Military Compensation versus Civilian Compensation
The advantages of a career in the U.S.military greatly outweigh working in a civilian career when considering compensation such as education, salary, health care, and retirement.
In today’s economy, everyone is looking to receive the most from his or her employer. A person wants a salary that can provide for his or her family, a healthcare plan with little out-of-pocket cost, retirement benefits to plan for the future, and an education that makes it all that possible.
The military offers exemplary tuition assistance and salary when benefits such as the basic housing allowance are taken into consideration. In the same way, the military’s retirement plans and health care benefits are superior to that of civilian employers because of its low cost. The following will compare military compensation to civilian compensation, and why a career in the military provides a superior benefit package. Although there are some benefits to civilian compensation packages, the military offers the best educational program. Few civilian employers offer tuition reimbursement for employees.
Those that do offer tuition reimbursement; require that the employee pay the cost of tuition up front and complete the class before receiving reimbursement. The employee must also maintain a certain grade point average (GPA) to qualify for tuition reimbursement. Once an employee has completed his or her education, the employer often requires the person to remain employed for a certain amount of time after receiving tuition reimbursement. If the employee terminates employment before the agreed upon timeframe, the employee may have to repay tuition reimbursement funds, (Smith, 2008).
Unlike civilian employers, the military offers a superior education program called the GI Bill. The GI Bill pays full tuition and fees to the school, a monthly housing allowance, and an annual books and supplies stipend, (U. S. Department of Veteran Affairs, 2011). In the same way, The GI Bill requires that the service member maintains a certain GPA and consequently, if a service member fails to complete or pass a class, he or she must reimburse the Veteran Affairs Educational Department. An additional advantage of The GI Bill is the ability to relinquish benefits to a spouse or a child.
Therefore, by choosing a career in the military a person has many more opportunities to advance his or her education versus choosing a civilian career, where educational opportunities are limited. Admittedly, there are some benefits to the civilian compensation structure, the total military compensation package is better. According to “Entry Level Salary” (n. d), the average salary for an entry-level civilian position is $37,000. 00 per year, whereas as entry-level military base salary is $16,000. 00 per year, (Dyer, 2008).
Compensating for low salaries, the military offers sign on bonuses of up to $40,000.00, (The Scoop On Army Enlistment Bonuses, 2010), basic housing allowances, basic allowance for subsistence, overseas pay when stationed in another country, and hazard duty pay when deployed to a hazardous theater. Another significant difference between the two employers is how wage increases and promotions are received. The majority of civilian employers use annual performance reviews to reward employees with a pay raise or a promotion whereas military service members must meet time in service, time in grade, performance and education standards to receive a promotion and a raise.
In conclusion, the military does receive a better compensation package when bonuses, basic housing allowance, and other itemized pay are taken into consideration. While civilian and military employers both offer similar retirement plans, military employees have a more cost-efficient plan. Civilians have two types of retirement plans to choose from: a defined-benefit plan and a defined-contribution plan. Defined-benefit plans have a pension of some kind that the employer pays for and a defined-contribution plan is typically a 401k that an employee invests his or her own money in to, (The CNA Corporation, 2008).
Becoming eligible for a defined-benefit plan requires that employees work for the company for a minimum of five years; however, retirement payouts are larger the longer an employee stays with a company. Civilian employees must also wait until at least age 62 to retire and can retire anytime between the age 62 and 70; however, retirement benefits are reduced when an employee retires early. Military retirement plans are very different from their civilian counterparts, in that military service members do not invest any money into their retirement plan.
After 15 years of service a military employee can choose between two plans: a standard High-3 plan or a Redux retirement plan. The standard High-3 plan bases retirement pay on the highest average basic pay for 36 months of a service member’s career. Choosing the Redux retirement plan, a service member will receive a $30,000. 00 bonus, a percentage-based annuity, and basic pay. Military employees can retire after 20 years of service, so the average age of a service member at retirement is age 40. Another remarkable benefit that military service members can use for retirement is a thrift savings plan that resembles a civilian 401k.
The most significant difference in a thrift savings plan is that the military does not match any employee contributions. By not matching what a service member invests into a thrift savings plan the employee can contribute more money into a tax-deferred plan than he or she could contribute to an individual retirement account, (The CNA Corporation, 2008). By not contributing to a retirement plan, military service members will save more money and be able to invest more toward a future than civilian employees.
Although military and civilian employers both offer health care benefits, the benefits offered by the military are more cost efficient. Civilian employer’s health care packages require an employee to pay an average annual premium of $13,000. 00 to cover a family’s health care. Employees must also incur the cost of copays, an amount a person pays at the time of service; and deductibles, an amount that the insured person must meet before health benefits are used. When choosing a doctor, hospital, or specialist; a civilian healthcare plan has several limitations to overcome.
On the contrary, active duty service members pay no premiums, copays, or deductibles for health care benefits. Unlike civilian employers, the military offers health care benefits to reserve (part-time) service members, veterans, and retired personnel at low-cost, affordable rates and service members can use any doctor, hospital, or specialist that accepts TRICARE, the military’s main healthcare provider. The government is working on raising the standards of civilian health care to the more cost-efficient plan the military has incorporated; however, there is still much to accomplish.
In conclusion, when choosing a compensation package based on education, salary, retirement, and health care; the military offers a superior compensation package than that of a civilian career. Choosing a military career will not only provide compensation and health care to take care of a family, it will provide a retirement plan for the future and an education to better oneself. Most of all, when looking at civilian and military compensation packages side-by-side a potential employee can determine that the best option is a military career for its stability and cost-efficient compensation packages.