Updated November 19, 2019 Defense Primer: Military Pay Raise The phrase “military pay raise,” frequently used in discussions of military compensation, almost always refers to the annual increase in basic pay for members of the uniformed services. By law, basic pay is automatically increased at the start of each calendar year by an amount linked to the change in the Employment Cost Index (ECI), although the President or Congress may override this statutory adjustment. Pay Raise for 2019 Basic pay for all servicemembers increased by 2.6% on January 1, 2019. What Is Basic Pay? Basic pay is one component of the military compensation package, which also includes housing, subsistence, health care, and retirement benefits. For most servicemembers, it is the largest element of the compensation they receive in their paycheck and typically accounts for about two-thirds of an individual’s regular military compensation (RMC). RMC is “the total of the following elements that a member of the uniformed services accrues or receives, directly or indirectly, in cash or in kind every payday: basic pay, basic allowance for housing, basic allowance for subsistence, and Federal tax advantage accruing to the aforementioned allowances because they are not subject to Federal income tax.” (37 U.S.C. §101(25)). The rate of basic pay an individual receives varies based on his or her paygrade (rank) and years of military service. For example, a newly enlisted recruit (paygrade E-1) with four or more months of service and less than two years of service receives $1,680.90 in basic pay per month in 2019, while a more senior enlisted person (paygrade E-6) with between 10 and 12 years of service receives $3,656.40 per month. A newly joined officer (paygrade O-1) with less than two years of service receives $3,188.40 in basic pay per month in 2019, while a more senior officer (paygrade O-4) with between 10 and 12 years of service receives $7,236.00 per month. Pay tables are available at https://www.dfas.mil/militarymembers/payentitlements/Pay -Tables/PayTableArchives.html. How Is the Annual Increase in Basic Pay Calculated? Section 1009(c) of Title 37 provides a permanent formula for an automatic annual increase in basic pay that is indexed to the annual increase in the ECI for “wages and salaries, private industry workers.” The automatic adjustment is equal to the increase in the ECI from the third quarter of the third preceding year to the third quarter of the second preceding year. For example, in the 12-month period between the quarter that ended in September 2014 and the quarter that ended in September 2015, the ECI increased by 2.1%. Hence the pay raise for calendar year 2017, as calculated by the statutory formula, was 2.1%. However, under subsection (e) of this statute, the President can specify an alternative pay adjustment that supersedes the automatic adjustment. Additionally, Congress may pass a law to specify the annual pay raise, superseding the automatic adjustment and/or any presidential adjustment. Statutory Formula for 2020 The prescribed adjustment in basic pay for calendar year 2020 under the statutory formula is 3.1% (reflecting the increase in the ECI between the third quarter of 2017 and the third quarter of 2018). Congressional and Presidential Action for 2020 The FY2020 President’s Budget requested a 3.1% increase in basic pay, equivalent to the statutory formula. Section 606 of the House-passed version of the National Defense Authorization Act (NDAA) for FY2020, H.R. 2500, directs a 3.1% increase in basic pay. Section 607 of the House bill directs that the statutory formula of 37 U.S.C. §1009 take effect, also resulting in a 3.1% increase in basic pay. The Senate-passed version of the FY2020 NDAA, S. 1790, did not contain a provision specifying the increase in basic pay, thereby leaving the 3.1% automatic adjustment provided by 37 U.S.C. §1009 in place. Statutory Formula for 2021 The adjustment in basic pay for calendar year 2021 under the statutory formula is 3.0% (reflecting the increase in the ECI between the third quarter of 2018 and the third quarter of 2019). The actual increase in basic pay for 2021 may be different, depending on presidential or congressional action. https://crsreports.congress.gov Defense Primer: Military Pay Raise Table 1. Historical Increases in Basic Pay Pay raise figures do not include targeted increases (“pay table reform,” or PTR), which are discussed in the comment column Calendar Year in Which Pay Raise Was Effective Statutory Formula Increase in ECI Budget Request PAA Provision Enacted into Law (NDAA) Increase in Basic Pay Comments 2002 =ECI +0.5% 4.1% 5.0%+PTR n.a. 5.0%+PTR 5.0%+PTR PTR: Additional increases for most servicemembers, but focused on midgrade and senior enlisted members, midgrade officers and some warrant officers. 2003 =ECI +0.5% 3.6% 4.1%+PTR n.a. 4.1%+PTR 4.1%+PTR PTR: Additional increases for midgrade and senior enlisted, midgrade officers, and some warrant officers. 2004 =ECI +0.5% 3.2% 2.0%+PTR n.a. 3.7%+PTR 3.7%+PTR PTR: Additional increases for midgrade and senior enlisted, and some warrant officers. 2005 =ECI +0.5% 3.0% 3.5% n.a. 3.5% 3.5% 2006 =ECI +0.5% 2.6% 3.1% n.a. 3.1% 3.1% 2007 = ECI 2.2% 2.2% n.a. 2.2%+PTR 2.2%+PTR 2008 = ECI 3.0% 3.0% n.a. 3.5% 3.5% 2009 = ECI 3.4% 3.4% n.a. 3.9% 3.9% 2010 = ECI 2.9% 2.9% n.a. 3.4% 3.4% 2011 = ECI 1.4% 1.4% n.a. NGP 1.4% 2012 = ECI 1.6% 1.6% n.a. NGP 1.6% 2013 = ECI 1.7% 1.7% n.a. 1.7% 1.7% 2014 = ECI 1.8% 1.0% 1.0% NGP 1.0% 2015 = ECI 1.8% 1.0% 1.0% NGP 1.0% No increase for paygrades O-7 and higher. 2016 = ECI 2.3% 1.3% 1.3% NGP 1.3% No increase for paygrades O-7 and higher. 2017 =ECI 2.1% 1.6% 1.6% 2.1% 2.1% 2018 =ECI 2.4% 2.1% 2.1% 2.4% 2.4% 2019 =ECI 2.6% 2.6% n.a. NGP 2.6% 2020 =ECI 3.1% 3.1% n.a. 2021 =ECI 3.0% PTR: Additional increases for midgrade enlisted and some warrant officers; pay table extended to 40 years of service. Source: Statutory formula from 37 U.S.C. 1009; increase in ECI from Bureau of Labor Statistics; presidential alternative adjustment from presidential notification to Congress; provision enacted into law from relevant NDAA. Notes: PAA= presidential alternative adjustment; PTR = pay table reform (targeted changes in certain cells of the pay table, thereby giving certain groups higher pay raises than provided by the general increase); NGP = no general statutory provision; n.a. = not applicable. IF10260 Lawrence Kapp, Specialist in Military Manpower Policy https://crsreports.congress.gov Defense Primer: Military Pay Raise Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. 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