Military Pay Gaps and Caps

This report investigates the military/civilian pay gap and its implications for capping military pay increases. The pay gap is defined as the percentage difference in military versus civilian pay growth as measured from a given starting point. The index currently used to measure civilian pay growth is the Employment Cost Index (ECI), which reflects pay growth in the civilian labor force at large. We instead recommend measuring civilian pay growth for the subset of civilian workers whose composition by age, education, occupation, gender, and race/ethnicity represents that of active duty military personnel. We do so via the Defense Employment Cost Index (DECI), which we constructed previously and have updated to include fiscal 1992. We compare pay gaps based on the ECI versus the DECI and present DECI based pay gaps for officer and enlisted personnel by gender and seniority and for occupational and age categories. We then consider the implications of these pay gaps for capping military pay.