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This report investigates the military/civilian pay gap and its implications for capping military pay increases. The pay gap is defined as the percent difference in military versus civilian pay growth as measured from a given starting point. The index currently used for civilian pay growth is the Employment Cost Index (ECI), which reflects pay growth in the civilian labor force at large. The authors 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. The authors do so via construction of a Defense Employment Cost Index (DECI). They compare pay gaps based on the ECI vs. the DECI, and present DECI-based pay gaps for officer and enlisted personnel by gender and seniority and for occupational and age categories. The authors then consider the implications of these pay gaps for capping military pay.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Pay Gap Comparisons

  • Chapter Three

    Implications for Pay Caps

  • Appendix A

    Pay Gap Comparison Between Three-Way and Five-Way DECIs

  • Appendix B

    Correspondence Between Military/Civilian Pay Ratios and Enlisted Recruit Quality and Retention

  • Appendix C

    Military-Civil Service Pay Adjustment Linkage: Legislative Background, 1967-1993

This report is part of the RAND Corporation monograph report series. The monograph/report was a product of the RAND Corporation from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

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