What Are Military Pay Grades?
Military pay grades are preset salary brackets released each year by the Department of Defense that directly list the base pay of military members based on rank and years of service. Unlike in civilian jobs where pay is often negotiable on a case-by-case basis, the base pay of all service members in all branches is determined by pay grades.
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Nomenclature
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Pay grades are distinguished by a two-character designator that corresponds to a service member's rank [see Resources]. The first character, either an E, a W or an O, represents the service member's status as enlisted (E), a warrant officer (W) or commissioned officer (O). The second is a number that corresponds to the level of rank the service member has achieved within his status. For example, a brand new private in the Army would carry a pay grade of E-1 (E for enlisted and 1 for rank, which, in this case, is the lowest possible for an enlisted member). A major, meanwhile, would be designated as an O-4 (O for officer and 4 designating rank).
Organization
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Each pay grade's salary amount is based on both rank and years of experience. The higher the pay grade and rank, the more the pay (see Resources). Within the same pay grade, salary can vary according to length of service. For example, an O-3 with more than six years in the military would make $5,117.10 a month. An O-3 with eight years of experience, meanwhile, would earn $5,373.90 a month.
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Interpretation
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Every year, the Department of Defense releases a table listing the base salary for each pay grade according to years of experience (see Resources). To determine salary, locate the pay grade in the table's vertical column on the left side of the page. Then, move to the right horizontally to the box corresponding to the appropriate length of service.
Cost of living
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At the beginning of the fiscal year, the Department of Defense releases a new pay table with salary increases for each pay grade to offset inflation and account for cost of living increases. According to the Defense Finance and Accounting Service, service members received a 3.4 percent cost of living raise in 2010.
Exceptions
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Note that the amount of pay listed in the table is only the base pay earned by all service members in that pay grade regardless of duty or location (see Resources). The table does not take into account the basic allowance for housing, subsistence, special duty pay or any other bonuses.
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