Key Indicator Hints at Military Pay Raise for 2021

A key government index used as a guideline for wages and benefits may provide insight into what the proposed military pay raise for fiscal 2021 will be.

The change to military pay is expected to be announced Monday when the Pentagon rolls out its proposed 2021 budget, but the latest U.S. Employment Cost Index (ECI) put out by the Labor Department's Bureau of Labor Statistics (BLS) has already been released. It indicates a pay boost of at least 2.9%.

The president, Congress and the Defense Department are not strictly bound by the ECI in their proposals on military pay, but by statute the ECI has been a major factor in the final decision.

Related: 2020 Military Pay Charts

DoD's website on military compensation spells it out this way: "Unless Congress and/or the president act to set a different military basic pay raise, annual military basic pay raises are linked to the increase in private-sector wages as measured by the Employment Cost Index."

Last year, the ECI on increases in wages and compensation was pegged at 3.1%, which was what the military pay raise turned out to be. It was the first time since 2010 that the military pay raise was above 3%.

The 3.1% raise meant about $815 more a year for junior enlisted troops. For senior enlisted and junior officers, the raise was about $1,500 more. For an O-4 with 12 years of service, the raise meant about $2,800 more.

Seamus Daniels, a research associate and defense budget analyst at the Center for Strategic and International Studies, said it was impossible to predict the exact military raise until a deal is hashed out by the White House, Congress and DoD, but he pointed to the Iatest ECI quarterly report, issued by BLS on Jan. 31.

The report showed that wages and salaries for civilian workers went up 2.9% last year.

Congress is not expected to take action on military pay rates for 2021 until approval of the fiscal 2021 National Defense Authorization Act later this year.

By law, the NDAA should be enacted before the start of the next fiscal year on Oct. 1, but Congress has often missed the deadline and passed continuing resolutions to keep the military operating under the previous year's budget.

The debate over the NDAA is likely to be even more complicated and heated in what will be an election year for a Congress already bitterly divided in the House and Senate.

-- Richard Sisk can be reached at Richard.Sisk@Military.com.

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