Purposes and Uses of Special and Incentive Pay for Military Personnel

Special and incentive (S&I) pay is a particular category of compensation paid to eligible service members. The Department of Defense (DoD) uses that pay to attract or retain personnel in certain occupations (by offering bonuses, for example) or to compensate personnel for the unusual conditions of some assignments or for serving in designated locations (by offering incentives to perform unusually dangerous duty, for instance, or to serve in austere locations). Those types of pay are provided in addition to other elements of military cash compensation.

In this report, the Congressional Budget Office analyzes funding for S&I pay for active-duty service members in the Army, Navy, Air Force, and Marine Corps and explores how those types of pay have been used to address personnel shortfalls.

• Funding. S&I pay accounts for a small share of the services’ military personnel appropriation, which provides for basic pay, retirement pay, and other personnel-related costs. In 2021, that share for all four services was 4 percent (or about $5 billion of the $132 billion appropriation for military personnel). For service members who receive S&I pay, that compensation is a small part of their overall cash compensation, on average, although that portion is larger for personnel in some occupations.
• Purposes. About 70 percent of the funding for S&I pay in 2021 was used to attract or retain service members with desired skills. The remaining 30 percent was used to compensate service members for risks and conditions that are largely specific to the military: performing onerous or dangerous tasks or serving in designated locations. The average amount of S&I pay used to attract or retain personnel was about $12,000 per recipient—roughly five times the amount paid per recipient for performing onerous and dangerous tasks or for serving in certain locations.
• Occupational and Activity Groups. Enlistment and reenlistment bonuses for enlisted personnel in occupations with staffing shortages accounted for about one-third of S&I pay in 2021. Other types of S&I pay for officers and enlisted personnel were ongoing compensation or onetime bonuses for occupations in aviation, health care, and naval activities; other occupations or activities accounted for the rest.
• Use Among the Services. The Army, Navy, Air Force, and Marine Corps spent different portions of their military compensation appropriation on S&I pay. Between 2011 and 2021, the Navy allocated more of its military personnel appropriation (5.1 percent, on average) to S&I pay than the other services did, probably because a significant fraction of Navy personnel receive pay related to sea duty, which is considered onerous. About 40 percent of active-duty personnel received one or more types of S&I pay in 2021.
• Use for Personnel Shortfalls. In CBO’s estimation, there is no consistent relationship between changes in the amount of attraction and retention pay per recipient and the nation’s unemployment rate. Between 2011 and 2021, the amount per recipient both increased and decreased, whereas the unemployment rate mostly decreased. Nevertheless, DoD has usually used bonuses to address recruitment challenges to a greater extent in a tight labor market than in times when the labor market is not as strong.

Distribution of Funding for S&I Pay, by Function, 2021

Billions of 2022 Dollars (Number of recipients)