Defense Primer: Military Pay Raise



Updated January 7, 2021
Defense Primer: Military Pay Raise
The phrase “military pay raise,” frequently used in
How Is the Annual Increase in Basic Pay
discussions of military compensation, almost always refers
Calculated?
to the annual increase in basic pay for members of the
Section 1009(c) of Title 37 provides a permanent formula
uniformed services. By law, basic pay is automatically
for an automatic annual increase in basic pay that is indexed
increased at the start of each calendar year by an amount
to the annual increase in the ECI for “wages and salaries,
linked to the change in the Employment Cost Index (ECI),
private industry workers.” The automatic adjustment is
although the President or Congress may override this
equal to the increase in the ECI from the third quarter of the
statutory adjustment.
third preceding year to the third quarter of the second
preceding year. For example, in the 12-month period
Pay Raise for 2021
between the quarter that ended in September 2014 and the
quarter that ended in September 2015, the ECI increased by
Basic pay was increased by 3.0% on January 1, 2021.
2.1%. Hence the pay raise for calendar year 2017, as
calculated by the statutory formula, was 2.1%.
What Is Basic Pay?
However, under subsection (e) of this statute, the President
Basic pay is one component of the military compensation
can specify an alternative pay adjustment that supersedes
package, which also includes housing, subsistence, health
the automatic adjustment. Additionally, Congress may pass
care, and retirement benefits. For most servicemembers, it
a law to specify the annual pay raise, superseding the
is the largest element of the compensation they receive in
automatic adjustment and/or any presidential adjustment.
their paycheck and typically accounts for about two-thirds
of an individual’s
Statutory Formula for 2021
regular military compensation (RMC).
RMC is “the total of the following elements that a member
The adjustment in basic pay for calendar year 2021 under
of the uniformed services accrues or receives, directly or
the statutory formula is 3.0% (reflecting the increase in the
indirectly, in cash or in kind every payday: basic pay, basic
ECI between the third quarter of 2018 and the third quarter
allowance for housing, basic allowance for subsistence, and
of 2019). The actual increase in basic pay for 2021 may be
Federal tax advantage accruing to the aforementioned
different, depending on presidential or congressional action.
allowances because they are not subject to Federal income
tax.” (37 U.S.C. §101(25)).
Congressional and Presidential Action

for 2021
The FY2021 President’s Budget requested a 3.0% increase
The rate of basic pay an individual receives varies based on
his or her paygrade (rank) and years of military service. For
in basic pay, equivalent to the statutory formula. Section
example a newly enlisted recruit (paygrade E-1) with four
601 of the House-passed version of the National Defense
or more months of service and less than two years of
Authorization Act (NDAA) for FY2021, H.R. 6395,
service receives $1,785.00 in basic pay per month in 2021,
directed a 3.0% increase in basic pay. The Senate-passed
while a more senior enlisted person (paygrade E-6) with
version of the FY2021 NDAA, S. 4049, did not contain a
between 10 and 12 years of service receives $3,882.90 per
provision specifying the increase in basic pay, thereby
month. A newly joined officer (paygrade O-1) with less
leaving the 3.0% automatic adjustment provided by 37
than two years of service receives $3,385.80 in basic pay
U.S.C. §1009 in place. Section 601 of the enacted version
per month in 2021, while a more senior officer (paygrade
of the National Defense Authorization Act for Fiscal Year
O-4) with between 10 and 12 years of service receives
2021 specified a 3.0% increase in basic pay effective
$7,684.20 per month.
January 1, 2021.
Pay tables are available at https://www.dfas.mil/

militarymembers/payentitlements/Pay-Tables/
PayTableArchives.html.

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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
Provision
Which Pay
Enacted
Raise Was
Statutory
Increase
Budget
into Law
Increase in
Effective
Formula
in ECI
Request
PAA
(NDAA)
Basic Pay
Comments
PTR: Additional increases for most
servicemembers, but focused on midgrade
2002
=ECI +0.5%
4.1%
5.0%+PTR
n.a.
5.0%+PTR
5.0%+PTR
and senior enlisted members, midgrade
officers and some warrant officers.
PTR: Additional increases for midgrade and
2003
=ECI +0.5%
3.6%
4.1%+PTR
n.a.
4.1%+PTR
4.1%+PTR
senior enlisted, midgrade officers, and some
warrant officers.
PTR: Additional increases for midgrade and
2004
=ECI +0.5%
3.2%
2.0%+PTR
n.a.
3.7%+PTR
3.7%+PTR
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%

PTR: Additional increases for midgrade
2007
= ECI
2.2%
2.2%
n.a.
2.2%+PTR
2.2%+PTR
enlisted and some warrant officers; pay table
extended to 40 years of service.
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.
3.1%
3.1%

2021
=ECI
3.0%
3.0%
n.a.
3.0%
3.0%

Sources: 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 cel s 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


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Defense Primer: Military Pay Raise


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