The History of US Military Pay
Paying the Continental Army
When the Continental Congress raised an army in 1775, it promised soldiers monthly pay — but a cash-strapped new nation often couldn't deliver. Troops were sometimes paid in near-worthless paper currency or IOUs, and unpaid wages fueled real unrest, including the 1783 Newburgh Conspiracy when officers nearly marched on Congress over back pay and pensions.
Rank and Time in Service
Military pay has long followed two axes: your pay grade (rank) and your years of service. This rewards both responsibility and experience — a sergeant with twelve years earns more than one with two, even at the same rank. The modern pay-grade system (E for enlisted, W for warrant officers, O for commissioned officers) was standardized across all branches after World War II.
Allowances: Food and Housing
Beyond base pay, service members receive allowances. The Basic Allowance for Subsistence (BAS) traces back to the era when troops were literally issued rations; today it's a flat monthly food allowance. The Basic Allowance for Housing (BAH) helps cover rent and varies by location, rank, and dependents. Crucially, these allowances are paid tax-free, which can make total compensation noticeably higher than base pay alone.
The All-Volunteer Force
When the US ended the draft in 1973 and moved to an all-volunteer force, pay and benefits had to become competitive with civilian jobs to attract recruits. This shift drove steady investment in basic pay raises, housing allowances, healthcare, and education benefits like the GI Bill — turning military compensation into a deliberately designed package rather than a token wage.
How Pay Changes Each Year
Annual military pay raises are tied to the Employment Cost Index, which tracks private-sector wage growth, and are set through the yearly National Defense Authorization Act. Allowances adjust separately: BAS follows USDA food-cost data, while BAH is recalculated each year from local rental-market surveys. That's why this year's numbers differ from last year's — and why a pay calculator has to be updated annually.