Points of Interest: Closing the "Pay Gap" or Merely Redefining It?

By Tom Philpott

The Clinton administration, however, is not inclined to support a dramatic pay gesture like Reagan made in 1981. Instead, officials are trying to redefine the pay gap, to make it appear smaller than 13.5%. They now question whether it can ever be quantified. The year 2000 pay raise of 4.4% will be "targeted" to give bigger increases to career enlisted and field-grade officers. Also there was some talk of giving some ranks additional increases of 4% to 6%.

But Defense Department officials did not accept the Joint Chiefs' contention that there is a large pay gap that needs closing. "The pay gap is only an issue if you believe there is a pay gap," said a Defense official. More important than what ECI shows, he said, is the challenge for recruiters and career counselors. Based on recruiting and retention numbers, Defense officials aren't worried yet about a return to the "hollow force" era.

Military people deploy more often today than during the Cold War. When not deployed, they work longer hours trying to get ready to deploy, officials agree. But force quality is only fraying, not collapsing, officials suggest. Pay raise dollars, they contend, are competing with money to improve the Redux retirement plan for members now under a cheaper plan, to bolster other readiness accounts and to replace aging weapon systems.

The 13.5% pay gap is "a red herring," said a Defense official. Pay only needs to be high enough "to attract and retain" sufficient numbers of quality people, he said. It would be inefficient to tie raises to a pay index. Clinton claimed in a speech on Veterans Day, and again in 22 November remarks to U.S. troops in South Korea, that "We have approved pay raises that will significantly reduce the discrepancies between military and civilian pay."

How can he say that when the pay raises planned will not keep pace with private sector pay raises? "I don't write the president's speeches for him," this official said. "I'm not sure what he's referring to."

A White House official said Clinton was referring to the overall 4.4% raise planned for January 2000, followed by a series of 3.9% raises in 2001 and beyond. But if that's all there is, Defense officials agree, the 13.5% "pay gap" that Shelton worries about would close by a mere 0.1%—to 13.4%—by 2004.

"It's smoke and mirrors," said a service official.

The services believe Rudy de Leon, Undersecretary of Defense for Personnel and Readiness, muddied the pay gap issue by asking Defense think tank RAND to update a 1992 study that found the overall gap disappears when ECI is replaced by RAND's own defense employment cost index (DECI). DECI tracks wages of workers whose age and educational experience mirrors the active duty population. That index shows no overall pay gap. In fact, most enlisted members are overpaid, RAND said.

De Leon's staff conceded the RAND study doesn't reflect the unique nature of military service. Still, the findings are a factor in deciding future pay raises. Inside the Pentagon, the RAND report took the air out of the Joint Chiefs' push for bigger pay raises over the next several years. Shelton publicly challenged the findings after the report was leaked, saying "There is a pay gap." But the damage was done.

Indeed, when explaining Clinton's claim that planned pay raises will "substantially" close the pay gap, the White House official referred to the "uncertainty" now swirling around the pay gap issues, including RAND's study.

Shelton wanted a strong signal sent to troops that pay is improving. It might have to come from Congress if it comes at all. The administration's signal on future pay raises won't boost anyone's morale.


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