Pay Perks

As the transformation of the military gains speed, retired Vice Adm. Arthur Cebrowski, head of the Defense Department's Of-fice of Force Transformation, says to challenge everything. One area that must improve is the arcane system of military salaries. Defense must make the pay chart more efficient and effective by inserting targeted incentives.

The salary scale is a disincentive to officers to stay past their initial obligation of three to five years. An officer can look back over the time put in for a college education and see numerous bumps in pay. The story changes, however, when the officer looks ahead five or six years. Responsibility increases and raises are less frequent until the 11th or 12th year, well past the time when most decide whether to opt out or stay on. It makes sense to provide incentives to get officers to the 10th year of service, halfway to a sizable retirement, when they likely would be fully committed to the military.

Before commissioning them, Defense provides officers significant assistance in earning their college diplomas. Officer candidates receive full tuition plus monthly payments that range from $250 for freshmen to $400 for seniors. This is the primary incentive for signing up for the first hitch. Subsidized education provides a powerful tool to entice young people. In return, Defense gets an officer for three to five years.

Unfortunately, the pay system provides a disincentive to stay longer. For example, when an officer receives a commission and reports for active duty, salary starts at about $2,300 a month. Raises come relatively quickly early on-one when the officer gets promoted around the 18th month of service, one at two years, and one at the three-year point. A promotion to the O-3 pay grade comes at the three-and-a-half-year mark and another time-in-service raise at four years. After six pay raises during the first four years, an officer could be earning more than $4,000 a month.

At the fourth year, the freshly minted O-3, who has become accustomed to pay raises about every six months (not including the January raise when Congress tacks on 3 percent to 5 percent) looks out over the next half-decade and sees a dearth of promotions and raises. Promotion to major is at least six years away. Raises become infrequent. Time-in-service pay hikes come at six, eight and 10 years, and promotion to O-4 at the 11- or 12-year mark. Where is the incentive for a young officer to stay? Defense richly rewards officers early on, when they must stay in the military anyway due to the obligation accompanying a military-provided college degree.

One solution would be to stop paying junior officers time-in-service raises before their sixth year. The Army still would pay the officer at commissioning, still provide the promotion to O-2 at the 18-month to two-year point, still provide the pay jump to O-3 at three-and-a-half to four years, and pay congressionally required cost-of-living raises each January. But reducing time-in-service raises would produce significant savings.

Defense should use those savings and fund an incentive at the fourth or fifth year to re-enlist officers with sizable bonuses and entice them to remain in uniform until the 10th year of service. Military services would be able to use the incentives to reward promising officers by tying competitive promotion to O-3 to the added incentive of a large cash bonus for continuing to serve. Defense could husband these resources, since a certain number of officers will leave after the initial term no matter the incentive. The Navy's Surface Warfare Officer Bonus program has provided young officers an incentive to remain in service after four or five years, but it has cost the service money. The Defense Department should instead institute an across-the-services bonus system at the fifth year for officers who agree to serve 10 years.

Cebrowski is right: We must question everything. We must challenge decades of practices to see whether they make sense today.