Most Military and Government Jobs Pay Less Than the Private Sector
But the Public/Private Pay Gap Is Shrinking
in 1998 and 1999 military pay rates have lagged behind private sector salaries for many years. Private sector employees often enjoy higher salaries than their peers in the armed forces, even if they have with the same level of education, degree of experience and cost-of-living expenses due to location.
The biggest disparities in public/private pay show up for highly educated people. Doctors, dentists and people who have Ph.D.
degrees in any field make significantly lower incomes than their civilian counterparts. In contrast, people with only a high school education can do considerably better in the military or in government service than their private sector counterparts.
History of the Big Pay Gap
This pay gap has existed at least as far back as 1976, four years after the U.S. went to an all-volunteer military. It got worse between 1983 and 1998 when Congress capped military pay raises to below the average private sector increases in order to trim money from the Department of Defense budget. That policy drove the pay gap to a record 13.5% in 1998 and 1999.
Congress reversed that policy in fiscal year 2000. As a result, the average pay gap has gradually shrunk to a current 2.6% (as of 2018).
Historical Pay Disparities
The chart below shows military pay raises and average private sector raises annually from 1976. Note: The figures shown for 2002, 2003, 2004 and 2007 for military pay raises are average percentages, as Congress in those years authorized different raises for various military pay grades.
Historic Pay Raise Chart
The annual rate increases of military and government pay are part of the federal budget. The increase is based on the pay numbers in the private sector, as seen in the employment cost index compiled by the U.S. Department of Labor, Bureau of Labor Statistics (BLS).