Bad Idea: Paying Servicemembers More to Do the Same Amount of Work →

From CSIS's Bad Ideas in National Security Series:

Because military pay is tied to the ECI, civilian wage increases drive commensurate increases in military pay. This helps retain an all-volunteer force that may be more inclined to leave military service if civilian wages were to increase at a faster rate. But, real increases in civilian pay reflect productivity growth. If the military matches those wage increases without commensurate increases in military productivity, we end up paying more each year for the same amount of output.

Admiral Moran on retaining talent

The ability to put the quality inside of our calculus and be able to tailor our compensation packages and tailor a compensation approach to retaining talent — we are going to have to do that with this new retirement program,” Chief of Naval Personnel Vice Adm. Bill Moran said. “It starts in fiscal year 2018, two years from this January. We are going to have to be ready to look at it differently.

Competition in educational benefits from civilian employers →

The military may face additional competition from civilian employers who are increasingly willing to pay for their employees' education.

Large companies like the oil giant BP, accounting firm Deloitte, tech behemoth Google, and even food-maker Smuckers either provide discounts to select courses at eligible colleges or cover the full cost of tuition. An employer survey from 2013 found that 61 percent of companies make available some type of tuition-assistance program. Parcel firm UPS offers its employees a $15,000 tuition credit and cut deals with regional colleges in Illinois and Kentucky to provide its workers free courses.

One of the main benefits of military service is access to tuition assistance and the Post 9-11 GI Bill. If other companies offer similar benefits, the military may need to increase compensation in other areas to attract and retain servicemembers.