The 2018 pay increase represents growth in the economy as well as an increase in compensation for military personnel.
President Trump signed an executive order raising pay for military service members and federal workers by 2.4% and 1.9%, respectively.
This is the largest increase in military pay in eight years. In 2010, President Obama authorized a 3.4% increase. Annual increases in military pay have hovered below 2% for most of the last eight years. 2017’s pay raise of 2.1% was the only year to top 2% since 2010. The 2018 pay increase represents growth in the economy as well as an increase in compensation for military personnel.
The pay raise went into effect on January 1, 2018. Military members saw increases in their paychecks over the course of this month.
Impact of a possible government shutdown
The National Defense Authorization Act for Fiscal Year 2018 was signed into law on December 12, 2017. It “authorizes the FY2018 personnel strength for active duty and reserve forces and sets forth policies regarding compensation and other personnel benefits.”
The law does not, however, replace the need for a spending bill, which will fund the pay raise. Congress needs to pass a spending bill and have it signed into law by Friday, January 19 to avoid a shutdown of all nonessential federal spending. This includes many federal employees who can expect to be furloughed if a bill does not pass.
Many military members worry that their pay, with or without a raise, will not come as scheduled if a government shutdown does happen. President Trump himself tweeted that “the biggest loser will be our rapidly rebuilding Military, at a time we need it more than ever,” should a government shutdown occur.
The Democrats want to shut down the Government over Amnesty for all and Border Security. The biggest loser will be our rapidly rebuilding Military, at a time we need it more than ever. We need a merit based system of immigration, and we need it now! No more dangerous Lottery.
— Donald J. Trump (@realDonaldTrump) January 16, 2018
Military members are paid the 1st and 15th of each month, with the next paycheck expected to come on February 1st. That does give Congress some extra time to agree on a spending bill before it impacts military paychecks.
Current spending is funded through a temporary continuing resolution passed in late December 2017. One of President Trump’s stated priorities is to get a spending bill passed that makes sense for Americans. One of the major hurdles is the disagreement between Democrats and Republicans on immigration reform.
This is the largest increase in military pay in eight years.
How the military is paid
The 2018 raise applies to base pay, which is only a portion of the compensation military members receive for their service. Other benefits include basic allowance for housing, which is included to cover a large portion of housing costs and utilities. Overseas service members also receive a cost of living allowance based on the increased personal costs associated with living overseas. The amount of both of these allowances vary by location and are determined using cost of living data for the area. Special pay is also provided to those in particular specialties that require separation from their families or hazardous duty assignments.
According to the Department of Defense, annual pay increases are calculated based on the Employment Cost Index, or ECI, provided by the Bureau of Labor Statistics. The ECI considers private-sector wages and salaries and is updated every three months to reflect growth or loss in these areas. The October reported ECI is then used to decide what a comparable raise for the military and federal workers will be for the following fiscal year.
