President Barack Obama on Wednesday set the military pay raise at 1.6 percent for next year.
The figure is higher than the 1 percent increase he approved for civilian employees in the federal government but lower than the 2.1 percent bump service members are supposed to receive under the formula in current law.
The change to monthly basic pay will take effect Jan. 1 and marks the fourth straight year troops will see their pay raise fall short of private sector-wage growth.
"I am strongly committed to supporting our uniformed service members, who have made such great contributions to our Nation over more than a decade of war," Obama said in a statement to congressional leaders, according to a release from the White House.
"As our country continues to recover from serious economic conditions affecting the general welfare, however, we must maintain efforts to keep our Nation on a sustainable fiscal course," he added. "This effort requires tough choices, especially in light of budget constraints."
The presidential order is consistent with the Pentagon's proposed $583 billion budget for fiscal 2017, which begins Oct. 1.
The spending plan called for a pay raise of 1.6 percent rather than the 2.1 percent estimated increase in average wage growth in the private sector as measured by the government’s Employment Cost Index (ECI) -- which military pay is supposed to track by law.
While the Senate agreed with the administration's military pay proposal, the House of Representatives supported a higher cost-of-living adjustment for military members to meet the legal provision.
However, the two chambers haven't yet negotiated a final version of the defense bill, which requires presidential approval before becoming law.
According to Military.com contributor Tom Philpott, the basic pay hike in 2016 was capped at 1.3 percent, a full percentage point below the level pegged by the ECI; and in both 2014 and 2015 at 1 percent when 1.8 percent was needed to match wage hikes nationwide.
While proponents say the pay caps save the government money -- to the tune of some $25 billion over a decade -- critics including veterans advocates argue they hurt military families' purchasing power as well as the military's ability to retain a high-quality force.