U.S. Armed Forces Earnings

The earnings structure for military personnel is shown in table 4. Most enlisted personnel started as recruits at Grade E-1 in 2007; however, those with special skills or above-average education started as high as Grade E-4. Most warrant officers had started at Grade W-1 or W-2, depending upon their occupational and academic qualifications and the branch of service of which they were a member, but warrant officer typically is not an entry-level occupation and, consequently, most of these individuals had previous military service. Most commissioned officers started at Grade O-1; some with advanced education started at Grade O-2, and some highly trained officers—for example, physicians and dentists—started as high as Grade O-3. Pay varies by total years of service as well as rank. Because it usually takes many years to reach the higher ranks, most personnel in higher ranks receive the higher pay rates awarded to those with many years of service.

In addition to receiving their basic pay, military personnel are provided with free room and board (or a tax-free housing and subsistence allowance), free medical and dental care, a military clothing allowance, military supermarket and department store shopping privileges, 30 days of paid vacation a year (referred to as leave), and travel opportunities. In many duty stations, military personnel may receive a housing allowance that can be used for off-base housing. This allowance can be substantial, but varies greatly by rank and duty station. For example, in fiscal year 2007, the average housing allowance for an E-4 with dependents was $1,151.24 per month; for a comparable individual without dependents, it was $910.66. The allowance for an O-4 with dependents was $1,856.97 per month; for a comparable individual without dependents, it was $1,611.69. Other allowances are paid for foreign duty, hazardous duty, submarine and flight duty, and employment as a medical officer. Athletic and other facilities—such as gymnasiums, tennis courts, golf courses, bowling centers, libraries, and movie theaters—are available on many military installations. Military personnel are eligible for retirement benefits after 20 years of service.

The Veterans Administration (VA) provides numerous benefits to those who have served at least 24 months of continuous active duty in the Armed Forces. Veterans are eligible for free care in VA hospitals for all service-related disabilities, regardless of time served; those with other medical problems are eligible for free VA care if they are unable to pay the cost of hospitalization elsewhere. Admission to a VA medical center depends on the availability of beds, however. Veterans also are eligible for certain loans, including loans to purchase a home. Veterans, regardless of health, can convert a military life insurance policy to an individual policy with any participating company upon separation from the military. In addition, job counseling, testing, and placement services are available.

Veterans who participate in the Montgomery GI Bill Program receive education benefits. Under this program, Armed Forces personnel may elect to deduct up to $100 a month from their pay during the first 12 months of active duty, putting the money toward their future education. In fiscal year 2007, veterans who served on active duty for 3 or more years or who spent 2 years in active duty plus 4 years in the Selected Reserve received $1,075 a month in basic benefits for 36 months of full-time institutional training. Those who enlisted and serve less than 3 years received $873 a month for 36 months for the same. In addition, each service provides its own contributions to the enlistee’s future education. The sum of the amounts from all these sources becomes the service member’s educational fund. Upon separation from active duty, the fund can be used to finance educational costs at any VA-approved institution. Among those institutions which are approved by the VA are many vocational, correspondence, certification, business, technical, and flight training schools; community and junior colleges; and colleges and universities.