On Thursday, Defense Secretary Lloyd J. Austin III announced a number of short and long term Defense Department initiatives aimed at offsetting the increasing cost of living for service members and their families. A number of these policy changes will take effect as soon as October.
“Our Service members and families must be able to secure affordable basic needs. It is a matter of bedrock financial security and a critical individual readiness issue,” Austin said in a memo to Pentagon leaders and Combatant Commanders announcing the changes on Thursday.
The Biden administration has already included a 4.6% pay increase for service members in its Fiscal Year 2023 budget proposal — the largest military pay bump in 20 years — but even that isn’t enough to keep pace with current inflation.
The memo goes on to outline four areas of focus these policy changes fall within as the Pentagon takes a multi-faceted approach to make life more affordable for service families:
- Securing affordable basic needs
- Making moves easier
- Strengthening support to families, especially for such things as childcare
- Expanding military spouse employment
“Over the last 20 months, the Secretary has met with service members across the country and around the world,” Pentagon Press Secretary Brig. Gen. Pat Ryder told the press.
“Today’s actions are a direct response of what the Secretary has heard from our service members. Some of these initiatives are ideas that came directly from the force, and they reflect his commitment to the families who sacrifice every day in order to serve.”
Related: Financial Tips for Military Recruits
Changes to Basic Allowance for Housing (BAH)
One of the immediate ways Austin’s announced policy changes will help service members is with an automatic increase in the Basic Housing Allowance for those stationed within 28 military housing areas that have seen “an average of more than 20% spike in rental housing costs this year.” These increases will reach paychecks starting in October.
The Defense Department will also begin a review of prospective changes to Basic Housing Allowance rates for 2023 to ensure they keep pace with the recent fluctuations in the housing market.
Cutting costs at the commissary
Many service members shop for common essentials at their local base commissaries. In order to help alleviate concerns about cost of living, Austin has directed that commissaries be “fully funded” to dramatically reduce the out-of-pocket expenses of service members and their families.
Once these changes are in place, Austin expects commissary shoppers to save an average of 25% over those who shop at similar retail establishments out in town.
Related: Everything you need to know about the new Commissary and Exchange rules
Basic Needs Allowance for eligible service members
Some service members can also expect to see an additional Basic Needs Allowance in their paychecks starting in 2023. These allowances will be paid to service members and families whose gross household income is below 130% of the federal poverty level.
“The allowance is designed to bring them back up to that level, and so the amount will vary according to their gross household income,” explained Jeri Busch, director of military compensation policy.
Related: Budgeting for military families: Tips that make a difference
Financial Aid when you PCS
Because service members are often expected to move regardless of the state of the housing market, a number of new changes aim to reduce the financial burden associated with executing PCS orders.
Among these changes is an increase in temporary lodging expenses from 10 to 14 days for all service members, and an extension of up to 60 days for service members relocating to areas with known housing shortages.
Service members with pay grades below E-6 will also receive an increased dislocation allowance the month prior to executing orders to help offset out-of-pocket costs. These changes will take effect in October.
Related: First PCS move? Here’s how to prepare
Investing in childcare facilities
Austin has also directed an increased investment across the department in child development program facilities and infrastructure to expand capacity.
“We must continue to push hard to provide even more affordable child care options for military families,” Austin said.
“Military child development centers have extended their hours to provide additional coverage for our service members to account for the varied schedules of military service. The department has reached out to additional high-quality, community-based child care providers who agree to provide care for military families using our fee-assistance program.”
Related: Army AER program to provide up to $1,500 for childcare at new duty stations
MilSpouse employment
There are a variety of Pentagon initiatives underway aimed at helping Military Spouses find gainful and rewarding employment that they can take with them as they PCS or at their new duty stations. Among these efforts is a directed increase of noncompetitive, direct-hiring authorities as well as expanded remote-work and telework options.
He also ordered the DOD to launch a new pilot initiative in January to provide military spouses with paid private-sector fellowships in a variety of career paths.
Related: MilSpouse Money Mission: Empowering military spouses financially
Where can you learn more?
- You can visit the DoD’s “Taking Care of Our People” website here.
- You can read the Pentagon’s full announcement here.
- You can read Defense Secretary Lloyd Austin’s memo here.
- You can read a transcript of the press briefing here.
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