The 2022 military pay increase is projected to be 2.7% based on the White House’s defense budget proposal. Actual increases in Basic Pay may be different, depending on presidential or congressional action. Typically the ECI plays a major factor in the final Basic Pay increase. For example, the FY2021 NDAA requested a 3.0% increase in basic pay which matched the automatic ECI statutory formula of 3.0%.
This military pay raise is more or less exactly what was anticipated–not as high as the previous year’s 3% pay raise. That said, the Military Officers Association Of America official site notes that the 2022 pay raise adds nearly $800 a year to junior enlisted pay over the previous year.
Final military pay increases are subject to change based on the passage of the 2022 Defense Budget and negotiations between Congress and the White House.
Pay Raise Details
Some may ask how publications arrive at the estimated 2.7% pay raise months prior to the DoD budget release–how do publications know when so much of the DoD budget for 2022 isn’t quite available yet? In October of 2020, the U.S. Employment Cost Index was released to the public; this index is one of the very first signs of what military members might be able to expect from pay raises in 2022.
The data in that index pointed to a 2.7% pay raise with the caveat that this can always be altered by Congress or by the President. If there is no intervention from those sources in a given fiscal year, the pay raise is based on the regulations found in Title 37 of the United States Code, Chapter 19.
Typical Next Steps for a Military Pay Increase:
- Winter/Spring: The DOD Fiscal Year 2022 Budget Proposal is released
- Spring/Summer – House & Senate Armed Appropriations Committees evaluate the defense budget
- Fall/Winter – House & Senate come to agreement and pass the defense budget
- Fall/Winter – The defense budget is signed into law by the President
By law, the NDAA should be enacted before the start of the next fiscal year on October 1, but the deadline is often missed, and Congress passes Continuing Resolutions (CR) to keep the military operating under the previous year’s budget.
Basic Needs Allowance for Low-Income Military Families
The House Armed Services Committee has also included the creation of a new basic needs allowance for low-income service members as part of their draft of the defense bill. This would create a monthly allowance for military families who have an income at or below 130 percent of the federal poverty rate. An E-3 with a spouse and two children and only that income for their household would qualify for the allowance. The allowance could equate to roughly $250 extra a month.
In the past, qualifying families have been eligible for food stamps or other state low-income assistance such as Supplemental Nutrition Assistance (SNAP) benefits. However, changes in recent years to the formulas have counted other military payouts such as Basic Allowance for Housing, or BAH.
How Annual Military Basic Pay Raises Are Calculated
Under current law, military pay raises are by default, set to equal the percentage change in the U.S. Employment Cost Index (ECI). It is a formula for an automatic annual increase in Basic Pay that is indexed to the annual increase in the ECI for Private Industry Workers. However, the President and Congress can enact increases that are above the ECI. The President, by law Title 37, Chapter 19, Section 1009, has the authority to specify an alternative pay adjustment that supersedes the automatic adjustment.
Basic pay is the largest component of military service members’ cash compensation. Non-taxable allowances for housing and food make up most of the remainder of that compensation.
ECI Increase for 2022
The 2022 military Basic Pay raise under the automatic statutory ECI formula is 2.7 percent. This is based on the ECI formula for wages and salaries that increased 2.7 percent for the 12-month period ending in September 2020. Again, the president, Congress and the Defense Department are not strictly bound by the ECI.
Actual increases in Basic Pay can be different, depending on presidential or congressional action. Typically the ECI plays a major factor in the final Basic Pay increase. For example, the FY2021 NDAA requested a 3.0% increase in basic pay which matched the automatic ECI statutory formula of 3.0%.
About the Economic Cost Index (ECI)
The Employment Cost Index (ECI) is a quarterly economic series that details the growth of total employee compensation. The index is prepared by the Bureau of Labor Statistics (BLS), a unit of the United States Department of Labor (DOL). It is based on a survey of employer payrolls conducted by the BLS in the final month of each quarter and measures the change in the cost of labor, free from the influence of employment shifts among occupations and industries.
ECI measures annual and quarterly percentage increases for three different populations — “private industry workers,” “state and local government workers” and a combination of those two called “civilian workers.”
ECI differs from the Consumer Price Index (CPI-W), which is used to determine pay increases for social security, retired military, and VA benefits recipients via Cost of Living Adjustments (COLA). CPI-W is tied to inflation.
Historical Military Pay Raises by Year
|Year||Military Pay Raise %||Year||Military Pay Raise %|
|1996||2.40%||1965||E: 11% O:6%|
|1995||2.60%||1964||2.5% - 8.5%|
* 2002, 2003, 2004, and 2007 are the average percentage raise as military pay raises differed for various military pay grades.
2022 military pay increases are for all branches of the U.S. Armed Forces; Air Force, Army, Coast Guard, Marines, Navy, Space Force and Reserve forces where applicable.