Free Essay

Negatives of Pay Raise Cap

In: Other Topics

Submitted By acursi15
Words 1085
Pages 5
Negatives of a Pay Raise Cap
Andrew Cursi
215
July 14, 2014
Daria Woodside

Negatives of a Pay Raise Cap
While the potential money saved by putting a cap on military pay raises might seem appealing, it would have a negative impact on the Armed Forces and their members. Putting a limit on military pay raises could and more than likely will affect how well the military recruits and retains members. Not only that, but it will have a direct impact on military members now and in their future.
When a potential soldier, airman, sailor, or marine steps into a recruiter’s office, it is essentially like stepping onto a car dealer’s lot. They immediately start trying to sell the military to the potential recruit, informing them of all the pay and benefits that come along with being in the Armed Forces. One of those benefits is a steady pay raise each year to account for the increase in the cost-of-living. According to the Social Security Administration, the cost of living for the past three years has increased by 1.5%, 1.7%, and 3.6% for the years 2013, 2012, and 2011 respectively (Cost-of-Living Adjustments, n.d.). In the past, Congress has taken that increase in the cost-of-living into account and increased military pay accordingly. The military pay increases for the past three years were 1.7%, 1.6%, 1.4% for the years 2013, 2012, and 2011 respectively according to Navy CyberSpace (U.S Military Basic Pay History, 2014). So, with the exception of 2011 where the pay increase was over 2% less than the cost-of-living increase, the pay increases and cost-of-living increases have been fairly similar.
For any possible recruit thinking about the long term, knowing that they will get a pay raise each year to help offset the increase in living costs is appealing. According to Military.com, more than 180,000 people enlist in the Armed Forces each year (10 Steps to Joining the Military, n.d., para. 1). The military has been able to sustain that recruitment rate despite the burden of being involved in a war since 2001 (Tilghman, 2014, para. 8). It is impossible to know how many of that 180,000 would pass up enlisting if they were told that, “Every year the cost-of-living is going to increase; however, the military is not going to be able to compensate you for that increase. So, eventually you will not get paid enough to support the cost-of-living.” If the military pay raise is capped, how many current enlisted members will recognize that soon they will not be able to live in this economy on their current salary? Once that happens, those members will be forced to either get a second job to account for that cost-of-living difference or separate from the military in pursuit of a better paying career.
According to an article on MilitaryTimes.com, “The House Appropriations Committee’s defense panel funded a 1.8% pay raise for troops for 2015, a move that would keep military pay in line with the most recent increase in private-sector wages” (Shane, 2014, para. 2). That essentially means that the military pay raise would compare to what private companies give to their employees to supplement the cost-of-living increase. However, the House and Senate Armed Services committees authorized a 1% pay raise for 2015, keeping the military pay raise below private-sector wage growth for multiple years to come (Shane, 2014, para. 4). There is also a concern for a potential return to the large military-civilian pay gaps that occurred in the 1990s, which will only make recruiting and retaining members of the Armed Forces even harder (Shane, 2014, para. 11). Basically, what that means is while their civilian counterparts continue to receive pay increases to offset the cost-of-living, military members, who volunteered to serve and defend the country, will continue to make less and less than if they were working in the civilian sector.
For an E-3 with three years of service, the .8% difference equals about $195 a year (Shane, 2014, para. 9). While that may seem largely insignificant compared to the $12 billion expected to be saved over five years by capping the pay raise at 1%, certain factors should be considered for the members of the Armed Forces (Shane, 2014, para. 4). The amount of $195 a year equals a little over $16 a month. Due to the strict dress and appearance standards that the military upholds, troops are required to get more frequent haircuts than a civilian might. The average person in the military will get a haircut twice a month in order to maintain a professional military image. Depending on where they get their haircut, the cost can range from about $8 to about $16. If that amount is paid twice a month every month for haircuts that are required, then that $16 a month starts to sound necessary. At least from a military member’s perspective, having one less burden to worry about is very appealing.
Everyone knows that the government needs to save money and cut spending; however, this should be accomplished in an area other than cutting military pay and benefits. Decreasing military pay and benefits will directly or indirectly lead to a smaller, weaker, and demoralized force. Any sacrifices that may need to be made should not be made to the military, especially in a time of constant war. While the money military members will lose by capping the pay raise may seem insignificant on paper, take it from a military member - it most definitely is significant.

References
10 Steps to Joining the Military. (n.d.). Retrieved July 14, 2014, from Military: http://www.military.com/Recruiting/Content/0,13898,rec_step03_enlisted_officer,,00.html
Cost-of-Living Adjustments. (n.d.). Retrieved July 14, 2014, from Social Security Administration: http://www.apastyle.org/learn/faqs/cite-website-material.aspx
Shane, L., III. (2014, June 10). New wrinkle in 2015 pay raise debate. Military Times. Retrieved from http://www.militarytimes.com/article/20140610/NEWS/306100064/New-wrinkle-2015-pay-raise-debate
Tilghman, A. (2014, July 3). Pay panel appears wary of cutting compensation. Air Force Times. Retrieved from http://www.airforcetimes.com/article/20140703/BENEFITS02/307030047/Pay-panel-appears-wary-cutting-compensation
United States Military Pay Chart Archive. (2014, July 9). Retrieved July 14, 2014 , from Navy CyberSpace: http://www.navycs.com/charts/

Similar Documents

Premium Essay

Large Salaries of Pro Athletes Negative Effects on Athletes and Sports

...Large Salaries of Pro Athletes Negative Effects On Athletes and Sports Abstract This paper will explain the effects of the luxury contracts of athletes on sports as well as the athlete. The debate is whether the effect is a negative effect or not. This paper will aim to show how the contracts of athletes have changed significantly over time. It will also show how the pro athlete affect the sport of college in different aspects and if that helps or hurt the college athletics or influences it in a way to help the athletes. Then we will focus on how the salaries affect the players themselves. We take a look at today’s professional athlete and wonder what it be like to live like that. Even though the professional athlete is few in numbers, the popularity of such sports industries as the NFL, NBA, MLB and etc. are well documented by the lucrative pay days. The major sports industry is at least a 100 billion dollar business and growing. The athlete’s income only consist of a small percent of this amount, which leaves the majority to the industry itself. Though we must take into account the exploits of the professional athlete. The perception of today’s athlete has drastically changed from that of the last decade, and even as early as the 80’s. One of the major changes would be the drastic increase in the salaries paid to professional athletes. The high salaries have robbed what most would say the passion for the game that the athletes of early age played before the luxury...

Words: 1586 - Pages: 7

Premium Essay

B) Is Maximum Wage Legislation the Best Way to Reduce Unequal Distribution of Income?

...mean that there would be a cap on what different people could earn in different professions. For example a Doctor may be able to earn a maximum of £200,000 per annum whilst a footballer may be limited to £1 million per annum. Unequal distribution of income is were groups of the population are receiving a much higher income then others. For example in the UK the average income of 90% of the population as whole in 2012 was £12,969 whilst the top 10% was earning around £79,000 and the top 1% having an income of £271,888 [The equality trust income inequality in the UK report 2013]. There is an unequal distribution of the income here because the top 10% of the population are earning around 600% more then the rest of the population. Maximum wage legislation could help reduce unequal distribution for several reasons. The main reasons is due to the simple fact that if the people at the top of the pay chart were to have caps placed on their incomes, then their incomes would most likely fall to this cap or below it and therefore the difference between the top and lowest incomes would be reduced. This would be a good way of reducing unequal distribution of income because unlike a minimum wage this legislation would be unlikely to cost firms money but in-turn save them money. This is because the firms would gain the surplus of the money already being paid to employees in comparison to the cap whereas a minimum wage can sometimes mean that firms will have to pay their lower paid employees...

Words: 1283 - Pages: 6

Premium Essay

Miss

...with embedded options 10) Interest rate derivative instruments 11) Valuation of interest rate derivative instruments 2 • • 1. Features of Debt Securities • Issuers: – Central government (e.g. US government) – Government agency (e.g. Fannie Mae, Freddie Mac) – Municipal government (e.g. city of Detroit) – Corporation (e.g. Coca-cola) – Supranational government (e.g. World Bank) Categories of Fixed income securities 1. Debt Obligations: • Borrower promises to pay amounts x1…x2 at times t1…tn to Lender (creditor) • Interest and Principal 2. Preferred stock: • Ownership interest in a corporation • Priority over common stockholders Bond’s indenture: – Contains promises of the issuer and bondholder rights – Identifies a trustee as representative of the interests of bondholders – Contains covenants • • • • • • • Affirmative covenants – What borrower should do, e.g.: • Pay interest and principal on timely basis • Pay all taxes when due • Maintain all properties in good condition Negative covenants – What borrower is not allowed to do, e.g.: • Not to issue additional debt Term to maturity (maturity, term): years remaining – 1 to 5 years=short term – 5 to 12 years=intermediate term – More than 12 years=long term Par value: amount issuer agrees to repay at maturity –...

Words: 1576 - Pages: 7

Premium Essay

South Park Iv

...current market rents, Laflin would still need a great deal of growth in addition to a lower negotiated price to make this investment profitable. Question 2 Laflin’s setup suffers from some overly optimistic assumptions. His revised set up assumes a base rent of $200k, which would imply that the current tenants keep paying their current rents, when the tenants have actually explicitly stated they would only extend their rents if they could pay the market rate of $2.00 PSF. If Laflin were to find new tenants, he would incur additional expenses of $230k ($2.50PSF x 80,000 SF = $200k, 15% x $200k first year rents = $30k). Additionally, Laflin would then be exposed to the market vacancy rates, which his potential competitors’ show averages to about 16%. Furthermore, given that market rents are $2.00 PSF, new tenants would most likely only be willing to pay this lower rate. The only Hope Laflin would have is for the market to grow so he could raise the rents every year on new tenants (assuming they sign a lease which allows him to raise such rents). My model displays how Laflin’s setup changes if he takes into account the varying vacancy rates, and what price reductions he would have to ask for if he were to hope for a positive operating leverage. Question 3 Laflin’s decision to make an offer for the property will be based on his manipulation of various factors. Assuming New Tenants, Moderate...

Words: 987 - Pages: 4

Premium Essay

Cost Effectiveness in Risk Managment

...Linear Regression Analysis of cost effectiveness in risk management Group 8 Abstract This research study explores the possibility that relate cost effectiveness to management’s philosophy of controlling the company’s exposure to various property and casualty losses, after adjusting for company effects such as size and industry type. Using data provided by Professor Joan Schmit and are discussed in more detail in the paper, “Cost effectiveness of risk management practices,” Schmit and Roth (1990). The data are from a questionnaire that was sent to 374 risk managers of large U.S.-based organizations. Through primary analysis, we hypnotized that control variable CAP, control variable INDCOST, and control variable CENTRAL are positively associated with cost effectiveness, and control variable ASSUME, control variables SIZELOG, and control variables SOPH are negatively associated with cost effectiveness. By analyzing the qualities and quantities characteristics of the data, utilizing R to build linear regression models and compare them through R squares and residual analysis to decide the best one, and finally use the model to do interpretation and hypothesis tests to support our hypothesis and findings. Introduction 1. Research Background and Purposes In corporate business world, risk is the main cause of uncertainty in any organization. Thus, companies increasingly focus more on identifying risks and managing them before they even affect the business. The ability...

Words: 2194 - Pages: 9

Premium Essay

Case Study

...Nonprofit Organization Case Study – Community Action Program of Lancaster County Pennsylvania Melissa G. Hartman Liberty University – HLTH 635_B01 June 16, 2016   Nonprofit Organization Case Study – Community Action Program of Lancaster County Pennsylvania Introduction/Background Imagine not having a job or having a job that pays minimum wage or less, food insecurity, and a home in a neighborhood that is run down and considered unsafe. This is the scenario of what millions of Americans are living each and every day with some wondering what can they do to make their lives better. Poverty is defined as a state of being extremely poor and is determined by the federal poverty guidelines established by the U.S. Department of Health and Human Services.1,2 For a family of four, the federal poverty guideline to apply for federal assistance is $24,250.2 According to the nonprofit organization, Feeding America, which helps feed America’s hungry through a network of food banks, 46.7 million people are living in poverty in the United States.3 Specifically in Pennsylvania, 13.7 percent of people are living in poverty.4 Poverty in the United States is very real and unimaginable as because we are considered one of the wealthiest nations in the world. Although poverty in the United States is happening at rates that are hard to understand, it seems poverty in America is more about lack of basic necessities and lack of security to include food and housing.5 It is estimated that...

Words: 5973 - Pages: 24

Free Essay

Overpopulation

...Negative Effects of Overpopulation Depletion of Natural Resources The effects of overpopulation are quite severe. The first of these is the depletion of resources. The Earth can only produce a limited amount of water and food, which is falling short of the current needs. Most of the environmental damage being seen in the last fifty odd years is because of the growing number of people on the planet. They are cutting down forests, hunting wildlife in a reckless manner, causing pollution and creating a host of problems. Those engaged in talking about overpopulation have noticed that acts of violence and aggression outside of a war zone have increased tremendously while competing for resources. Degradation of Environment: With the overuse of coal, oil and natural gas, it has started producing some serious effects on our environment. Rise in the number of vehicles and industries have badly affected the quality of air. Rise in amount of CO2 emissions leads to global warming. Melting of polar ice caps, changing climate patterns, rise in sea level are few of the consequences that we might we have to face due to environment pollution. Conflicts and Wars Overpopulation in developing countries puts a major strain on the resources it should be utilizing for development. Conflicts over water are becoming a source of tension between countries, which could result in wars. It causes more diseases to spread and makes them harder to control. Starvation is a huge issue facing the world...

Words: 388 - Pages: 2

Premium Essay

Jetblue Case Study

...Airway Corporation is an American low-cost airline and it was one of a few U.S. airlines that were profitable during the sharp downturn in airline industry affected by the September 11, 2011 attacks. With its strong capital base, the company was successful due to its impressive management team, in which, David Neelaman has rich experience with airline start-ups; COO David Barger and CFO John Ower are all experienced former senior managers from other airlines. The company’s sales rose from $104,618 to $320,414 from December 2000 to December 2001 and net profit is negative $21,330 in December 2000 and reach positive $38,537 only one year later. As we can see, the company is a high growth company with huge potential. To meet its further growth needs, it going to public to finance more money. The advantage of IPO is by raising more capital, the firm could use the capital to fund capital expenditure (buy more airplanes), pay off existing debt and also it increase public awareness and let potential customers know their products. Subsequently, this may increase its market share. And the venture capitalists may want to use IPO to cash in on JetBlue as they helped start-up. The disadvantages is that JetBlue has to disclosure more information for investors, prepare periodic financial reporting and they must also meet other rules and regulations that supervised by SEC. it is always costly of complying with regulatory requirements, such as preparing additional paper work, audit fees, investor...

Words: 1787 - Pages: 8

Premium Essay

Performance Appraisal and Job Evaluation Process

...Enclosures/Graphics/Charts 16 Performance Appraisal and Job Evaluation Process A case study on “Dada Corporation” Introduction a) History of the organization: In 1974, current CEO, Boo YI Park starts a humble but bold headwear manufacturing business with just 5 sewing machines. 1974 ~ 1988: Venturing into headwear business Dada traces its root to Daedo trading, a company Dada’s current CEO B.Y. Park established in 1974. Believing that importing raw materials and subsequently processing and exporting them as a business with no basis, Park always wanted to start a manufacturing business. While Park was traveling in the United States in the early 1970’s, he noticed many young and old people wearing sports caps with affection. Park immediately decided to venture into headwear business and set up a small...

Words: 3383 - Pages: 14

Premium Essay

Ob Case Chapter 8

...|Universitas Gadjah mada | |Organizational Behavior | |Case study: The Pay-for-Performance Program among Denver Teacher Hits a Roadblock | | | | | |[pic] | |By Umar, Fitri and Claudia | |10.04.2012 | 1. Analyzing the Denver Public School’s pay-for –performance plan to motivate teachers it appears that while the school district has good intentions their plan is a bit short-sighted and has caused conflict between the two of the three major parties, the school district and the teachers’ union, while hurting the third and most important party, the students.  Looking...

Words: 1695 - Pages: 7

Premium Essay

Corporate Finance

...Wesfarmers Financial Strategy 1. Pro-forma Financials assuming that Wesfarmers re-financed the $4bn bridging facility with debt. i) Pro-forma financial statements [pic] Comments on results: Under the alternative financing scenario, the $4 billion bridging facility used to fund Coles acquisition and working capital is replaced by a long term debt facility. The debt facility has the same terms as the USD650 million (i.e. AUD $711 million) bond issue which has a 5-year duration at 6.998% p.a. interest rate. The interest bearing debt will increase by $3,289 million from the 2009 level, assuming the USD650 bond issue is treated as long term liabilities in the 2009 report. The interest expense will increase by AUD$230 million (6.998% of $3,289 million equity funding equivalent). Shareholder equity is $3,289 million less under the alternative scenario, which also means that annual dividend payout is reduced by $470 million assuming $1.10 per share payout for FY2009. Financing Cash Flow [pic] Interest Expense increases with increased debt from $737m to $938m Profit after Tax reduces by $313m from $1,535m to $1,224m. This is due to the increase in interest which is partially offset by the tax benefit of interest. Interest Bearing Debt will increase by $3,289m Shareholder Equity reduces by $3,289m. This is due to the rights issue being replaced by long-term debt, increasing the debt-holders interest in WES. Financing Cash Flow increases by...

Words: 3450 - Pages: 14

Premium Essay

Negative Economic Impact of the Ppaca

...Negative Economic Impact of the Patient Protection and Accountable Care Act The Patient Protection and Affordable Care Act (PPACA) also referred to as ObamaCare, federal healthcare law, Affordable Care Act, or ACA, is a United States federal Statute signed into law on March 23, 2010, by President Barack Obama. In combination with the Healthcare and Education Reconciliation Act, it represents the most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965 (Patient Protection and Affordable Care Act). The PPACA is intended to increase the number of health insured Americans and reduce the overall costs of healthcare. The PPACA will revamp the current health insurance system by extending health insurance coverage to nearly 32 million currently uninsured Americans; 18 million through Medicaid expansion to individuals with incomes under the 133 percent federal poverty line (FPL), and 18 million through government exchange subsidies to individuals with incomes up to 400 percent of the FPL. Citizens and legal residents in families with income between 100 and 400 percent of poverty who purchase coverage through a health insurance exchange are eligible for a tax credit to reduce the cost of coverage. To subsidize the additional 32 million individuals covered, the new law introduces 18 new taxes and penalties on individuals, employers, and businesses (Campbell). Though the PPACAs intent is to lower healthcare costs, it will...

Words: 3283 - Pages: 14

Premium Essay

Econ212-1402b-04 Principles of Microeconomics

...Ralph Thomas ECON212-1402B-04 Principles of Microeconomics Professor: Lance Brofman Phase: 2 Individual Projects June 2, 2014 What is the price elasticity of demand? What determines it? What is elastic and inelastic demand? The Price Elasticity of Demand (commonly known as just price elasticity) measures the rate of response of quantity demanded due to a price change. The formula for the Price Elasticity of Demand (PEoD), (Moffat, M., para1 economic, about.com) is: PEoD = (% Change in Quantity Demanded)/ (% Change in Price) * If PEoD > 1 then Demand is Price Elastic (Demand is sensitive to price changes)  * If PEoD = 1 then Demand is Unit Elastic  * If PEoD < 1 then Demand is Price Inelastic (Demand is not sensitive to price changes) The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded. =40/20 =2 The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded =10/5 =2 Why is elasticity an important concept for a business? If you use elasticity of demand information to predict the potential impact of a price fluctuation on the total sales revenue, the price elasticity of demand is a way of looking at the sensitivity of price related to product demand. Demand elasticity is an economic concept also known as price elasticity. Price elesticy can be a confusing at times but its main reason is to help the company gain the maximum profit possible. If you utilize the versatility of...

Words: 1110 - Pages: 5

Premium Essay

European Economic Poicy Sum Up

...European Economic Policies 1. THE MULTIPLE DIMENSIONS OF AN ENLARGED EUROPE 1.1 THE HISTORICAL DIMENSION Many unprecedented achievements characterize the Europe we see today; for the first time since Charlemagneʼs Holy Roman Empire in the 9th century in the ninth century, most of the European continent (400 million citizens) is again united and in peace. For the first time (at least since the last century) a set of countries have autonomously decided to relinquish to a supranational authority the control of one of the key symbols of a nation, its currency, without renouncing their identity or independence (along with numerous innovations). All this in less than 60 years. Historically, a period of war in Europe has ended with one or more treaty (e.g. 30 years war → Westfalia, Napoleonic war → Vienna Congress, WW1 → Versailles) The end of WW2 produced a series of treaties which, among other things (UN), laid down the founding pillars of the modern European Union The First 40 years (1950 – 89) Its acknowledged that the start of the European integration can be identified in the “Schuman declaration” a speech by French foreign minister in 1950. He proposed that France and Germany and other nations wishing to join, pool their coal and steel resources. It was an opening of credit to Germany (only 5 years after the first tank left Paris) and it implicitly recognized the new world order with france and germany allied with the US. It was also a security measure for France with respect to Germany...

Words: 15394 - Pages: 62

Premium Essay

The 11th Hour

...The 11th hour Story of the film film is preceded by the introduction of the environmental problems that plagued the world today. This introduction is intended to give an overview to the viewers about the negative impacts caused by human activities that are less responsible for the stability of the environment in general. Then proceed with the analytical discussion about things that appear in and around the environmental issue, and ended with optimistic statements proposed to raise the confidence of the audience to carry out concrete actions for the earth. In parts of the we can see about 50 leading scientists, thinkers, leaders, oceanographer, author, etc, asking questions or presenting facts relating to the environmental issues facing the planet and the prospects for maintaining the stability of the Earth's environment the first hour documentary presents a frightening picture, especially the degradation of environmental conditions that hit the planet, telling many sins conducted on the environment (such as pollution, deforestation, excessive mining), indicate the reasons or factors behind the spread of environmental damage (such as corporate greed, the failure of public policy, the lack of leadership and ignorance), and the meaning and impact of all of the existence of mankind. In the final third of the documentary, after a series of bleak picture of the condition of the planet. Improved mood viewers try again with the appearance of a wide selection of solutions describing...

Words: 1522 - Pages: 7