In a step toward evaluating whether military compensation has been effective and efficient in addressing cost-of-living changes, the authors explore the extent to which military compensation growth has kept up with cost-of-living changes over time, across geographic areas, and across subgroups of soldiers, using data from 2018 to 2022.

Differences in Cost of Living and Military Pay Growth for Army Personnel

Beth J. Asch, Jessie Wang

ResearchPublished Apr 16, 2025

Army personnel costs are a significant part of the Army’s budget. Given force size, grade, and experience mix, the major driver of personnel costs is military compensation, which includes basic pay, allowances, special and incentives pays, retirement accrual, and an array of other benefits. Military compensation is used by the U.S. Department of Defense as a strategic human resources tool to attract, retain, and motivate high-quality personnel to stay, seek advancement, and eventually separate from service.

Between 2000 and 2020, military basic pay grew faster than inflation, by 70.7 percent versus a 51.9 percent increase in the Consumer Price Index. Since 2021, however, cost of living has been particularly salient in discussions about the adequacy and cost of military compensation, owing to historic rates of inflation nationally and to uneven rates of inflation across geographic areas.

In a step toward evaluating whether military compensation has been effective and efficient in addressing cost-of-living changes, the authors explore the extent to which military compensation growth has kept up with cost-of-living changes experienced by Army personnel from 2018 to 2022, across geographic areas and across subgroups of soldiers.

Key Findings

  • From 2018 to 2020, Army pay growth exceeded the change in cost of living nationally. However, in 2021 and 2022, exceptionally high inflation levels resulted in cost-of-living increases that exceeded the growth in Army pay nationally.
  • The results differed geographically; some installations, such as Joint Base Lewis-McChord in Washington, experienced significantly slower pay growth than cost-of-living growth since 2020, while others, such as Fort Eisenhower (formerly Fort Gordon), experienced faster pay growth than cost-of-living growth despite high inflation, meaning soldiers assigned to the latter installations had an increase in purchasing power despite high inflation.
  • Married individuals and those with more dependents experienced a greater loss of purchasing power in 2021 and 2022 than never-married soldiers or those without dependents.
  • The loss of purchasing power was greater for enlisted personnel than for officers in 2021, but the loss was about the same for enlisted personnel as it was for officers in 2022. On the other hand, pay growth exceeded cost-of-living growth in 2018 for all grades, with the biggest gain in purchasing power occurring for enlisted soldiers compared with officers.

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Asch, Beth J. and Jessie Wang, Differences in Cost of Living and Military Pay Growth for Army Personnel, RAND Corporation, RR-A2149-1, 2025. As of April 30, 2025: https://www.rand.org/pubs/research_reports/RRA2149-1.html

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Asch, Beth J. and Jessie Wang, Differences in Cost of Living and Military Pay Growth for Army Personnel. Santa Monica, CA: RAND Corporation, 2025. https://www.rand.org/pubs/research_reports/RRA2149-1.html.
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This research was conducted within the Personnel, Training, and Health Program of RAND Arroyo Center.

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