This report investigates the military/civilian pay gap and its implications for capping military pay increases. The pay gap is defined as the percent difference in military versus civilian pay growth as measured from a given starting point. The index currently used for civilian pay growth is the Employment Cost Index (ECI), which reflects pay growth in the civilian labor force at large. The authors instead recommend measuring civilian pay growth for the subset of civilian workers whose composition by age, education, occupation, gender, and race/ethnicity represents that of active duty military personnel. The authors do so via construction of a Defense Employment Cost Index (DECI). They compare pay gaps based on the ECI vs. the DECI, and present DECI-based pay gaps for officer and enlisted personnel by gender and seniority and for occupational and age categories. The authors then consider the implications of these pay gaps for capping military pay.

"Prepared for the Assistant Secretary of Defense (Personnel and Readiness)"--T.p. "National Defense Research Institute"--T.p. "MR-368-P & R"--Cover.

Introduction / Pay gap comparisons. The ECI and the DECI -- Three guidelines for pay gap comparisons -- Overall pay gap: ECI versus DECI -- Many kinds of gaps exist -- Pay gaps for enlisted personnel and officers -- Pay gaps by occupation -- Pay gaps by age group -- Summary of pay gap results / Implications for pay caps / Appendix A: pay gap comparison between three-way and five-way DECIs -- Appendix B: correspondence between military/civilian pay ratios and enlisted recruit quality and retention -- Appendix C: military-civil service pay adjustment linkage: legislative background, 1967-1993.