Air Force News | News from Afghanistan & Iraq - Air Force Times

Quick Links

http://www.airforcetimes.com/legacy/mon/1-monnews-2426565.php
Print  |  Discuss
December 15, 2006

Pay raise is just enough to match price increases

By Rick Maze
Staff writer

The 2.2 percent pay raise that will appear in military paychecks in January will be just enough to keep up with consumer price increases.

The U.S. Labor Department announced Friday that the Consumer Price Index, a measure of the cost of goods and services, jumped by 2 percent between November 2005 and November 2006.

The biggest price jump — 3.7 percent for the previous 12 months — has been in health care expenses, something that does not directly affect many military families because the government provides a service member’s health care for free and greatly subsidizes the cost for immediate family members.

Housing costs have increased by 3 percent and food costs have increased 2.3 percent over the last year, but some consumer expenses have dropped. Energy costs are down 3.7 percent, which is part of the reason for a 1 percent drop in transportation costs.

Military pay increases, however, are not designed to keep pace with consumer prices or inflation. Instead, the pay formula in federal law bases military pay on increases in private-sector salaries so that pay levels remain competitive with civilian wages — which may or may not be keeping pace with consumer prices. The 2.2 percent raise, which applies to all basic pay and drill pay for all ranks, equals private-sector wage growth in 2005.

The two-year lag between the private-sector and military raises is primarily the result of the lengthy federal budget process. The Jan. 1, 2007, raise was included in the defense budget submitted to Congress in February 2006, and was calculated using the private-sector pay increase for the previous year. While the Bush administration is still putting together the 2008 budget it will submit to Congress in January, the pay formula calls for a 3 percent raise.

The Jan. 1 increases, which will first appear in mid-January checks, will be followed by some targeted pay increases April 1 that will apply to midgrade enlisted members, warrant officers, and some senior officers, warrant officers and enlisted members with 30 or more years of service.



Back to top

Print  |  Discuss

MIl-MALL

Browse and buy some of the awesome products we have at Mil-mall.com

Military Discounts


Save on your purchases!
In honor of your military service, you can find regular and name brand products at a special discount.