Summary: The military pay raise issue is interrelated with other manpower management and compensation issues addressed by GAO over the past several years. GAO sees pay and the rest of the compensation package as a management tool to be used to achieve specific mission-related goals and requirements. The proposed 14.5 percent military pay increase is about 9.5 percent larger than the raise which has been proposed for the rest of the Federal work force. Thus, the key question is whether the extra monies for military personnel can be fully justified during these times of budgetary and program reductions either on the grounds of military necessity or gross inequities. Although the active duty career force has remained stable since 1973 and is fully manned, there are severe shortages of certain skills in each of the services. The Department of Defense (DOD) has stated that a recent pay increase improved retention rates; however, DOD has not demonstrated that the increased retention rates occurred in the critical shortage skill areas. GAO does not believe that an across-the-board approach is the best or most efficient way to solve the manpower problems facing military services. A better way would be to address each problem specifically through the use of tailored pay increases and selected bonuses to attract and to retain people with critically needed skills. It is the GAO opinion that any across-the-board pay raise should be limited to the amount provided to Federal civil servants, currently projected to be 4.8 percent. GAO believes that this approach would be far more cost effective and palatable to taxpayers and that it is in the long-term interest of the services and the Nation. It is time for the services to face the economic reality that they must compete in the job market against industries that are looking for the same kinds of people they are trying to recruit and keep. This means that pay raises must be targeted to meet shortages of people with specific skills. While across-the-board pay raises may be occasionally needed, the services need to manage their personnel structure and pay policies on an occupation-by-occupation basis.
