Updated: October 20, 2014
Today, October 31, 2012, the United States Employment Cost Index (ECI) was released; whereas this is a normal quarterly event, this quarter’s result is the one of most importance to the members of our military. It is the quarterly release that presidents have used to make a proposal for the military pay increases for over a decade in order to ensure our military member’s compensation keeps pace with that of the private sector. Specifically, the private industry worker’s wage and salary series of the ECI as mandated for use by United States Code, Title 37. This year’s increase is a reported 1.8% for the 12 month period ending September 2012.
The actual ECI percentage is 0.2 percent less than originally projected by the Congressional Budget Office for the Department of Defense official’s five year pay plan released last year. The current plan proposed by DoD is not expected to keep pace with inflation; as a matter of fact, the pay raises of the last couple of years have not kept pace with inflation — for example, CPI adjustment for this year for retired military and social security was an adjusted 2.5% (3.2% CPI(U) actual) as compared to the 1.7% military proposal for 2013. In real dollars, pay is actually decreasing.
With the pay gap reportedly closed, I think it is time to tie military pay adjustments to inflation rates.
Expect the president to announce a military pay raise of 1.8% sometime in February 2013, perhaps as late as March, as part of his budget proposal for FY-2014.
Provided congress passes and the president ultimately approves the 1.7% raise for 2013, here is what the 1.8% raise would do for 2014 base pay (active and reserve personnel).