United States military members will likely see their largest-ever pay increase in 2023 – a 4.6% hike, based on the Bureau of Labor Statistics’ Employment Cost Index (ECI).
The White House has not yet released a 2023 defense budget proposal. Actual increases in basic pay may be different, depending on presidential or congressional action.
Basic pay is the largest component of military service members’ cash compensation. Non-taxable allowances for housing and food make up the remainder.
How the 2023 Military Basic Pay Raise is Calculated
The ECI heavily influences final enacted increases to military basic pay.
Federal law (Title 37 USC chapter 19, section 1009) has tied military pay increases to ECI since 2003. Deviations from the ECI require Congressional or Presidential intervention, which last occurred in 2016.
Final military pay increases are subject to change based on the passage of the 2023 Defense Budget and negotiations between Congress and the White House.
Next Steps for 2023 Military Pay Increase:
- Winter/Spring 2022: DOD will release its fiscal year 2023 budget proposal
- Spring/Summer 2022: – Congressional Appropriations Committees will evaluate the defense budget.
- Fall/Winter 2022: – Congress agrees upon a budget and passes it.
- Fall/Winter 2022 – The President signs the defense budget into law.
By law, Congress must present a budget for the president to sign before the Oct. 1 start of each fiscal year, but has frequently missed the deadline in recent years. When that happens, Congress passes a continuing resolution to keep the military operating under the previous year’s budget while debate continues.
ECI Increase for 2021 – 2022
The fiscal year 2021 NDAA requested a 3.0% increase in basic pay which matched the automatic ECI statutory formula of 3.0%. Proposed military pay increases for fiscal year 2022 match the ECI formula for wages and salaries which increased 2.7% from September 2019 to September 2020.
About the Economic Cost Index (ECI)
The Employment Cost Index (ECI) is a quarterly economic series that details total employee compensation growth across the United States.
A unit of the United States Department of Labor called the Bureau of Labor Statistics creates the index by surveying employer payrolls each quarter. The surveys measure 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 determines pay increases for social security, retired military members, 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||2.4%||1965||E: 11% O: 6%|
|1995||2.6%||1964||2.5% - 8.5%|
* 2002, 2003, 2004, and 2007 are average percentage raises, as military pay raises differed by pay grade at the time.
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.