Junior enlisted troops bring home more pay than most civilians with similar experience, according to a new report released by the Pentagon.
Specifically, the pay for troops with less than 10 years of experience is higher than the “90th percentile of earnings for civilians” with a high school diploma, according to the first volume of the 14th Quadrennial Review of Military Compensation released Wednesday. The review, commissioned by the Department of Defense, studies the total compensation — pay plus cash allowances — that military members receive in comparison to civilian peers.
For instance, the report pegs the average compensation for an enlisted troop with five years of service at about $65,000 — a figure better than the paychecks of 90% of workers with five years of working experience and just a high school education.
Researchers compared military salaries to civilians using a number they call the Regular Military Compensation or RMC. The RMC combines three dollar figures that military members are eligible for: the average base pay that a service member makes for each year in service, along with the average Basic Allowance for Subsistence, or BAS, and Basic Allowance for Housing, or BAH, which many service members collect. All three figures are paid based on years in service and, for BAS and BAH, marital status.
Comparing to civilian salaries
Kate Kuzminski, director of the military, veterans, and society program at the Center for a New American Security, a Washington D.C.-based think tank said that while troop pay is on par with the majority of their civilian counterparts, officials should take into account what “competitive compensation” looks like for young troops.
“It is also worth considering what it is we are asking these junior enlisted service members to do. Even though they may be young and have a similar educational experience to their civilian peers, the nation is asking them to put their lives on the line,” Kuzminski told Task & Purpose.
“Pair that with a challenging recruiting environment, and it’s worth considering what competitive compensation is for the mission being entrusted to them.”
The review comes just after junior enlisted troops got a 14.5% pay raise in the fiscal year 2025 national defense bill that passed in December. The increase was included in the defense bill after a bipartisan Congressional Quality of Life panel recommended a 15% pay increase to improve service retention and help address high rates of food insecurity, mostly impacting enlisted service members living on post.
The review found that pay for mid-career and senior enlisted personnel “compares favorably” to their civilian peers.
Total compensation vs. pay
Because the report includes allowances, the RMC numbers for most troops in the study might sound far higher than their ‘salary.’ For example, even though an enlisted member in their fifth year of service brings home a base pay of around $40,000, a key graph in the report puts that member’s total compensation at $1,250 per week or about $65,000 per year.
The report did not provide the raw data or details on how it arrived at those figures, but a quick review by Task & Purpose of Pentagon pay data used in the report appears to roughly verify the report’s figures.
For example, an E-4 in their fifth year of service, according to Pentagon pay charts, is paid $36,792 in base pay. The average single-rate BAH for an E-4, according to Pentagon figures, is $19,464, with an annual BAH of $5,520 — a grand total of $61,776 in annual ‘compensation.’
The equivalent pays for an E-5 in their fifth year total to $68,940.
An average of those two final figures hews closely to the report’s $65,000 figure for a fifth-year enlisted troop.
A salary that high, the report said, would put a worker with 5 years of experience and only a high school diploma in the 92nd percentile of all similar workers — or, put another way, making more money than 91 of ever 100 of their peers.
Officers also have ‘strongly competitive’ compensation
The review had similar findings for officer salary comparisons to civilians. However, the report did recommend changing salary calculations for officers coming into intermediate levels that “could make lateral entry into the military more attractive.” For these officers, researchers recommended that the Pentagon consider giving them “credit” in the form of equivalent service and corresponding pay grades — rather than the same pay of troops with less than two years of service.
“Overall, the QRMC found that the department’s compensation package is strongly competitive with the civilian labor market,” senior defense official 1 told reporters ahead of the 2025 review release. “However, there are areas for some improvements that will ultimately benefit service members, their families, and the department as a whole.”
Researchers considered proposals to increase basic pay for junior, mid-career and senior enlisted personnel, and officers but concluded that it would be inefficient compared to other policies that could provide better solutions.
“Although many proposals increased retention and the overall performance of the force, given historically strong retention, it was unclear that there is an urgent problem that needed to be solved by increasing basic pay,” authors of the review wrote. “Basic pay is a blunt and costly instrument and should be used only when there are system-wide problems, such as widespread retention and recruiting shortfalls, which cannot be solved more efficiently with other policy instruments.”
In order for the Department of Defense to help relieve troops and their families of the financial burdens they face, researchers recommended that periodic quality of life take place to look at housing, dining, health care access, recreational facilities, childcare, spouse employment to evaluate noncash benefits and help target the Pentagon’s investments more “effectively.”
The review also looked at new methods of calculating annual troop pay adjustments and noted that the Department of Defense needs to factor in the time lag between earnings data collection and the real-time economy. The time lag is “especially relevant” during rapid civilian labor market changes or events that impact the broader economy like the COVID-19 pandemic. Because of this, the review recommended that the department switch to pay increases at the beginning of the new fiscal year in October rather than the calendar year.
Combat zone/hostile environment pay
Historically, troops have received tax exclusions for serving in combat zones as well as Imminent Danger Pay because of nearby combat or other “hostile activities” that can harm service members stationed at a given base. Once these regions have been designated as such, the tax and pay benefits continue for decades “with little appetite to remove them,” leading to “inconsistency” in the risk levels that troops going to the same areas at different points in time face, according to the report. One reason that the authors suggested for the persistent danger zone benefits was their use to encourage deployments to less favorable locations or entice them to reenlistment.
“If the purpose of deployment entitlements is to compensate for risk, the current combat entitlements need to be realigned with risk and that relationship needs to be maintained into the future,” the review authors said.
The review concluded that “deployed entitlements should remain linked to risk” and recommended that the Pentagon review which areas classify as more dangerous or designated as combat zones for these types of payments every five years.
To determine which areas fall into the hazardous pay category, the report authors also recommended that officials go beyond the number of casualties and include classified and unclassified information. Data sources that the report suggested include federal health official travel notices, Defense Intelligence Agency terrorism threat levels, State Department threat levels and travel advisories, and combatant command force protection condition levels.
Allowances
The review found that for most pay grades, the Defense Department’s current housing allowances, or BAH rates, is higher than civilian median spending on rent and utilities — providing service members with dependents between 17% to 60% more funds to cover housing. As an example, the average BAH for a sergeant, or E-5s with dependents in 2023, was 43% higher than civilian households with the same income would spend on rent and utilities.
To calculate these rates, researchers looked at publicly available civilian population data to determine what they were spending in a particular area and then compared it to the BAH rate for that area, senior defense official 2 said.
“That’s not exactly a surprising finding,” the official said, adding that BAH is calculated by looking at the local area’s entire market, excluding high-crime, low-income and industrial areas and restricting data collection to “where about 90% of the military members tend to live,” which is near their assigned base.
“We’ve taken the entire military housing area and all of the housing rental housing costs, and we have only selected a subset of that, which tends to be a higher rate or a higher cost piece of it, because we’ve excluded some of the less desirable areas,” the official said. “Just because we’re finding that BAH is set 17 to 60% above, is not necessarily indicative that BAH is overpriced or overvalued. It has much to do with how we select the data and how we compute the rates.”
How BAH is calculated was also one of the report’s recommendations, with authors wanting to use new frameworks and data sources to produce “more reliable, more accurate, and less volatile rates.”
Currently, BAH calculations are adjusted once a year in January based on median market rents, utilities, and cost of living. Kuzminski said that adjustments have not taken into account more immediate economic changes, something military families learned the hard way during and post-coronavirus pandemic.
“During the PCS seasons in the summers of 2020 and 2021, when rents were skyrocketing in communities as people left cities, service members and their families who had to follow orders to PCS to a new location were hit with housing shortages and rent increases,” Kuzminski said. “Because the BAH rates are adjusted over longer periods of time, the BAH rates no longer reflected the cost of housing in many areas of the country, but there was no mechanism to increase BAH rates to meet the rapid increase in housing costs.”
The report echoed this concern: “During periods of rapidly rising residential rents. BAH can fall far behind in some markets in the short term because of this lag.”
Another one of the review’s findings was that certain types of housing can lead to BAH rate mismatches because local housing options are not in line with military family preferences, according to the review. To fix this, the report authors suggested that BAH is calculated using the number of bedrooms instead of housing profiles.
Before the fiscal year 2024 annual defense bill, most troop pay grades were allotted BAH for one of six housing profiles. Now, the law requires, for example, that service members with the pay grades of E-1 to E-4, receive the same BAH rate but without specifying the type of housing. The review found that local supply and demand are not in line with the assumptions of the six types of housing that is used to calculate BAH. For instance, two-bedroom homes are not always cheaper than houses with three bedrooms.
“Sometimes there’s a view that a townhouse may be less desirable or less expensive than a detached home,” senior defense official 1 said, but in reality, depending on the location, newer luxury townhomes “are often even more expensive than detached single-family homes.”
The report’s more conservative suggestions for changing BAH rate formulas include relying on the U.S. Department of Housing and Urban Development’s data for median rent estimates and in turn reducing the number of BAH surveys for military housing areas, as well as using HUD housing profiles for a larger and more stable sample size. The review’s “overhaul” approach calls for basing BAH rates on the housing costs of civilians with comparable incomes using Census Bureau data.
However, the report also notes that publicly available housing cost indexes “do not align” with the areas around installations or Pentagon standards so all of the reform suggestions would still require input or involvement from defense officials.
Dual income
When President Biden directed the Pentagon to complete the 2025 review, one of the factors he requested that researchers look at was dual income households and military spouses.
The review noted that PCS moves, affordability, and child care access impact military spouses’ ability to contribute to household income but that the military’s “compensation and benefits are high enough that most military households are financially better off staying in the military.”
However, because of the obstacles that spouses face, the review recommended quality of life improvements that could benefit spouse careers and earning potential — without the need to increase compensation. According to the review, free access to childcare could increase retention between 5 and 14% for enlisted troops and decreasing PCS moves would improve retention by 4 to 8%.
“Policies that help support spouses’ careers have the potential to improve retention and could enable DoD to increase retention at a lower per-person cost than a comparable increase in military compensation for all service members,” according to the review.
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