Acting smartly on military compensation

Over the past ten days, Congress has received two reports that, taken together, raise the possibility of changing regular service-member’s compensation in favor of preserving layers of management above them and the missions those managers assign to them. Small surprise that their representatives in Congress are dubious about the idea.

The Pentagon faces a classic management-labor dispute, and Congress can overcome it only by stepping into the role of arbiter and requiring some compromise by both parties. Among those compromises, Congress should pair any changes to military compensation with a demand that the Pentagon follow through on the headquarters cuts that then-Secretary Leon Panetta ordered eighteen months ago.

{mosads}Much attention last week went to the Military Compensation and Retirement Modernization Commission’s final report.  It recommended fifteen reforms, the most sweeping of which include asking new service-members to contribute to their retirement benefit and replacing the current health care system for Reservists, National Guards, military families, and working-age retirees with an allowance that they can use on the commercial market. The Commissioners emphasized that they were not driven by budgetary concerns, yet they also project that their retirement and health care plans would save the Pentagon over $8.5 billion per year when fully implemented.

These general ideas are neither new nor usual. Eleven “Quadrennial Reviews of Military Compensation” have preceded them and, as this Commission notes, other commissions on military compensation reported out in 1978 and 2006. 

There’s good reason for the longstanding attention.  “83 percent of all enlisted personnel and 51 percent of officers receive no retirement savings for their service,” the Commission writes.  They intend for a reformed retirement system to include many more service-members and also to produce savings. Meanwhile, the Commission expressed concern that the Pentagon “decided to reduce TRICARE Prime [health care] service areas” and projected that switching to an allowance can improve members’ health care access as well as generate savings.

Politics has stood in the way of these changes, but not of the partisan sort. Congress members from across the aisle have little interest in upsetting the compensation balance for service-members in their districts, even if some of the details are attractive, because change can be scary and uncertain for them.  Just as importantly, bureaucratic politics within the Pentagon are totally out of balance on this issue.

A Government Accountability Office report highlighted this imbalance several days before the Commission made its recommendations. Investigators recalled a July 2013 order from then-Defense Secretary Leon Panetta to cut headquarters budgets by 20 percent and critiqued the Pentagon for asking to delay a report on its progress by several months last year. Here’s the kicker – the report never came.  As a result, GAO concluded that Pentagon headquarters “have not systematically determined how many personnel they need to conduct their missions.”

In a recommendation that should raise eyebrows, the Military Compensation and Retirement Modernization Commission even proposed a new headquarters, to be called the Joint Readiness Command, and paradoxically suggested that it emphasize medical readiness even though Congress has already created a joint medical task force from the merged Walter Reed Army Hospital and Bethesda Naval Hospital.

This is the context in which Congress has been asked to consider major changes to the military compensation system.  Options for adjusting service-members’ compensation are clear down to the technical details, yet the Pentagon is six months past due on a plan for streamlining the managers that set these service-members’ workload.  In practical terms, this would amount to taking money from military compensation and giving it to management.

Management isn’t cheap. GAO focused its case study on the several thousand people that work in for the Defense Secretary or in the one of the military services’ front office, but those people have a ripple impact way beyond their own desks. Like in any organization, managers set priorities for workers, and more managers means more priorities that workers have to meet. 

Following through on Leon Panetta’s headquarters cut would require the remaining managers to be much more disciplined in setting priorities for the military. That creates the real savings because it begins to relieve the very weighty workload that service-members have carried for so long. 

Congress has shown little willingness to think critically about military compensation in recent years. Even chartering the Military Compensation and Retirement Modernization Commission, rather than dealing with the issues directly, is a symptom. Now the free money that made these dodges possible is harder to find, but the connection between pay and workload remains essential, and overlooking it only aggravates the friction between management and labor within the Pentagon. If Congress chooses to change service-members’ compensation, it should require the Pentagon to follow through on Leon Panetta’s headquarters cut at the same time.

Leatherman is an adviser at the Stimson Center.