BUDGET MATTERS: Pentagon Personnel Costs at Historic High.

• Author: Harper, Jon

* Since 9/11, personnel-related expenditures have ballooned for the Defense Department. While reining in such costs could free up money for modernization, doing so would come with political and manpower risks that may give policymakers pause, analysts say.

The total cost of military personnel includes regular pay and special pay, plus other benefits such as health care, retirement, housing and subsistence allowances.

Last year, the Pentagon employed about 1.4 million activeduty troops and 800,000 civilians and maintained a reserve component of more than 800,000 members, according to a new Center for Strategic and International Studies report by defense budget analyst Seamus Daniels, "Assessing Trends in Military Personnel Costs."

"While today's U.S. military is near its smallest size since the end of World War II in terms of active-duty end strength, personnel costs are at a historic high--surpassed only by the height of operations in Iraq and Afghanistan," Daniels wrote. "Left unaddressed, high personnel costs may limit resources for Department of Defense modernization initiatives and could threaten the long-term sustainability of the force."

Between fiscal years 2000 and 2012 during the peak of the Afghanistan and Iraq Wars, the average cost per service member increased a whopping 64 percent--adjusted for inflation--while the average cost per Defense Department civilian grew by over 25 percent. The average cost per active-duty service member is now close to $140,000, while total personnel-related costs--including costs for running the Defense Health Program, family programs and other initiatives--exceed $200 billion, according to the study.

Drivers of this cost growth include military pay raises above the Employment Cost Index--which measures private sector labor costs--as well as increases in housing, health care and retirement payments, the report said.

Regular military compensation now substantially exceeds the Pentagon's benchmark goal of the 70th percentile of earnings for civilians--or the point at which 30 percent of comparable civilians would earn more, according to a recent report by the Congressional Budget Office, "Alternative Approaches to Adjusting Military Cash Pay."

In 2020, the Defense Department spent about 25 percent of its $630 billion base budget on cash pay and benefits for current service members, according to CBO.

"In 2018, regular cash pay for enlisted personnel was at roughly the 90th percentile of the earnings of...