February 11, 2010

Does The Military Pay Well?

When I was in high school I seriously thought about joining the military.   It didn't end up happening for a number of reasons.    Military pay wasn't one of the things I thought about at the time.   There are a variety of compelling things about military service but the pay isn't often considered to be one of the pros of the military.  

The Army has a page discussing compensation and doing a comparison between Army pay and civilian jobs.    I'll look at the Army specifically but the numbers should apply equally to the other services.  Someone correct me if I'm wrong but my understanding is that military pay structure is standard across the services so the pay for Navy, Marines and Air Force should be the same for a given pay grade and general situation.

If you look at the Officer job comparison they have compared a civilian "Telecom Engineer II" with a Lieutenant with 4 years service.   Their bottom line is that the civilian engineer would end up with $52,652 and the Army Lieutenant would walk away with $68,149.   Engineers are well compensated jobs so they are comparing to a highly compensated career field.   The Army job comes out well ahead.   However this is a recruiting website so I think their claims should be taken with a grain of salt.  

Lets look a little closer at their compensation figures..

Civilian job Compensation:
Wages = $64,752 
Health Care = -$12,100
Total = $52,652

The wages are pretty realistic.  I found alternate source from Payscale.com for wage information for electrical engineers based on years experience.  They have the median pay for 1-4 years at $53,844 to $67,249 and for 5-9 years at $61,477 to $80,977.   So making $64,752 at 4 years seems about right roughly speaking.

The health care figure is inflated.   People do not pay $12,100 out of pocket on average.   This USA Today article on health care costs says the average family total premium cost is $13,375 but that "The average employee with family coverage paid 26% of the premium".   So your out of pocket costs would average only $3,477.   They inflated the cost of the health care by stating the full amount of the insurance costs, yet most of that is paid by the employer.

If you adjust for the inflated health care cost then the total compensation for the civilian job would actually be $61,275.

Now lets look at the Army officer.

Army Lieutenant Compensation

Salary = $47,908
Housing =  $13,092
Food Allowance = $2,433
Special Pay = $1,800
Tax Advantages = $2,916
Health care = $0
Total =  $68,149

The housing and food allowances are dependent on the assumption that you are married with children.
You can find the current housing allowance with this page.    The figure they give is for Kansas City, Mo and its for 2008 with dependents.    The 2010 number for dependents is $14,616 and no dependents is $12,744.

Current food allowance is found on this page.   For 2009 the rate for officers is $223 a month or $2,676 for the year.    You may or may not get special pay and that depends on your specific service duties. 

Looking at the minimum you might get I would assume the housing allowance with no dependents and then remove the special pay.    That would result in total pay range of $66,244 to $69,916.

There are pay other bonuses that the military jobs may qualify for such as hardship duty, foreign language proficiency or flight pay.

Bottom line, the Army officer job is well compensated compared to a civilian job when you include the housing and food allowances and other bonuses.

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