Military service members need a new compensation system. Per Title 37, Pay and Allowances of the Uniformed Services, the current Regular Military Compensation consists of base pay, basic allowance for housing, basic allowance for subsistence, and a tax advantage, as the allowances are not taxed.1 Regular Military Compensation, developed in 1962, predates the all-volunteer force and includes out-of-date factors such as room and board as compensation. This complex system has remained stagnant even as civilian compensation has evolved. Given the strained recruiting and retention environment, the Department of Defense (DoD) should transition to something akin to the General Schedule used for federal civilian employees.
Military Compensation
At first glance, military compensation appears adequate. The Report of the Thirteenth Quadrennial Review of Military Compensation in 2020 found that 2017 military pay met the 85th percentile of civilian wage distribution for enlisted personnel and the 77th percentile for officers.2 Healthcare is generally not considered in discussions of Regular Military Compensation; however, a 2005 study found the added benefits would drive “military compensation up a few percentiles in the civilian wage distribution.”3 However, prospective recruits cite healthcare as one of the top ten reasons they would consider joining the military.4
Regular Military Compensation assumes all service members receive full allowances or “in kind” benefits. However, single E-4s and below are generally not entitled to a housing allowance and forfeit a subsistence allowance in exchange for government-provided meals.5 One could argue that the government provides housing “in kind” instead of a monetary allowance, since these service members usually reside in barracks or shipboard berthing. However, a Norfolk-based E-1 without dependents would receive $1,500 monthly, sufficient for a one-bedroom apartment. Trading money or the quality of life derived from a private living space for a bunk on a ship or a shared barracks room and weighing them equally is disingenuous at best. Second, tax advantage matters when a service member actually receives a nontaxable allowance.
Allowances increase a junior service member’s compensation between 77 and 100 percent. Assume the same Norfolk-based E-1 makes about $24,000 annually, or $11.64 an hour, from base pay alone. Allowances and the tax advantage raise the hourly pay to $24.49. A Norfolk-based E-4 earns $33,000 a year, or nearly $16 an hour; with allowances, the hourly pay is $29.12.6
Nevertheless, most junior service members never see this advantage. In addition, these calculations are based on a 40-hour work week, which does not exist in the military, especially on deployments, during which junior personnel can earn less than minimum wage.
A New System
Adopting a simpler salary system would put more money in the hands of junior service members on top of other significant benefits. Eliminating the basic housing allowance reduces the need to pay Military Housing Offices and contractors to constantly collect data to reassess allowance amounts.7 A locality pay can augment base salary where required—as is already done with civilians—to offset duty locations with higher living costs.8 This simplified system also would streamline administrative processes. For example, the starting, stopping, and transferring of allowances would no longer be required.
A regular salary would increase transparency and let current and prospective service members know their annual compensation up front. Telling prospective recruits they will make slightly more than $49,000 annually the day they arrive at boot camp and more than $67,000 30 months later is a more effective recruiting tool than the current system of potential allowances and convoluted tax incentives.
A dated compensation system will continue to impair military recruitment and retention while frustrating service members. The limited number of junior sailors receiving basic allowances, housing allowances that lag nationwide rent increases, and subsistence allowances trailing the Consumer Price Index’s basket of food items are some of the many factors complicating the Regular Military Compensation’s output.10 Reversing this trend to achieve comprehensive compensation for service members would require Congress and the DoD to rethink how service members are compensated. The Ninth Quadrennial Review of Military Compensation pointed out in 2002 that “the management and compensation policies governing the career force retain much of the same character today that existed in the draft era.”11 Little has been done to change that in the two decades since the report’s release. The idea of the military providing room and board is as antiquated as parcels of land augmenting military pay—it is time to reconsider how service members are compensated.12
1. Pay and Allowances of the Uniformed Services, U.S. Code, Title 37, chap. 1, § 101, par. 25 (1962).
2. Troy D. Smith, Beth J. Asch, and Michael G. Mattock, “An Updated Look at Military and Civilian Pay Levels and Recruit Quality,” Report of the Thirteenth Quadrennial Review of Military Compensation (Santa Monica, CA: Rand Corporation, December 2020), xvi.
3. James Hosek et al., Placing a Value on the Health Care Benefit for Active-Duty Personnel (Santa Monica, CA: Rand Corporation, 3 October 2005).
4. Office of People Analytics, “Fall 2022 Propensity Update,” Department of Defense, 21 August 2023.
5. Updated time-in-service requirements, effective 1 July 2024, will require service members to have 30 months in service before promoting to E4 and then another 12 months at E4 before being eligible to advance to E5. See MyNavyHR, “Navy-Wide Apprentice (E1–E4) Advancement Changes Fact Sheet,” 3 August 2023; Bureau of Naval Personnel, “Advancement Manual for Enlisted Personnel of the U.S. Navy and U.S. Navy Reserve,” BUPERSINST 1430.16G, Department of the Navy, 19 September 2018; and Heather Mongilio, “MCPON Honea to Congress: Allow Navy to Give Housing Allowance to Most Junior Sailors,” USNI News, 31 January 2024.
6. NCCM Thomas Goering, USN (Ret.), “2024 U.S. Military Basic Pay Charts,” Navy CyberSpace.
7. Defense Travel Management Office, “Frequently Asked Questions: BAH Data Collection and Rate Determinations,” Defense Human Resources Activity, 25 March 2022.
8. U.S. Office of Personnel Management, “2024 General Schedule (GS) Locality Pay Tables.”
10. R. J. Rico, “Military Families’ Housing Benefits Lag as Rents Explode,” AP News, 24 August 2022.
11. LTG Timothy J. Maude and SGM Lacey B. Ivory, USA, Report of the Ninth Quadrennial Review of Military Compensation, vol. 1 (U.S. Department of Defense, March 2002).
12. U.S. National Archives and Records Administration, “Military Bounty-Land Warrant Records.”