Historic Military Pay Raises
Military Monthly Pay Increases
Through the years, military and federal pay, on average, have lagged behind commercial private sector salaries by what is referred to as a pay gap. Depending upon the amount of education, time in service, and living location someone in the military compared to the same education in the private sector, often the private sector employee has a higher salary. For instance, two people with high school education can do considerably better in the military and government service compared to their private sector counterparts on average.
Those numbers are also skewed for higher education members within government service jobs compared to their private sector counterparts. The professional (medical, dental, Ph.D.) educated within government service make significantly lower incomes than their civilian counterparts in the private sector.
Since 1976, military pay has always been less than average civilian pay for similar jobs. Between 1980, and 1998, Congress actually capped military pay raises to below the average private sector raises to trim money off the Defense Budget. Due to this policy, the "pay gap" rose to a record of 13.5 percent. In other words, private sector workers made an average of 13.5 percent more than military members of similar training and experience. Since Fiscal Year 2000, Congress has reversed this policy, and as a result, the "pay gap" between military members and the private sector has been reduced to only 2.9 percent.
The below chart depicts yearly military pay raises, and average private sector raises between military and civilian pay from 1976 to present. Note: The figures shown for 2002, 2003, 2004, and 2007 for military pay raises are the average percentage raise, as -- for those years -- Congress authorized a "targeted" raise for various military pay grades.
In other words, during those years, some pay grades got a larger raise than others.
Historic Pay Raise Chart
These rate increases of government pay are determined by the federal budget and made official by the President and Congress each year. The federal government determines if the military basic pay tables will increase by what percentage, or not increase for the following fiscal year. The increase is based on the annual increase in the employment cost index (ECI)These increases are determined by the U.S. Department of Labor, Bureau of Labor Statistics (BLS).
The employment cost index is a quarterly economic data study detailing the changes in the costs of labor for businesses in the United States economy. The recommended amount of pay increase for 2017 was 2.0 by the Employment Cost Index.
However, the President and Congress has proposed a 1.6% pay increase for the 2017 year beginning January 1, 2017.