I tend to agree that the total compensation package that the military offers these days, is pretty damn good.  I have yet to work for a company that has offered the same benefits that the military has to offer.  If anything, the only reason why salary is more for contractors, is because of this fact.  Not to mention that many companies that use independent contractors do not offer retirement plans or medical plans.  Nope, when you cut away from the military umbilical cord, you are on your own.  That is why I tell guys to save your pennies, because you never know how long your contract will last or even how long your company will be around.

   And to add further to this article, I know of some contractors that have gone back to the military.  One of the reasons for that is stability for their family, or to get certifications that are tough to get anywhere else (like clearances).  Some guys join up in Guard units so they can serve and be a contractor at the same time.  That is an optimum set up, but you don’t have much of a personal life with that one.

   Finally, there are the tax incentives of military versus contractor.  If a contractor does not get their 330 days overseas, or is not able to claim residency in a foreign country, they will be taking a huge hit in taxes.  Some guys are able to get their 330 days, but many are not able to enjoy the foreign earned income tax credit.  The reason for that is a family emergency or the company just doesn’t have enough work for you to stay overseas for that long.  Or your contract could end. There is a number of things that could happen to you last minute, that could screw up your plans for taxes, and it pays to be prepared. –Matt

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Military pay competitive with private sector

April 30, 2010WASHINGTON: Military compensation is competing well against the private sector, as evidenced by the high rate of recruitment and retention, a Defense Department official told a Senate subcommittee today.

Therefore, the department is focusing on targeted special pays and bonuses as an efficient means to give incentives for people to sign up for hard-to-fill and hard-to-retain specialties, William J. Carr, deputy undersecretary of defense for personnel policy, told the Senate Armed Services Committee’s personnel subcommittee.

Using regular military compensation – basic pay combined with housing and food allowances and federal tax advantages – as a comparison, military members are paid higher than 70 percent of their private-sector peers of similar education and experience, Carr said.

A $340 million investment in such pays could provide $30,000 bonuses to more than 11,000 servicemembers the military especially needs, Carr said, while the same amount would buy only a 0.5 percent across-the-board basic pay raise for all servicemembers. At the same time, however, it is important to ensure regular compensation remains competitive, he said, noting the department’s request for a 1.4 percent across-the-board pay increase for next year.

Carr called specialty and incentive pays “essential,” especially for special operations forces and people with medical, dentistry, mental health, aviation and nuclear skills. The services paid out $6.4 billion in specialty pays last year, comprising 4.4 percent of the personnel budget. The department is requesting $5.6 billion for 2011.

The decrease does not mean such targeted incentives are less important, Carr said. Rather, he explained, it reflects less need to use them during the slow economic recovery.

When recruiting and retention dropped in the strong job market of the late 1990s, Congress and Defense Department officials reacted quickly, Carr said. Since 2002, pay has risen 42 percent, housing allowance has gone up by 83 percent, and the subsistence allowance has grown by 40 percent, he said, compared to a 32 percent rise in private-sector salaries.

Three outside military experts – Brenda Farrell of the Government Accountability Office, Carla Tighe Murray of the Congressional Budget Office and James Hosek of the RAND Corporation think tank’s national security division – testified with Carr and agreed that the overall military compensation package compares well against the private sector, with some studies placing military compensation equal to or greater than 80 percent of their civilian counterparts.

Virginia Sen. Jim Webb, a former Navy secretary who chairs the subcommittee, said military pay has risen dramatically in the three decades of the all-volunteer force.

Story here.