New Study on Military Compensation

The Department of Defense released today the report of the 11th Quadrennial Review of Military Compensation (QRMC), which assesses the effectiveness of military pay and benefits.  Full recommendations, in greater detail, can be viewed on the Web here.

Every four years, the DoD is directed by the President to complete a review of compensation principles and concepts for members of the uniformed services.

The 11th QRMC began in 2010, and focused on the following four areas established by the President:  special and incentive pays for critical career fields; combat compensation; wounded warriors, caregivers, and survivor compensation; and Reserve and National Guard compensation and benefits.

DoD will study the recommendations for potential implementation and, if needed, send selected proposals to Congress as proposed legislation.

The 11th QRMC began its study by analyzing the relative standing of military compensation with civilian wages as context for decisions about elements of the military compensation system.  The QRMC found that regular military compensation (RMC) for enlisted personnel and officers compares favorably with civilian wages for those with comparable education and experience.  Highlights of the QRMC recommendations for each of the study areas follow.

Special and incentive pays.  Special and incentive pays are a cost-effective means of achieving manpower objectives.  In conducting its assessment of several high-demand career fields, the QRMC found that a versatile career incentive pay authority could have great utility and recommends establishing such an authority.

Combat compensation.  The QRMC concluded that the relationship between combat compensation and the degree of danger to which a member is exposed has eroded, with members most likely to be exposed to the hazards of combat receiving the smallest benefit.  Thus, the QRMC recommends that combat compensation be restructured so that those who are exposed to the greatest danger receive higher compensation, regardless of grade by:  establishing differentials in hazardous duty pay, and replacing the Combat Zone Tax Exclusion with a refundable Combat Tax Credit and a refundable Direct Support Tax Credit.

Wounded warriors, caregivers, and survivors.  The QRMC researched the financial well-being of service members wounded in combat and survivors of fallen warriors.  The QRMC also examined the financial implications for family members who take on the role of caregiver for a wounded service member.

Wounded warriors.  The QRMC's research showed that income loss increases with severity of injury, but disability payments more than offset the loss, on average.  However, the QRMC recommended that the department continue to examine wounded warriors' earnings and disability payments to fully understand the long-term financial impact of being injured.

Caregivers.  The new DoD and VA benefits provide a source of compensation and help offset earnings losses some caregivers experience.  However, the QRMC recommends that the two programs be more closely aligned.

Surviving spouses.  Similar research of surviving spouses found that recurring survivor benefits replace a significant portion of income loss.  However, the QRMC recommends partially eliminating the reduction in Survivor Benefit Plan payments when a spouse is also entitled to Dependency and Indemnity Compensation, and equalize Survivor Benefit Plan payments when a guard or reserve member dies while performing inactive duty training.

Reserve Compensation, Benefits and Duty Structure.  Today, the reserve components serve two purposes -- to support operational missions on a regular basis and to provide strategic depth.  Yet the QRMC found the reserve compensation system was designed to support a strategic reserve by optimizing compensation for training, and therefore, the system is misaligned with current utilization of the guard and reserve in an integrated total force.  The QRMC recommended modernizing the reserve compensation system by transitioning the reserve components to a total force pay structure under which a member receives full pay and allowances for each day of duty regardless of the type or purpose of duty.  Further, the QRMC recommended transitioning the reserve components to a retirement system that is more closely aligned with the active duty system with guard and reserve members receiving retired pay upon reaching their 30th anniversary of military service, having completed 20 qualifying years.

The QRMC also examined the breadth of benefits available to guard and reserve members and their families, and made recommendations involving health care, educational assistance, and disability.

The QRMC found that the reserve duty structure is complicated, confusing and cumbersome.  Thus the QRMC recommends reducing the number of authorities under which a reserve component member can be called or ordered to duty from 30 to 6.