Compensation%20Packages%20D0016569.A4.pdf).

On the other hand, entities interested in securing additional pay and benefits for military personnel, such as the various service and veteran’s associations, advocate for increasing compensation of military personnel. MOAA provides a good example at: http://www.moaa.org/Main_Menu/Take_Action/Top_Issues/Serving_in_Uniform/Compensation/SecDef_Warns_of_Pay_Cuts.html.

As James Fallows wrote in the January/February 2015 issue of The Atlantic, in his highly regarded article “The Tragedy of the American Military,” the military and military personnel have become something akin to a sacred cow. He asserts that the “American public and its political leadership will do anything for the military except take it seriously.” The perceived gap between civilians and the military is a topic covered at length, both in the news media, scholarly journals, and the blogosphere and other less formal fora (for examples, see http://www.rand.org/pubs/monographs/MG379.html, http://nation.time.com/2011/11/10/an-army-apart-the-widening-military-civilian-gap/, https://scholar.google.com/scholar?q=civil+military+gap&hl=en&as_sdt=0&as_vis=1&oi=scholart&sa=X&ei=jcgSVaH3HYGBU9eWgfgG&ved=0CBsQgQMwAA ).

Some military personnel may have the tendency to perceive that part of the civil-military gap is a disparity in pay between civilians and military personnel. Frankly, this view has always confused me, as pay in both the Government (including in the military) and the civil sector is largely impacted by many of the same factors: education, skills, experience, and leadership.

I recently came across a New York Times piece (http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?_r=0) that is useful in understanding how pay for military personnel stacks up against civilian income levels. The tool allows you to enter a given household income (pre-tax) and then provides comparison for how that income stacks up against the national average, as well as 344 different zones throughout the country. Give it a try; perhaps you’ll be as shocked as I was at where your income actually puts you in comparison to the rest of the U.S. population.

The chart I’ve attached shows what “percentage” various military grades “are,” in comparison to the rest of the country. For example, at the low-end of the scale, the chart shows that E-1s are in the bottom 17 percent, based on income; at the other end, four-star general/flag officers are in the top 6 percent.

Methodology.

For each grade, I used two pay levels, both from the 2015 pay table. The first level, shown in the red bars on the chart, is for base pay at a “normal” time in service for each grade. I determined a “normal” time in service myself (an E-2 at 1 year; an E-3 at 2 years; and E-4 at 4 years; and O-1 at 1 year, an O-3 at 6 years, etc, etc, etc). The second pay level, shown in blue bars on the chart, is for base pay at the Retention Control Point (http://www.apd.army.mil/pdffiles/ad2014_03.pdf) for enlisted and non-commissioned officers and the Mandatory Retirement Date for officers (http://dopma-ropma.rand.org/retirement-for-years-of-service.html). (I’d note that I still really don’t understand the rules for the limits established by Level II of the Executive Schedule for O-7 through O-10.) I did include the ranking non-commissioned officers from each Service in the data, and this is shown in the chart as E9#. I’d note that I could not find and am not familiar with how warrant officers are managed as far as retention control points or mandatory retirement dates go. Thus, data for warrant officers is derived from only the “normal” time in service for each grade.

I then put the pay levels into the New York Times tool (http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?_r=0) and recorded the given percentage based on the national average. A weakness in this methodology is that the New York Times tool uses data from 2011 or 2012, but for pay levels I used data from the 2015 pay table. I’d make an educated guess that this weakness probably skews the data a bit, perhaps by a couple percentage points either way. I’m comfortable with this, mostly as I haven’t found a better tool than the New York Times tool that quickly allows for comparison of income levels.

Finally, I ran two examples that include base pay and other entitlements. I used myself as the first example (O-4, 14 years), and used the data from the entitlements column of my most recent LES. On the chart, this example is annotated as O4*. Using base pay only, O4s are in the top 28 to top 25 percent, as compared to national income levels. Using an actual O4 as an example, including base pay and other entitlements on the LES, bumps O4s into the top 13 percent, representing a jump of 12 to 15 percent. For the second example, I used an E-6 with 12 years of service and no special pays, but BAH for Ft. Hood and BAS (for BAS and BAH: http://www.defensetravel.dod.mil/site/bahCalc.cfm, http://www.defense.gov/news/newsarticle.aspx?id=123873). This example is annotated as E6* on the chart. A normal E6, using base pay only, is in the bottom 39 to bottom 44 percent of income earners nationwide. Adding BAH for Ft. Hood and BAS bumps an E6 up by 15 to 20 percent, to 59 percent (or, rather, the top 41 percent).

Except for the O4* and E6* examples, I used only base pay in the data. Clearly, total military compensation includes much more than base pay, regardless of how hard the non-pay benefits are to quantify. As shown in the O4* and E6* examples, including only the entitlements shown on an LES (BAH, BAS, and the like) makes a substantial impact on income. Housing represents the largest part of this impact. As the O4* and E6* examples suggest, including LES entitlements bumps one up by something like 12 to 20 percent. I think it would be fair to include BAH/OHA/housing benefits in an assessment of military pay, and if anyone would like to extend this study to account for the thousands of BAH/OHA/housing benefit levels, feel free.

The take-away from the paragraph above is that the chart shows the absolute low-end of an assessment of military compensation, as it only (except for the O4* and E6* cases) considers base pay. Considering other entitlements would substantially impact the data, and would raise the percentage level of all grades by a substantial amount (probably in the range of 12 to 20 percent, with more of a bump for those at the lower end of the scale and a much smaller bump for those at the upper end of the scale).

I did briefly consider health care benefits, but decided adequate data was not readily available and it would just be too hard and time consuming to develop data for all grades in all locations (again, if someone would like to add to this, feel free). Some studies put the average health care benefit for military families at around $3,000 a year (https://www.cna.org/sites/default/files/news/2010/Comparing%20Military%20and%20Civilian%20Compensation%20Packages%20D0016569.A4.pdf, page 44). While unrealistic (as military health care is part of the sacred cow mentioned above and will never change), if military health care was every disbanded and we were all required to sign up for coverage made possible by the Affordable Care Act, it would cost a married O-4 with no children $6,750 annually to enroll and a married E-6 with one child stationed at Ft. Hood $5,961 annually to enroll (you can run the calculations at http://www.npr.org/blogs/health/2013/09/30/226456791/how-much-will-obamacare-cost-me-try-our-calculator). Based on this, it is clear that the military health care benefit is substantial. Running the numbers, even assessing the benefit at only $3,000 a year, adds five percentage points or so for those at the low end of the scale and one or two percentage points for those in the middle of the scale; $3,000 doesn’t make much of a difference for those at the upper end of the scale, though.

Poverty comparison.

The Government defines poverty as annual incomes below $11,770 (bottom 9%) for households with one person; $15,930 (bottom 14%) for two-person households; $20,090 (bottom 18%) for three-person households; and $24,250 (bottom 23%) for four-person households (and so on; for full data, see http://aspe.hhs.gov/poverty/15poverty.cfm).

Considering only base pay, only married E1s and E2s with one or more children and married E3s and E4s with two or more children fall below Government defined poverty rates. And these E1s, E2s, E3s, and E4s just barely fall below the poverty line, even when only considering base pay. Add in housing, health care, BAS, special pays, and these E1s, E2s, E3s, and E4s no longer fall below the poverty line.

Population assessment.

At the end of January 2016, there were 1,307,786 U.S. active duty military Servicemembers (https://www.dmdc.osd.mil/appj/dwp/dwp_reports.jsp).

Per the data I’ve presented, all E1s through E7s, W1s, and O1s (and probably about half of O2s) have incomes (base pay only) that place them in the bottom half of incomes nationwide. This group (E1-E7s, W1s, O1s and half of O2s) represents 82.6 percent of active duty Servicemembers.

All E1s and E2s have incomes (base pay only) that place them in the bottom 20 percent of incomes nationwide.

All E1s, E2s, E3s, and E4s have incomes (base pay only) that place them in the bottom 30 percent of incomes nationwide.

Conclusion.

Using only base pay to compare the income levels of active duty military personnel with nationwide income levels is a terrible way to compare compensation levels. Considering only base pay when considering income levels provides comparisons based on bad data.

If one considered only base pay, one can see why some argue that military personnel, especially junior enlisted, should be paid more. Acknowledging that the base pay incomes of 82.5 percent of military personnel puts them in the bottom 50 percent nationwide is tough.

If one considered base pay plus the entitlements that appear on one’s LES (housing, BAS, special pays, etc), it would be difficult to understand arguments calling for increased across-the-board military pay.

If one considered base pay plus entitlements that appear on one’s LES plus entitlements that do not appear on one’s LES (education, health care, family support systems, etc, etc), understanding arguments that call for increased across the board military pay becomes even more difficult to understand.

However, even if one ONLY CONSIDERS BASE PAY, military compensation compares really well to nationwide averages.

Personally, I’d be quite happy with more pay; why not? However, I’d assess that the current total compensation package is adequate across the board. I’d assess that the total compensation package is as good or better than what most military members could find in the civilian market. I’d assess that the total compensation package is logical, as it provides additional compensation for education (via special pays and increased rank/promotion for higher education levels), skills (again, via special pays), experience (time in service), and leadership (higher compensation levels for increased responsibility).

If you read all of this, thanks!

Military Compensation: Army Benefits and Pay

The Army offers generous military pay and benefits. Military compensation averages $99,000 for active duty members. Army benefits and pay include health care, retirement pay and more that you may qualify for.

Response by 1SG Private RallyPoint Member made Mar 25 at 2015 3:23 PM

1SG Private RallyPoint Member — Wed, 25 Mar 2015 15:23:55 -0400

Sir,

I would say that I am adequately compensated. In fact I think after rolling all our pay and benifits together I am making out pretty darn good. With that said do I think that an occupation that puts thier lives on the line for the country should get paid more? I sure do and I would be grateful for it. But even after stating that I still believe that I am very well compensated.

Response by TSgt Kevin Buccola made Mar 25 at 2015 3:38 PM

TSgt Kevin Buccola — Wed, 25 Mar 2015 15:38:48 -0400

We are adequately compensated while in the service when you add all forms of pay. Retirement pay is the real question. Retirees are not adequately compensated for 20 years of service. Remember it is a percentage of Base Pay only. When you look at your LES as you get closer to retirement take that base pay and cut in half - out of that pay taxes and medical. Granted being 39 and receiving check is nice.

Response by LTC Private RallyPoint Member made Mar 25 at 2015 7:06 PM

LTC Private RallyPoint Member — Wed, 25 Mar 2015 19:06:28 -0400

We are adequately compensated. Yes deployments are tough, but don't kid yourself - when not deployed, life is good (and you get compensated more while deployed). In Garrison, I find Soldiers in the barracks during the day, NCOs taking off at 1000 to run errands and returning to work at 1330, Officers and CSMs taking off at 1500 because they came in early...you don't necessarily have these liberties in a civilian job. I am not saying Garrison life is easy, but many military folks who complain have never worked in a real civilian job so they have nothing to compare their experiences too. We have it good (not great or perfect, but who does!) - we get 3 and 4 day weekends every month, early release Thursdays (lower enlisted usually), vacation days, plus free passes. Others complain about retirement - at least we get a pension. Sure we don't get fund matching in a 401K, but look at all of the articles on 401K fees and mismanagement, a pension is a rarity this day in age and ours is a good one (if you stay for 20 or more). If we're honest, the military can be tough, but there are a lot of good things folks forget or don't realize are actually pretty great when compared to the alternative. Sure, investment bankers and McKinsey consultants make a crap ton of money, but they also work VERY long hours. We are a volunteer force, so if you think the grass I greener, you can always try your hand at another profession, but be careful what you ask for!

Response by Sgt Ryan Bowman made Mar 25 at 2015 8:25 PM

Sgt Ryan Bowman — Wed, 25 Mar 2015 20:25:28 -0400

While I am a veteran now, I do believe I made a fair living while serving on Active Duty. I spent half of my enlistment as a single Marine, and half married. We also had our first Son in NY while serving- absolutely free. (Two years later, our second son was quite expensive). I have had a couple different career moves since AD, and now, while it looks good on paper, I feel more constricted financially than I did when I was in. Those benefits and resources really do add up!

Response by CSM Private RallyPoint Member made Mar 26 at 2015 2:18 AM

CSM Private RallyPoint Member — Thu, 26 Mar 2015 02:18:55 -0400

Wow! That hurt my head...

I believe that we are paid fairly in the military. I believe we do a poor job of educating our Soldiers on financial responsibility. Failing to educate our Soldiers, in my opinion, causes the myth that we are underpaid. Soldiers tend to do a pretty good job of living beyond their means, especially the majority of young single Soldiers. It always amazes me to find those couple of Soldiers in the barracks that have been in the Army for a couple years and don't even have a car, more than a couple sets of civilian clothes, etc. They blow their entire check at the club in one weekend and then complain they don't have any money.

Some married Soldiers do the same thing or spend too much money on cars, clothes, etc. instead of saving. It is a pretty big shock when a Soldier gets out of the Army and realizes they have to pay much more for insurance, rent, education, emergency medical care, etc.

Response by Maj Chris Nelson made Mar 26 at 2015 9:01 AM

Maj Chris Nelson — Thu, 26 Mar 2015 09:01:01 -0400

I am going with adequately compensated. I know the approximate pay that is received on the civilian side for nurses and I know the pay that I receive as a Major. While the benefit package from civilian side to military side is different, the military one is basically "free" while my civilian counterparts must pay some type of co-pay. My pay is significantly higher in the military doing what I am currently doing then my civilian counterparts, HOWEVER:
1. They do not deploy to combat zones
2. They do not have additional duties
3. They do not have the broad spectrum of additional training requirements.
4. They come to work, do their job, then go home.
5. They are compensated on the hourly pay scale (most of them), while I am "salaried"...means that I can work 16-18 hours a day if required and my pay does not change.
6. They do not generally PCS and "start over" every 2-5 years.

I am sure there are many more differences. Some would be an impact, some would not. I would say that the additional pay over my civilian counterparts helps compensate for some of the "suck" that is military. I will be retiring in the next year.....I will understand the differences MUCH more keenly in very short order!!

Response by CW2 John Brookins made Mar 26 at 2015 11:23 AM

CW2 John Brookins — Thu, 26 Mar 2015 11:23:11 -0400

If anyone thinks they are underpaid while on active duty, just wait till your off active duty. Once insurance is paid, taxes on everything you make is taken and limited paid days off it become quite apparent we were paid pretty decent. You remember that little paper that told you what you were making based on your compensation that we all thought was BS. Well it turns out it wasn't. Just saying.

Financial management by SMs is often piss poor though. I don't know if it's a failed school system or failed parenting but way too SMs learn the hard way about debt and responsibility.

Response by SFC Collin McMillion made Mar 27 at 2015 8:43 AM

SFC Collin McMillion — Fri, 27 Mar 2015 08:43:49 -0400

There is not a lot I can say about this subject. E-1's pay more in taxes than my base pay was when I was first in.

Response by SrA Edward Vong made May 7 at 2015 2:38 PM

SrA Edward Vong — Thu, 07 May 2015 14:38:16 -0400

From my experiences being in the USAF. I felt as a SrA, I was adequately compensated. Because I do manage my money well, I can even go as far as saying I was overly compensated. I was able to afford everything I need, while able to save up for my luxury items and entertainment. (I have an Omega Speedmaster, sorry to name drop.)

Response by CSM Private RallyPoint Member made May 7 at 2015 5:36 PM

CSM Private RallyPoint Member — Thu, 07 May 2015 17:36:36 -0400

Considering the educational requirements to hold the position I hold, I'd say I'm compensated fairly well. I don't put a lot of stock into the 'risk your lives' argument for more money, as each of us volunteered to do this and most of us knew when we joined that we were going to deploy. Try finding the level of compensation and benefits package in the private sector with equilavent entry/educational requirements. Additionally, we all agreed to serve our country, and part of that service is serving responsibly. The country can not afford to
pay servicemembers what they 'think' they're worth. It's the responsible and honorable thing to stand up and make that fact known.

Response by Capt Private RallyPoint Member made May 8 at 2015 6:58 PM

Capt Private RallyPoint Member — Fri, 08 May 2015 18:58:22 -0400

I'd say I'm adequately compensated (maybe even slightly overly compensated). I did a similar study myself. My base pay is $35k but I have to make $60k as a civilian to bring home what I make now. That's just including base pay, bah, bas, and tax benefits (remember civilians pay state taxes too!). That doesn't include medical benefits, education benefits, commissary and bx discounts, free gym membership, good OJT, or the expected value of the retirement pension. All of that probably puts me at least at $70k. I know that some friends of mine make more money than me and yet they don't see as much of that money as I do. I'll make less money if I can bring home more lol. I always cringe when I hear the young airmen in my office talk about getting out. The military is not a bad deal at all especially if you promote. You can't really say that you're under compensated if you're still in. It must be good enough for you to stay in otherwise you'd move to your better offer.

Response by SGT Private RallyPoint Member made May 9 at 2015 7:41 PM

SGT Private RallyPoint Member — Sat, 09 May 2015 19:41:13 -0400

I think I am under-compensated when compared to my civilian peers. According to the Bureau of Labor Statistics, the median salary for FAA Air Traffic Controllers is just over $122,000 a year. Versus my meager E5 pay. Ultimately though, I can pursue a career as a civilian air traffic controller if I like thanks to me being in the National Guard . . . I'm just not interested in it. I took a pay cut and instead pursued a job that lines up with my dreams better. . . working on computers.

Response by MSG Private RallyPoint Member made May 12 at 2015 5:17 AM

MSG Private RallyPoint Member — Tue, 12 May 2015 05:17:12 -0400

I was involuntarily put out without warning on 2005, i got severence which i used wisely. But as much as some think the civilian world is best, i found that there lack of discipline is what turned me off completely. I learned so much during the 18 months i was out and realized so much. When i returned 1 rank less, i started educating those disgruntled Soldiers helping anyway i could to lead and guide them to be "all the could be", no pun intended. We are well compensated the military gives us so much and my job is to continue to educate our young people and even those who are seasoned.

Response by SGT David T. made May 15 at 2015 10:07 AM

SGT David T. — Fri, 15 May 2015 10:07:00 -0400

This is a complex question as one cannot separate the base pay from the other forms of compensation. In the military, I had virtually everything provided to live. Food, housing and medal care. Now that I am out, I have to pay for those things solely on base pay. I am not complaining only comparing the two. I make more money now but I have more expenses. For example I spend about $300 a month on food for my family, $1200 on my mortgage, and about $300 a month for health insurance. When I was in the Army, I had all of those things included in the compensation package and my base pay was mostly used for fun and other bills. Many Soldiers go wrong in making large purchases. Greater emphasis on financial management would help this to some degree.

Response by SPC Private RallyPoint Member made Jun 2 at 2015 12:59 PM

SPC Private RallyPoint Member — Tue, 02 Jun 2015 12:59:05 -0400

Great post. You're right, a lot of active duty benefits are hard to directly compare to civilian sector benefits. Consider just medical insurance. In the civilian/local government sector it can range from total employer coverage to "get it yourself". During my time as a police officer I was covered and paid a couple hundred a month for my wife. That went up to three hundred a month when my daughter was born. When I started my business I had no coverage and went out on the market. I found coverage (catastrophic) for a hundred a month, a thousand dollar deductible, and most doctors wouldn't take. This was pre"obamacare", I don't know what I'd find today. My wife switched to teaching and we went back to the hundred for a short time, but over the years her employer has been eroding the benefits. Monthly premiums have steadily increased, co-pays that used to be $10-15 are now $40-60, and any major procedure is now a 30/70% split. For example, my second child, a cesarean section with minor complications, ran to almost ten thousand dollars, that left me on the hook for three thousand dollars. Whereas my first, almost identical birth, was a six hundred dollar co-pay.

I realize that this is completely anecdotal, but it does function as a cautionary tale of what one might expect.

Response by MAJ Ken Landgren made Jun 2 at 2015 2:16 PM

MAJ Ken Landgren — Tue, 02 Jun 2015 14:16:55 -0400

I looked up the data for an E-4 with 4 years. $2351 (Salary) + 773 (BAH) + 368 (Food Rations) = $41,904 for the year. This does not include the other non monetary benefits. The Average Household Income is $50,000 a year for civilians, with the possibility of two people working to earn the Average Household Income. I would say the E-4 pay is not too shabby.