Military Compensation in the Age of Two-Income Households

When Regular Military Compensation was developed in the early 1960s, military household income was synonymous with military pay. Today, a majority of soldiers' spouses are in the labor force. Due to the vagaries of military assignment and stationing practices, these spouses incur a substantial employment and earnings penalty. Heretofore, this penalty was attributed to the relatively high rates of migration exhibited by military households. Analysis of Current Population Survey data and the 1992 DoD Survey of Officers, Enlisted Personnel, and their Spouses demonstrate that the spouses of soldiers and airmen incur the heaviest burden of this earnings penalty due to service specific factors. These findings have important implications for stationing practices, civil service employment policies, and military compensation policy. Specifically, these findings indicate that civilian spouse earnings can serve as a potential channel through which policy can act to enhance military household earnings by improving the employment and wage prospects of soldiers' spouses without adverse budgetary consequences. In this way, military compensation policy can reflect labor market conditions that are likely to prevail into the new millennium rather than those extant at the midpoint of the last century.