Last week I wrote a diary entitled "I'm in the military and I am overpaid." Extensive comments to the diary scolded me for insensitivity to the situation of junior enlisted service members. There was a point to that critique, so this diary is about taking a look at the compensation of our most junior enlisted members.
One of the things I've always liked about the military, frankly, is the pay balance between high and low. While the admirals and generals live better than the seamen and privates, the ratio of pay between the highest and lowest paid, in terms of basic compensation, is just a little under 10 (15,125.10 for an O-10 compared to 1531.50 for a recruit). There are few large corporations where that's the case, and I wish more of our society were compensated in that way. Also, some allowances like Basic Allowance for Subsistence, or BAS, are awarded without respect to rank.
For the purposes of this diary, I'm going to take a look at the compensation of a junior enlisted person, specifically, an E-2. This is a military member just out of boot camp, ready to begin his or her first assignment. While this member's basic pay is the same as any other E-2's, the individual's housing allowance is dependent on location and marital status. Consequently, I'm going to select the location that offers the very lowest basic allowance for housing, or BAH, in the country, which turns out to be Klamath Falls, OR 97601. In addition, I'm going to assume that this person has a spouse and one child, under the reasoning that policy doesn't permit the recruiting of people with more than two dependents.
Meet Airman John Doe. He has graduated successfully from Basic Military Training at Lackland AFB, where he began his military career right after high school, and from the F-15 Aircraft Maintenance Specialty course at Sheppard AFB. His first assignment is to the 173rd Fighter Wing at Kingsley Field, Klamath Falls, OR, which is the place where pilots go to learn to fly the F-15C. John's a little concerned about how the money situation is going to work out, since he has to support his wife Jane and their little girl, Dosie, and his First Sergeant has pointed out to him that he's going to a guard base, where there's no commissary and not a lot of amenities. He's 18 years old.
As an E-2, John receives $1,716.90 per month. Assigned to Klamath Falls, OR, he also receives a BAH of $786.00, and a BAS of $323.87, neither of which are taxable. In fact, his tax picture is very simple - because he has three exemptions (himself and two dependents), his taxable income is zero. So the only mandatory deduction from John's pay is the FICA tax. Twice a month, he has a check for 1,347.71 deposited to his account - this is his base pay of $1716.90, less the FICA tax on that amount (131.34), plus the two allowances. All told, John's total compensation is $33,921.24. This places the Doe family at 171% of the federal poverty line for a family of three, and 16% above the $29,155 household median income for Klamath Falls.
Because much of John's compensation is untaxed, however, the effective degree of compensation is greater. John's neighbor Richard, for example, earns $37,782.61 per year, also with a family of three. He's able to take advantage of the child tax credit, so his federal tax liability is only $388 per year. He also has to pay taxes to the State of Oregon, and pays more in FICA tax as well on his greater base pay. By coincidence, he is also paid twice a month, and gets the same 1,347.71.
|Federal Income Tax||-||388.00|
|State Income Tax||2,159.11|
|Housing Allowance (Klamath Falls, OR)||786.00|
|Net Monthly Pay||2,695.43||2,695.43|
In conclusion, when we discuss military compensation, we should be very careful to base our discussion on facts. If the problem is troops on food stamps, there's a straightforward and affordable fix to the problem - adjusting BAS or BAH to reflect family size. But even a very junior airman, with a spouse and child, living in the location with the lowest housing allowance, is 91% over the poverty line and 25% over the median income, when the tax treatment of a large portion of his or her pay is considered. How well to compensate military members is a complex policy judgment,