Keeping Military Pay Competitive

The Outlook for Civilian Wage Growth and Its Consequences

by James Hosek, Jennifer Sharp

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To help the military attract and keep high-quality personnel, Congress voted in fiscal year 2000 for significant increases in military pay. But the military faces stiff competition from higher education as more young people attend college and as the financial value of a college education continues to rise. Will the recent pay increases be enough? To help answer this question, the authors looked at how military compensation will compare with private-sector compensation in the next ten years. They compared current military and civilian pay for persons with similar characteristics, computed the wage gaps, and then compared pay streams for different career paths. The findings suggest that, to meet its manpower challenges, the military may have to adjust compensation further than called for in the recent pay legislation. It may also have to develop new views on career paths, in-service education, and transferability of skills.

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