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[Excerpt] The military compensation system is complex and includes an array of cash compensation elements, non-cash compensation (benefits), deferred compensation (retirement pay and benefits), and tax advantages. This report focuses primarily on the cash compensation provided to members of the active component armed forces. Other CRS reports cover military retirement and health care.

Military compensation is a critical tool for sustaining recruiting, retention and the overall quality of the force. Over the years of operations in Iraq and Afghanistan, particularly during times of major combat operations, robust compensation has been an important mechanism by which Congress helped the services, and particularly the Army, meet their recruiting and retention goals. Today, the average cost to compensate an active duty servicemember—to include cash, benefits, and contributions to retirement programs—is estimated at about $90,000- $100,000 per year, although some estimates are higher (methodologies vary). As a result, some analysts believe that the military compensation is now too high and is impeding efforts to modernize equipment and sustain readiness, particularly given the budgetary limits imposed by the Budget Control Act of 2011 (BCA; P.L. 112-25). Others argue that robust compensation is essential to maintaining a high-quality force that is vigorous, well-trained, experienced, and able to function effectively in austere and volatile environments. The availability of additional funding to prosecute wars in Iraq and Afghanistan mitigated the pressure to trade-off personnel and equipment costs for many years, but the current budgetary environment appears to have brought these trade-offs to the fore again.


Suggested Citation
Kapp, L., & Salazar Torreon, B. (2015). Military pay: Key questions and answers. Washington, DC: Congressional Research Service.