The Myth of Military Poverty

But if you drive through any military base and end up at the base exchange—the military department store (complete with home and garden shop and liquor store) —what do you see? In addition to clean-cut men and women walking purposefully past manicured lawns along clean streets, do you notice anything incongruous? Take a good look at the cars. Notice the military stickers on the windshields. If you look closely at the vehicles with blue and red stickers (denoting officers and enlistees), look how new and well-kept they are. Then look at what servicemembers and their families are toting out of the busy complex: TVs, VCRs, stereos, jewelry, clothes everything imaginable.

How can this be? We’ve all heard for years that military personnel are living in poverty, some receiving food stamps. The outrage comes not only from pandering politicians, but also from some military personnel themselves and especially their lobbyists like the American Legion, the Veterans of Foreign Wars, and almost a dozen other groups.

Every year, as Congress debates the military budget, you’re likely to hear much wailing and gnashing of teeth among military boosters. Stories about shabby housing and servicemembers living on food stamps are tossed around as if the entire military is living in Dickensian squalor. Members of Congress duly express their support for military pay increases with only the vaguest notion of how the military compensation system is structured and how it compares to that of civilians. A budget is enacted, usually with increases even with, or higher than, the cost of living. And individual servicemembers howl at the injustice of being denied even more.

The system used to compensate servicemembers is so complex and arcane that neither lawmakers nor most uniformed personnel really know how military compensation compares with civilian pay. The system currently used originated in 1922, when the Army, Navy, Marine Corps, and Coast Guard consolidated their systems. The new one was created to compensate—in cash and in kind—a relatively small number of people living in a completely different milieu from today’s.

From the system’s creation up through most of the Vietnam War, the armed forces operated as the surrogate parent of their personnel—especially enlistees. In return for loyalty, competence, diligence, and in some cases bravery, the military would take care of your every need: housing, food, clothing, medical care, retirement, and pocket money. Even in the early years of the all-volunteer force, most junior enlistees and many (if not most) junior officers were unmarried. They lived and dined on base. If they were stationed aboard ship, they lived and ate meals aboard ship, not ashore. With a few exceptions, the only ones who were married and lived off base were officers and senior enlistees. These people received a cash allowance to compensate for housing and food they would have received if they were single and lived on base.

For most, the cash components of compensation provided for a good time in town and little else. The in-kind components, especially extensive recreational facilities, provided free on-base options between pay days. Only senior officers had enough cash income to pay for an upper-middle-class lifestyle.

Today, each service has dozens of occupational specialties, technology touches every aspect of life (both in and out of the military), women serve alongside men virtually everywhere, few military personnel live in military housing, and 60 percent of them are married. Plus, young people are far more independent and individualistic when they enter the service and expect a far greater level of material comfort than their predecessors. Despite these changes, the generals and admirals cling to the antique compensation system their grandfathers knew. Lawrence J. Korb, Assistant Secretary of Defense for Manpower in the Reagan Administration, says the current system “is outmoded and outdated.” It is so complex that listing its various components can make your eyes glaze over.

After basic pay—a cash payment determined by one’s rank and seniority—there are more than 40 types of untaxed cash allowances. The two most common—basic allowances for housing (BAH) and subsistence (BAS)—go to everyone who isn’t provided in-kind housing and food. There are also three types of “incentive pay” and 30 types of “special pay,” all combined in one lump sum in every paycheck. A servicemember usually has only a vague idea as to how many factors she qualifies for or how much she brings in from each.

There’s more. Don’t forget the military’s free life insurance (now paying $100,000) and the very generous non-contributory retirement plan. It allows servicemembers to retire after 20 years of service (as early as age 37) and immediately collect half their pre-retirement cash salary for the rest of their lives, indexed to inflation and in addition to Social Security.

There’s also the free skill training the services provide in specialties as varied as nuclear power plant operation and cooking, as well as generous in-service and post-service education assistance funds. Then there’s the free medical and dental care, and a minimum of 30 days of paid leave per year, along with tax-free stores on base and first-class, on-base recreation facilities (including swimming pools, gyms, marinas with sail and motor boats, movies, and racquetball courts.)

Also worth considering in the total compensation package are the federal and state laws that allow servicemembers to shop around for a state in which to claim residency for tax purposes. Military people also receive discounts from civilian businesses ranging from movie theaters to theme parks to rental car agencies to Amtrak; and there’s even free, worldwide air transportation on a space-available basis.

So far, I’ve deliberately used the word compensation rather than pay. In the civilian world, employees might receive contributory retirement plans, access to health insurance, and cheaper movie tickets, but cash wages or salary are what really count. In contrast, in-kind benefits are nearly as important as cash in the total military compensation package. The cash portion, up to half of which—depending on pay grade—is untaxed, consists of literally dozens of different types of pay, allowances, and bonuses. From here on out, I’ll use “pay” to denote the cash portion of the complete military compensation package.

Before 1967, when legislation linked military and federal civil service raises, military leaders lobbied hard for all pay increases. To ensure that members of the administration and Congress looked sympathetically at requests for a raise, military leaders encouraged the view that military compensation was low. Navy Rear Admiral Lester E. Hubbell, who directed a military compensation study group, wrote in the group’s 1967 report, “Modernizing Military Pay”: “In the process of trying to convince others of how bad pay was so it could get raised—because that was the only way it could get raised in the absence of any accepted standard for what it ought to be—the military sold its own career members on how poorly paid they were. Much of this bad psychology remains as an integral part of the military folklore.”

But with the end of the draft in 1973, recruitment became all-important. One of the things Congress did to make it easier for the services to attract entry-level personnel was to dramatically increase military pay. This brought the total military compensation package into rough parity with that of civilians. Old habits die hard, however, and many military personnel who were used to tiny paychecks—even when they started receiving much larger ones—continued to complain.

Like most Americans, military personnel consider take-home pay when comparing employment opportunities. And when they contrast their take-home pay with that of civilian friends, servicemembers see a great disparity. That’s why, despite the large cash infusion at the end of conscription, the folklore Admiral Hubbell noted in 1967 lingers even today.

Recognizing the complexity of the problem, Congress devised the concept of Regular Military Compensation (RMC) to make analyzing and discussing military compensation easier. It consists of the three main cash items noted earlier and the cash equivalent of the advantage of tax-free basic allowances for housing and subsistence. But even RMC is inadequate as a measure of the military compensation package’s value because it doesn’t take into account the other in-kind or cash elements.

The General Accounting Office (GAO), in a 1975 study, pointed out that “lack of visibility of pay among military members was widespread. [Even] RMC was underestimated by 40 percent of enlisted personnel and 20 percent of officers.” The report went on to say that “[a] potential effect is that personnel needed to satisfy military manpower requirements may opt for other careers based on erroneous assessments of relative financial rewards. This, in turn, could result in unnecessary increases in military pay in an effort to aid attraction and retention programs.” Nothing of substance has changed since the GAO wrote its report.

In November 1996, the Navy Times printed a story with the alarmist lead, “The gap between military and civilian pay could grow a half percentage point, to 13.5 percent in 1998, unless Congress and the next administration can agree on a plan for larger military raises.” The story’s author’s own reporting indicates only a fuzzy understanding of the difference between a true pay gap and a pay-raise gap, terms he and others use interchangeably.

A pay gap would be the difference between the pay of a military person and that of a civilian doing the same or comparable job. The DoD has never made any serious effort to make such comparisons. A pay-raise gap is a gap between the raises given to military people compared with those given to civilian workers.

On its Web site, the Retired Officers Association (TROA) has a table purportedly “track[ing] the growth of the military pay gap by comparing military raises with wage growth in the private sector,” as expressed in the Employment Cost Index (ECI). TROA goes on to say that “[f]or budget reasons, pay raises have been capped most years since 1982, when military pay was last deemed reasonably comparable’ with the private sector. The cumulative pay gap widened to 13.5 percent by 1999, with serious retention and readiness consequences.”

On its face, this assertion sounds reasonable. But looking closer, you will discover that between 1982 and 1999, according to the Bureau of Labor Statistics, the overall ECI rose by 103 percent: 94 percent for wages and salaries and 125 percent for benefits. Benefits include: paid leave, life insurance, disability benefits, health benefits, retirement benefits, and unemployment insurance. Military personnel pay for none of these. Perhaps the reason the cash portion of their pay didn’t keep pace with the overall ECI is that servicemembers didn’t need it.

Even for the lowest grades, the problem isn’t nearly what many people would have you believe. Comparing RMC (not counting most allowances and in-kind benefits) for enlisted personnel in the first four pay grades, stationed in San Diego, monthly compensation ranges from $1,852 for an E-1 without any dependents to $2,249 for an E-4 with dependents, a pay grade military recruits advance to within 18-24 months. That means between $22,000 and $27,000 a year for men and women—almost all under 20 years old—just beginning their careers. Moreover, with constant pay raises built into the system, military poverty, to the extent it even exists, shouldn’t last long. A bigger paycheck is always guaranteed for next year. Although at the lowest enlisted grades frugality might be required, the picture is hardly one of grim destitution.

As to food stamps, the situation is even more complicated considering that the Department of Agriculture uses two main criteria to determine eligibility for food stamps: income and family size. If your income is below a certain level, you qualify. In the military, cash given to those who live off base is counted as part of one’s income in determining food stamp eligibility. Actual housing provided by the military (whether on or off base) is not counted, however. Thus, if a servicemember has a low income (i.e., is low in rank), lives in military housing, has an unemployed spouse, and has a large family, it’s quite possible she or he will qualify for food stamps. Even those who live off base and receive the cash housing allowance might qualify with a big enough family.

The reason there are servicemembers on food stamps, then, can be traced for the most part to the size of some military families. The Air Force’s senior enlistee—Chief Master Sergeant of the Air Force Eric Benken—recognized this years ago. According to a March 1997 issue of Air Force Times, he didn’t “see the fact that some airmen qualify for food stamps as proof there is something wrong with military pay scales. Instead, it is a sign that young people with low incomes are starting families before they can afford it.” A month later, Navy Times carried an interview with Fred Pang, then assistant defense secretary for force management. Pang said he didn’t “want to appear insensitive [but] the Pentagon’s analysis shows the reason service members qualify for food stamps is family size, not income.”

Secretary of Defense William Cohen, trying to explain the food stamps situation, told journalists in April 2000 that the problem “really has to do with young people who are coming in who have a large family.” Facts, however, don’t seem to have changed the popular misconception, as evidenced by the large number of active-duty and retired personnel (and their spouses) who routinely condemn Congress for the fact that military people are receiving food stamps. A trip to the chat rooms and discussion boards of Military.com or the letters-to-the-editor of Army, Navy, Marine Corps, and Air Force Times bear this out.

I entered the military in June 1971. At that time, enlistees couldn’t marry unless they were at pay grade E-5 (approximately four years’ service) and had their commanding officer’s approval. This practice at least prevented the problem of destitute families headed by young enlistees.

At no time during the ensuing nine years I was in uniform, however, did I read any official directives—and seldom did I hear any caution from superiors—about spending within one’s limits or prematurely taking on family responsibilities before one was ready. Any admonitions or guidance came after an individual had gotten in over his head. It’s not that servicemembers were encouraged to go out and immediately spend their whole paychecks or to get married. They just weren’t cautioned against doing so, a problem that remains today.

Even when the services try to tackle this problem, they are shot down by their civilian overseers. On August 11, 1993, the Marine Corps announced it no longer would permit married persons to enlist. A few hours later, however, the service renounced the planned policy, apparently after a protest by President Clinton. Typical of overreactions was that of then-Rep. Patricia Schroeder, who was a member of the House Armed Services Committee. She “accused [Marine Corps Commandant, General Carl E.] Mundy of being an anti-family neanderthal’ . Rather than reducing the number of military families, Schroeder urged more funding for family programs,” according to a January 1995 commentary in Navy Times.

Schroeder, like most in Congress who never served in the military, didn’t understand that her proposal was precisely the wrong one. It doesn’t take Milton Friedman to figure out that paying more to people who marry than to those who don’t encourages marriage. Similarly, we don’t need Dr. Joyce Brothers to tell us that marriages entered into primarily for financial reward are unlikely to last. A 1997 study bears this out. David W. Flueck and Jeffrey S. Zax, economists at the University of Colorado at Boulder, concluded that the additional benefits that come with marriages to servicemembers “may encourage them, perhaps excessively.” They also conclude that “[M]ilitary marriage subsidies cause higher rates of marriage and lower quality marriages” and that “there is no compelling rationale for subsidizing marriages among 18- and 19-year-old servicepeople, especially when many of them will not re-enlist.”

Not only are ill-advised marriages tacitly encouraged, servicemembers are surrounded by messages telling them to spend what money they have on material goods that even exceed those civilians are exposed to. The base exchanges sell state-of-the-art electronic equipment, jewelry, CDs, watches, mobile phones, and the latest fashions in clothes for a fraction of what they’re available for off base.

Even slick new cars are within the reach of junior enlistees, given their steady pay and predictable raises. And unscrupulous car dealers—many within easy walking distance of the base gates—are more than happy to indulge them.

Those who get into financial trouble are most often young people away from home for the first time, earning more than ever before. It’s no wonder so many of the barracks-bound live from paycheck to paycheck, going on spending binges immediately after payday, then living on mess hall food and the free on-base recreation for two weeks until the cycle repeats itself. Similarly, it’s no wonder junior enlistees living off-base with families find themselves cash-strapped most of the time.

We shouldn’t be surprised, then, that they think they can afford everything the culture tells them they should have if they want to be part of the middle class, given the absence of countervailing messages from those around them. Indeed, officers and senior enlistees even today survey this situation with a smug sailors-will-be-sailors attitude, as if that were just the way the world works.

Proposing military pay raises and subsidies for members with large families is all very nice and politically correct but are the president’s plans to do so wise? Why is a Republican administration—the cheerleader for privatization—putting a dime into building, refurbishing, or maintaining housing when Republicans constantly tell us the private sector does such things so much better than government does? And just what is an “across-the-board pay raise for members of the military”?

Let’s focus on this proposed pay raise. Cash counted in Regular Military Compensation comes in three flavors: basic pay, basic allowance for housing, and basic allowance for subsistence, the latter two of which are not taxed. When Congress enacts a “pay raise,” the president may apply it to any or all of these three components.

Consequently, a “pay raise” evenly distributed among the three components is better for junior personnel, because basic pay (which is taxed) increases greatly with pay grade, but the housing allowance (untaxed) increases much less from pay grade to pay grade and the subsistence allowance (also untaxed) is the same regardless of pay grade. That is, a greater proportion of a junior enlistee’s total pay is untaxed than that of more senior personnel. No one in the new administration is telling us how the planned “pay raise” will be allocated among these three components, and no one in the media is asking.

It’s all well and good to be incensed about thousands of servicemembers being on food stamps—if it’s true. But we have no indication it is. DoD’s last estimate was that 5,100 servicemembers receive food stamps, but they have never done a serious study, and the number they cite changes constantly. Plus, the number is usually cited without mentioning that every single person who may actually be on food stamps, is also in line for a pay raise and therefore isn’t likely to stay on food stamps for long unless his family continues to grow.

Moreover, the current compensation system already pays married personnel more than it pays singles. If pay increases by a certain percent so that a tiny number of military personnel receive more money, in large part because they’ve chosen to have large families, even greater disparities will exist between personnel of the same pay grade and seniority. Married personnel will receive more than singles, and those with larger families will be paid more than married personnel without large families.

Sadly, Republican legislators, in the last session of the 106th Congress, have decided to exacerbate the existing tendency in this direction in military compensation by offering a provision that would give up to $500 in additional cash per month to families qualifying for food stamps. In an effort to make political hay in an election year, their scheme increases existing disparities by skewing the system even more in favor of married servicemembers with large families. That won’t be helpful. What we need is military leaders who, through command-level instruction and counseling, promote responsible behavior in their subordinates with respect to money and marriage. We also need a completely new and easily comprehensible system. Otherwise, current perceptions that servicemembers live on the brink of poverty—held by members of Congress, lobbyists, and servicemembers themselves—will persist.

Only when we’ve tackled both individual attitudes and behaviors as well as systemic problems will the myth of military poverty be put to rest.

A former Coast Guard officer, Andrew Webb is a freelance writer in San Diego.

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