Military people were dumbfounded November 14 when they picked up the Washington Post and discovered how prosperous they were. According to a front-page story in that newspaper, a male college graduate in the armed forces earns $65,671 a year by age thirty-five. The source cited for this startling information was a General Accounting Office (GAO) report that says military compensation is twenty-seven percent better than that in the Civil Service and generous by almost any standard.
By sheer coincidence, an early copy of the GAO report found its way into the hands of the Project on Military Procurement (see “The Reformers,” p. 106) which leaked it to the Post at the peak of the federal budget furor — and at a time when axe-grinders all along the Potomac were trying to prove that defense costs had brought the nation to economic ruin. GAO did not openly release its report until November 20, the day the Administration and Congress announced they had struck a deal on the FY ’88 budget.
The report uses the strange sort of methodology we have come to expect from GAO. It is built around four data tables that claim to array military personnel and civil servants by age, sex, case compensation, and other benefits. The numbers do not match directly with anything on the actual pay charts.
Available clues, however, suggest that GAO’s mythical $65,671 moneymaker is a major with fourteen years of service and whose base pay, quarters allowance, and subsistence allowance in reality came to $42,823.80 at the time of the study. The report further says that a thirty-five-year-old high school graduate earns $39,021 annually in service. Interpolation from clues here points to a master sergeant with seventeen years in uniform and whose payroll total is $26,309.25. GAO appears to have taken these military men the rest of the way to affluence on the strength of benefits it contends they are getting.
GAO devotes about a third of its report to itemizing and commenting on the range of military benefits and financial advantages. It does not specify which of these went into its calculations, but there was, to put it mildly, no discernible effort to hold down the score. While many employers routinely budget twenty to thirty percent of salary to cover benefits and payments to Social Security and retirement accounts, few people interpret the income a person ”earns” per year as including those amounts.
This is one in a series of GAO reports that, taken together, paint the picture of an overpaid military. The conclusions attract considerable notice, the fine print almost none. In the latest report, for example, GAO had no idea how long the civil servants in its database had worked for the government. The fourteen-year major may have been compared with an accountant who had been on the job for two weeks. A highlighted conclusion of a June 1986 GAO report on military compensation proclaimed that “pay differences may not affect military retention.” The first sentence of the current study recalls an earlier analysis in which GAO found the military well ahead of “a national sample of employed workers” on total compensation.
Such statements arise from the depths of either ignorance or malice. Pay is not the only thing that motivates people to choose a military career, but the “hemorrhage of talent” in the 1970s was painful evidence that compensation has a profound effect on retention.
If GAO’s thesis is correct, why isn’t the world eating down the doors to military recruiting offices? What keeps the US labor force in those private sector occupations that pay so much less? Civil Service may or may not suffer by comparison with the military, but there are presently 650,000 job applicants registered with the Office of Personnel Management’s nationwide Staffing Service Center in Macon, Ga. Thoughtful people must surely wonder what kind of numbers game GAO is playing.
It’s true that military pay is better than it once was. When the nation decided in 1973 to meet its defense needs with an all-volunteer force, part of the arrangement was to take the troops off starvation wages. Income of $42,823 is not excessive for a middle manager who has been with an organization for fourteen years and who carries significant responsibility — to say nothing of the possibility of being shot at. The enlisted force would be a bargain at substantially higher salary levels.
GAO makes much of the fact that military allowances are untaxed and that transient military members are often able to avoid state income taxes by having some choice in where they establish their legal residences. What this leaves unsaid is that the government chooses to put $7,771 of our major’s $42,823 into tax-free allowances so that it can save later by computing his retirement annuity on a base pay that is lower than his payroll income. People who complain about military residence options should experience the aggravation of changing car tags and driver’s licenses every three years or splitting their tax returns between two states with different filing rules. The military member, whose dislocation allowance seldom covers the real cost of a move, may think the advantage lies with his civilian neighbor, who has built up equity in a home bought fifteen years ago at a third of today’s prices.
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