Quadrennial Review Helps Ensure Troops Are Paid Competitively

Every four years, the Defense Department conducts a complete review of the principles and concepts of the military compensation system - the Quadrennial Review of Military Compensation. In addition to DOD, the review includes the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, and the Public Health Service.

The 14th QRMC released its report today.

President Joe Biden established the 14th QRMC, January 31, 2023. In doing so, he stated we have a "sacred duty to take care of our men and women in uniform;" "our service members deserve a 21st century military compensation system that rewards their contributions … and incentivizes the next generation of men and women to serve."

In furtherance of these objectives, he directed the 14th QRMC to study five topics and the secretary of defense added a sixth topic at the request of the commander of U.S. Special Operations Command and the chairman of the Joint Chiefs of Staff.

"The goal of the QRMC is to ensure that service members are paid competitively alongside their civilian peers, and that they can afford the necessities of life, and that their total benefits package is sufficient to attract and retain the service members DOD needs," said a senior defense official.

"This is important because we know through long-standing research and lived experience, that when the department prioritizes the basic needs of its service members and families that they're better able to focus on their mission to defend the nation, and this requires a competitive compensation package, both to incentivize that next generation to serve, as well as [retain] very specific military skill sets," said the senior defense official.

The QRMC is considered an independent body of work with a director who works with federally funded research and development centers to conduct the QRMC's research. They conduct analysis and present it to a senior advisory group. The senior advisory group comprises uniformed members, senior civilians and senior enlisted advisors, who have knowledge, experience and expertise in the area of pay and compensation.

"The 14th QRMC found that the department's compensation package is strongly competitive with the civilian labor market. However, there are some areas for improvement that will ultimately benefit service members, their families and the department," the senior defense official said.

The department has accepted these recommendations in full and will endeavor to implement them over the next few years, the official said.

This is the first QRMC to examine the impact of dual-income households on military retention decisions, including how aspects of military life, such as permanent change of station moves, separation from the service and child care access affect a military spouse's ability to pursue a career, the official said.

"This may ultimately require us to consider policy and programmatic changes to compensation as well as nonmonetary programs to ensure successful recruitment, retention and readiness of the force moving forward," the senior defense official said.

In 2002, the 9th QRMC determined that, in order to attract the service members it needs, DOD should pay service members at the 70th percentile of comparable civilians. This means that if you looked at 100 comparable civilians and service members of the same age, education and so on, service members are paid more than 69 of the 100 civilians on average.

"That premium reflects some of the unique aspects of military life," a second senior defense official said, meaning hardships that civilians don't generally experience.

The 14th QRMC reviewed the regular military compensation for all ranks and recommended increasing it to the 75th percentile, the second senior defense official said.

The 14th QRMC also recommended improved communications with service members and others regarding their total compensation package, the second senior defense official said.

For example, it is important that DOD communicate to its potential recruits and to its members that basic pay is not the only element of military compensation. The compensation package includes things such as free dental and health care, incentives for child care, a generous Thrift Savings Plan, a traditional retirement plan and a generous leave program, said the first senior defense official.

"There are a lot of elements of the compensation package that members might not be thinking of. ... Our retention is really high, so I'm thinking that the longer members serve, the more fully they understand the value of the total compensation package," the second senior defense official said, adding that this could be an important tool for recruiting.

The three core findings of the 14th QRMC are:

• The military compensation package is strongly competitive with the civilian labor market.
• Reducing pay volatility and variability and improving data quality will benefit service members and the department, and the QRMC has recommended some improvements in data collection and processing to improve the predictability of pay and compensation.
• Targeted noncash compensation may offer better returns on investment for service members and military families than increases in basic pay and compensation.

The eight recommendations of the 14th QRMC are:

• Updating the regular military compensation benchmark from the 70th to the 75th percentile.
• Improving communications with service members regarding their total compensation package and its comparative quality to comparable civilians.
• Improving "constructive credit" afforded to lateral entrants who join the military with already established and much needed skill sets, such as surgeons.
• Updating the methods used to calculate basic allowance for housing.
• Updating the method used to calculate both contiguous United States and overseas cost-of-living allowance adjustment rates.
• Reviewing deployed entitlements every five years.
• Exploring additional retirement savings options for military spouses.
• Instituting a regular quality-of-life or quality-of-service review to examine areas such as housing, health care, child care programs, and Morale Welfare and Recreation programs.

The report was delivered to the president and congressional armed services committees. The report was also shared with interagency partners and military and veteran service organizations. The first senior defense official explained that, while they can implement some of the QRMC's recommendations immediately, others will take several years to implement, and some will require congressional support to implement.

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