	Introduction

The military compensation system is complex and includes an array of cash compensation elements, noncash compensation (benefits), deferred compensation (retirement pay, Thrift Savings Plan, retiree health care, and other retirement benefits), and tax advantages. Other CRS reports cover military retirement and health care. Servicemembers may also receive additional cash compensation based on their occupational specialty, duty assignment, and other factors. What Is Regular Military Compensation (RMC)? Compensation Elements Not Included in RMC

RMC does not include the full array of compensation elements (e.g., special pays and bonuses, reimbursements, educational assistance, deferred compensation, or any estimate of the cash value of nonmonetary benefits such as health care, child care, recreational facilities, commissaries, and exchanges). This methodology results in a substantial lag between increases in the ECI and increases in basic pay; the lag appears to be related to the stages of the federal budget process. However, in the case of a downward adjustment, a "save pay" provision on the BAH statute prevents the decrease from applying to individuals currently assigned to that locality: "So long as a member of a uniformed service retains uninterrupted eligibility to receive a basic allowance for housing within an area of the United States, the monthly amount of the allowance for the member may not be reduced as a result of changes in housing costs in the area or the promotion of the member." 2012. 110-181 ). 2001. However, the compensation increases that occurred in the 2000s have led many analysts to conclude that military compensation is currently quite robust in comparison to civilian counterparts. Do Military Personnel Make More or Less Than Their Civilian Counterparts? In general, the markedly different ways in which civilian public and private sector compensation and benefit systems are structured, compared to those of the Armed Forces, make it difficult to validate any generalizations about whether there is a "gap" between military and civilian pay. Another approach to estimating a pay gap attempts to compare actual compensation levels of military personnel to civilians with similar education and experience, rather than comparing rates of compensation increase over time. For example, the 9 th Quadrennial Review of Military Compensation (QRMC), published in 2002, compared the RMC of junior enlisted personnel to the earnings of civilian high school graduates, middle grade NCOs with civilians with some college education, and senior enlisted personnel with civilians who are college graduates. Based on a separate body of research, it argued that "pay at around the 70 th percentile of comparably educated civilians has been necessary to enable the military to recruit and retain the quantity and quality of personnel it requires" and pointed out those groups of military personnel that fell short of this compensation goal. Average RMC for the enlisted force corresponded to the 90 th percentile of wages for civilians from the combined comparison groups. Since that time, Congress and the executive branch have made efforts to slow the growth of military compensation. Recent initiatives have included presidentially directed increases in basic pay below the ECI for 2014-2016 and statutory authority for DOD to reduce BAH payments by 1% of the national average monthly housing cost per year from 2015 to 2019 (for a maximum reduction of 5% of the national monthly average housing cost). Taking into account the somewhat different methodology used by RAND in 2018, its authors conclude "overall RMC percentiles for 2016 for enlisted personnel and officers were virtually the same as for 2009." They argue that the key issue is, or should be, not comparability of military and civilian compensation, but the competitiveness of the former. The purpose of this pay is to compensate servicemembers for physical danger. The rate for HDP in Iraq and Afghanistan is $100 per month.
From the earliest days of the republic, the federal government has compensated members of the Armed Forces for their services. While the original pay structure was fairly simple, over time a more complex system of compensation has evolved. The current military compensation system includes cash payments such as basic pay, special and incentive pays, and various allowances. Servicemembers also receive noncash benefits such as health care and access to commissaries and recreational facilities, and may qualify for deferred compensation in the form of retired pay and other retirement benefits. This report provides an overview of military compensation generally, but focuses on cash compensation for current servicemembers.
Since the advent of the all-volunteer force in 1973, Congress has used military compensation to improve recruiting, retention, and the overall quality of the force. Congressional interest in sustaining the all-volunteer force during a time of sustained combat operations led to substantial increases in compensation in the decade following the attacks of September 11, 2001. Subsequently, in the earlier part of the 2010s, concerns over government spending generated congressional and executive branch interest in slowing the rate of growth in military compensation. Initiatives to slow compensation growth included presidentially directed increases in basic pay below the rate of increase for the Employment Cost Index (ECI) for 2014-2016 and statutory authority for the Department of Defense (DOD) to reduce Basic Allowance for Housing (BAH) payments by 1% of the national average monthly housing cost per year from 2015 to 2019 (for a maximum reduction of 5% under the national monthly average housing cost).
Some have raised concerns about the impact of personnel costs on the overall defense budget, arguing that they decrease the amount of funds available for modernizing equipment and sustaining readiness. Others argue that robust compensation is essential to maintaining a high-quality force that is vigorous, well-trained, experienced, and able to function effectively in austere and volatile environments. The availability of funding to prosecute contingency operations in Iraq and Afghanistan mitigated the pressure to trade off personnel, readiness, and equipment costs, but the current budgetary environment appears to have brought these trade-offs to the fore again.
DOD spends about $100,000-$110,000 per year to compensate the average active duty servicemember—to include cash, benefits, and contributions to retirement programs—although some estimates of compensation costs are substantially higher. However, gross compensation figures do not tell the full story, as military compensation relative to civilian compensation is a key factor in an individual's decision to join or stay in the military. Thus, the issue of comparability between military and civilian pay is an often-discussed topic. Some analysts and advocacy groups have argued that a substantial "pay gap" has existed for decades—with military personnel earning less than their civilian counterparts—although they generally concede that this gap is fairly small today. Others argue that the methodology behind this "pay gap" is flawed and does not provide a suitable estimate of pay comparability. Still others believe that military personnel, in general, are better compensated than their civilian counterparts. The Department of Defense takes a different approach to pay comparability. The 9th Quadrennial Review of Military Compensation (QRMC), published in 2002, argued that compensation for servicemembers should be around the 70th percentile of wages for civilian employees with similar education and experience. According to the 11th QRMC, published in 2012, regular military compensation for officers was at the 83rd percentile of wages for civilian employees with similar education and experience, and at the 90th percentile for enlisted personnel. A 2018 RAND report concluded that these overall percentiles were nearly the same in 2016.