Military and Federal Civilian Disposable Income Comparisons and Extra Pays Received by Military Personnel

In response to a congressional request, GAO conducted a study to determine: (1) the special features of the military pay system which enhance the disposable income value of regular military compensation; (2) how military disposable income compares with that of federal civil servants who receive about the same amount of gross pay; and (3) how extra pay and allowances received by a large percentage of career military personnel add to their basic compensation.

Unlike many compensation systems, the military pay system includes free housing and meals, free medical care, and a noncontributory retirement plan, all of which enhance military members' disposable income. In addition, many career military personnel do not pay state income taxes on military pay. However, military members move frequently and often are not fully reimbursed for the cost of the move. In addition, because of frequent moves, they often pay more for housing than civilians, and military spouses have more difficulty establishing careers. Finally, during unaccompanied tours, service members must maintain two households. GAO found that military personnel receiving roughly the same gross income as federal civil servants retain a higher percentage as disposable income. In addition, they receive pay which augments basic compensation including enlistment and reenlistment bonuses, aviation and medical pay and bonuses, and sea and foreign duty pay. Because some members receive more than one extra pay, the combined value augments basic compensation by as much as 40 percent in some instances. Although these high percentage increases are the exception rather than the rule, the study showed that many career personnel receive supplemental pay.