Story by Vice Chairman of the Joint Chiefs of Staff Navy Adm. James A. “Sandy” Winnefeld
This morning, Acting Deputy Secretary of Defense Christine Fox and I met with the Senate Armed Services Committee to discuss military compensation and retirement benefits.
This is a subject that weighs heavily on the mind of our military family as we work to preserve the all-volunteer force. We must figure out how to recruit and retain the best America has to offer and pay them fairly.
Above all, we have a solemn contract with the selfless young men and women who volunteer to defend our nation that we will only send them into combat with the best possible training and equipment we can provide.
Here are my opening remarks:
Good morning, Chairman Levin, Senator Inhofe and distinguished members of the Armed Services Committee. I thank you for the opportunity to testify today on the CPI-1 provision, and on military compensation in general.
And I’d like to start with the latter if I may.
First, I want to make it very clear that our magnificent volunteer men and women in uniform and their incredible families deserve the best possible support we can provide, including competitive pay and other forms of compensation.
This is especially true when they’ve experienced over a decade of wartime deployments and stress, coming on top of all the normal disruptions of military life, including the sacrifices made by our wonderful spouses and their families.
However, we must also exercise good stewardship over the resources that the American taxpayers entrust to the Department of Defense to protect the United States.
This means investing prudently to maintain the highest quality all-volunteer force, while simultaneously getting the best value for the capability, capacity and readiness that we need to win decisively in combat.
In this light, I try not to forget that the American people have been very supportive over a decade of war to those of us who wear the uniform. They provided ample funding for our combat operations. They treat us in person far differently from our Vietnam War predecessors.
Many businesses have offered generous discounts and other special benefits to the men and women in uniform. And our nation, with the support of Congress, has provided substantial increases over the last decade in compensation that have more than closed previously existing gaps with the rest of our nation’s workforce.
We in uniform are very grateful for all of this. It means a lot.
However, demanding at this point that our compensation not only remain at its currently high relative level but that it continue to rise faster than that for the average American is simply not sustainable at a time when our entire budget is under great pressure.
This growth has been substantial, and rightly so; by the 1990s, military compensation had fallen to a deeply unsatisfactory level relative to the rest of the working population in America. The quality of our all-volunteer force suffered as a result.
To address this, with the help of the Congress, we substantially increased the compensation growth trajectory in the late ’90s, and in the post-9/11 period. These increases worked.
In 2001, U.S. median annual household income was $42,000. That equated to the direct pay of an average E-7 in the U.S. military. Today, median annual household income is $52,000, roughly equal to what an average E-5 makes.
So in short the average enlisted service member surpasses the U.S. median annual household income, two pay grades earlier, or about eight to 10 years earlier, than his or her career would have in 2001.
None of this includes indirect compensation, or the special pays and bonuses we use to shape our force or very generous changes to the G.I. Bill.
To provide additional context, in 2002, the Quadrennial Review of Military Compensation or QRMC concluded that in order to attract and retain the best that America has to offer, and because of the rigors of military service, military pay should equal around the 70th percentile of civilians with comparable education and experience.
But in 2000, midgrade enlisted personnel only placed in the 50th percentile. By 2009 our higher compensation trajectory enabled us to more than close this gap. In 2012, the QRMC reported that average enlisted compensation had climbed between the 85th percentile and 90th percentile, understandably so during a decade of war.
While these percentile numbers are not a goal, they are an indicator that we can and should gradually place compensation on a more sustainable trajectory.
As Secretary Fox mentioned, Congress and the department have already made some initial adjustments, but more are probably needed. The department, with the support of the Joint Chiefs and our senior enlisted leaders, is now considering proposals that would meet that intent.
Contrary to what some are reporting, none of these proposals would reduce the take-home pay of anyone in uniform.
We believe we should make this adjustment once. We’ll still be able to recruit and retain the best of our nation into our all- volunteer force and, indeed, we are hearing from our people that they’re much more concerned about their quality of life, their continue — their ability to continue serving in a modern and ready force, than they are about maintaining the trajectory of compensation that closed previous gaps.
We realize that we will probably not get this exactly right. We seldom do. And there may be special cases and issues that require corrective action. If future upward adjustments are required in order to remain competitive for the best America has to offer, we will surely recommend them.
We’ll also do our best to ensure both active and retired communities have the most accurate information possible.
Some will say that savings can and should be found elsewhere through efficiencies. We agree. We’re working hard to do just that. And we could use additional congressional support in that area.
Yet even with our most ambitious efficiency efforts we will still need to address the growth rate of compensation.
In the end, we believe the most important way we keep faith with the fantastic young men and women who volunteer to defend our nation is to only send them into combat with the best possible training and equipment we can provide.
Controlling compensation growth in a tough budget environment will help us do just that.
Now regarding the CPI-minus-1 provision: we are very pleased that the bipartisan budget act prevented a government shutdown and gave us at least a couple of years of long-needed predictability in our budget.
However, the inclusion of the CPI-minus-1 provision has clearly led to considerable and understandable anxiety among those who are currently retired or who are planning for retirement.
I want to make it clear that Chairman Dempsey and I and the service chiefs and senior enlisted leaders support grandfathering any changes to our retirement structure. The chairman has testified several times on this point.
And the current CPI-minus-1 provision does not fit within that principle. We believe changes to our retirement plan, if appropriate, should only be made after the [Military Compensation and Retirement Modernization Commission] takes a holistic look at the many variables involved in such a plan.
Accounting for changes in the cost of living is only one of those variables, and is far too soon to reach a conclusion on whether it should be part of a grandfathered plan. I’d also say that however and whenever the specific provision is addressed should not permanently remove cost of living adjustments as a potential variable in a future grandfathered plan.
In other words, we don’t have to rush in to this. We just need to make sure we get it right.
However, as Secretary Fox said, we’re grateful that the appropriations bill does exempt military disability retirements and survivors of members who die on active duty.
We thank the Congress for this correction. It’s an important signal to those in our force who have sacrificed the most.
Thank you again for the opportunity today, and for your continued, strong support for our magnificent men and women who serve and who have served. And I look forward to hearing your views and your questions.
Thank you, sir.