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Most Reserve, Guard Members Earn More, Not Less, in Uniform

By Donna Miles
American Forces Press Service

WASHINGTON, Jan. 26, 2006 – Despite general perceptions that National Guard and Reserve troops lose income when called to active duty, most actually earn more in uniform than as civilians, a new Rand Corp. study reveals.

The nonprofit research organization's study, commissioned by the Defense Department and released yesterday, shows that 72 percent of the more than 100,000 troops surveyed saw their earnings jump 25 percent when called to active duty. Their average pay hike amounted to about $10,000 a year, Rand officials said.

However, Rand researchers also found that 28 percent of reservists studied lost pay after being called to active duty. About one-fifth of the survey group lost 10 or more percent of their normal income.

DoD commissioned the study to determine the financial impact of mobilization and deployment on reserve-component members, Army Lt. Col. Bob Stone, DoD reserve affairs spokesman, told American Forces Press Service. Survey results and anecdotal reports had suggested that a large fraction of mobilized National Guard and Reserve members lost income while serving on active duty, but DoD wanted empirical evidence, Stone said.

The study shows that while some reserve-component members lose money during mobilization and deployment, many are actually better off financially, Stone said.

"Our findings contradict the prevailing belief that most reservists lose pay when called to active duty," said Jacob Klerman, a Rand senior economist and lead author of the study. "But there is a group of reservists who experience a drop in income when activated."

Rand researchers based their findings on a review of pay records of more than 110,000 Army and Air Force reservists mobilized in 2001 and 2002. The calculations factor in military pay and allowances and the fact that those received in a combat zone aren't subject to federal taxes, Rand officials said. The study does not account for any salaries or benefits mobilized reserve members may continue to receive from civilian employers while serving on active duty.

The new study found that average earnings increase and the percentage of reservists who experience earnings losses drops the longer reserve-component members serve. For example, reservists who served for 270 or more days in a year saw their earnings jump by an average of 44 percent over normal pay, the study showed.

However, about 17 percent of reservists who served on active duty for a similar duration lost 10 or more percent of their normal wages.

The results suggest that recent increases in military pay and benefits for servicemembers, as well as enlistment and re-enlistment bonuses, are helping bridge gaps between military and civilian pays, Stone said. New legislative authorities provided for in the 2006 defense budget, including a measure to help make up income shortfalls for mobilized reserve members, are expected to further reduce financial hardships related to military service, he said.

The latest Rand findings contrast with those of a May 2004 survey of reserve pay. That study, conducted by the Defense Department, found that 51 percent of Reserve and Guard troops reported an earnings loss when serving on active duty. Of those, 44 percent reported a loss of 10 or more percent, and 21 percent reported 20 or more percent income losses.

Rand officials say the discrepancy boils down to how income is defined. DoD's 2004 survey compared before-tax income before and while serving on active duty. The Rand study also took into consideration tax advantages for troops serving in a combat zone. In addition, the DoD study was based on voluntary participation and as a result, may not be representative of all reservists, the Rand study noted.

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