Observations on the April 15, 1982, Joint Services Report, "Military Pay Adjustment Mechanism Study"

FPCD-82-78: Published: Sep 28, 1982. Publicly Released: Sep 28, 1982.

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GAO evaluated the recommendations contained in a recent Joint Services Study Group report concerning the appropriate mechanism for annually adjusting military pay levels. The report recommended that the Department of Defense (DOD) propose legislation which would: (1) sever the existing link between military basic pay adjustments and the Federal white-collar pay adjustment process; and (2) require the use of the Bureau of Labor Statistics' Employment Cost Index (ECI) wage and salary series to annually adjust military basic pay and allowances.

GAO opposes the traditional DOD across-the-board approach to adjusting basic pay and allowance levels and supports the Study Group's recommendation that the ECI is probably the most suitable index currently available for adjusting military pay annually. The primary advantages of using the ECI over other available indexes are that: (1) the occupations surveyed to assess pay levels represent over 70 percent of the military work force, a considerably higher percentage than is covered by other indexes; (2) it is easily understood by military members; and (3) it is a quarterly index which offers the potential for significantly reducing the current timelag between the index date and the pay raise date. GAO believes that any legislative proposal to sever the link between military pay adjustments and the Federal white-collar pay adjustment process should contain authority for the President to propose an alternative pay plan.

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