Military Compensation:

Key Concepts and Issues

NSIAD-86-11: Published: Jan 10, 1986. Publicly Released: Jan 10, 1986.

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GAO studied the military compensation system to summarize the key issues and differing viewpoints found in the system evaluations that at least 12 study groups have conducted since World War II.

GAO found two major contrasting views on approaches to military compensation: (1) the institutional approach, primarily in use now, which opposes differences in compensation among the various military occupations in order to develop cohesion, unity of purpose, and reciprocal loyalty among military people; and (2) the market approach, which advocates pay distinctions on the basis of occupation and the setting of competitive pay levels based on job market supply and demand conditions. GAO found that neither Congress nor the Department of Defense has established a framework of principles for setting military compensation and that none of the studies recommended a specific guide. GAO summarized the debate over the comparability and competitiveness principles, which were suggested as alternative approaches to setting compensation levels. The evaluations presented issues which: (1) concern the compensation system's structure; (2) create distinctions in compensation among military personnel, such as by occupation and number of dependents; (3) affect the total compensation package's composition, such as retirement and payment for the hardships of military service; and (4) arise in the administration of the system, particularly in adjusting military compensation. The evaluations also suggested changes to achieve increased system effectiveness by setting up an independent compensation board and selecting an index more representative than the one now used to update the pay elements of regular military compensation.

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