SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Military Pay Comparability Act of 
2003''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) One of the underlying principles of the all-volunteer 
        Armed Forces is the principle that military pay increases must 
        remain comparable to private sector pay growth, as measured by 
        the Employment Cost Index.
            (2) The capping of military pay raises below private sector 
        pay growth for extended periods during the past 30 years has 
        led to significant retention problems among second-term and 
        career members of the Armed Forces.
            (3) Such retention problems cost the United States more in 
        terms of lost military experience, decreased readiness, and 
        increased training costs than maintaining the principle of pay 
        comparability.
            (4) Since military pay was last deemed reasonably 
        comparable with private sector pay in 1982, military pay raises 
        have lagged a cumulative 6.4 percent behind private sector wage 
        growth, although recent efforts of the President and Congress 
        have reduced the gap significantly from its peak of 13.5 
        percent in 1999.
            (5) Under existing law, while military pay increases must 
        exceed growth in the Employment Cost Index through fiscal year 
        2006, increases in subsequent years will be capped one-half 
        percentage point below the Employment Cost Index, to the 
        detriment of retention and readiness over the long term.
            (6) The remaining so-called pay comparability gap should be 
        eliminated as quickly as possible, and military pay increases 
        must sustain full comparability with increases in the 
        Employment Cost Index.

SEC. 3. ANNUAL ADJUSTMENTS IN MONTHLY BASIC PAY FOR MEMBERS OF THE 
              UNIFORMED SERVICES.

    (a) Annual Adjustment Required.--Section 1009 of title 37, United 
States Code, is amended by striking subsections (a), (b), and (c) and 
inserting the following new subsections:
    ``(a) Requirement for Annual Adjustment.--Effective on January 1 of 
each year, the rates of basic pay for members of the uniformed services 
under section 203(a) of this title shall be increased under this 
section.
    ``(b) Effectiveness of Adjustment.--An adjustment under this 
section shall have the force and effect of law.
    ``(c) Equal Percentage Increase for All Members.--(1) Subject to 
subsection (d), an adjustment made under this section in a year shall 
provide all eligible members with an increase in the monthly basic pay 
that is the percentage (rounded to the nearest one-tenth of 1 percent) 
by which the Employment Cost Index for the base quarter of the year 
before the preceding year exceeds the Employment Cost Index for the 
base quarter of the second year before the preceding calendar year (if 
at all).
    ``(2) Notwithstanding paragraph (1), but subject to subsection (d), 
the percentage of the adjustment taking effect under this section 
during each of fiscal years 2004, 2005, and 2006, shall be one-half of 
one percentage point higher than the percentage that would otherwise be 
applicable under such paragraph.''.
    (b) Publication of Adjusted Rates.--Subsection (e) of such section 
is amended--
            (1) by striking ``(e) Notice of Allocations.--'' and 
        inserting ``(e) Notification and Publication Requirements.--
        (1)''; and
            (2) by adding at the end the following new paragraph:
    ``(2) The rates of basic pay that take effect under this section 
shall be printed in the Federal Register and the Code of Federal 
Regulations.''.
    (c) Presidential Determination of Need for Alternative Pay 
Adjustment.--Such section is further amended--
            (1) by redesignating subsection (g) as subsection (h); and
            (2) by inserting after subsection (f) the following new 
        subsection (g):
    ``(g) Effect of National Emergency or Serious Economic 
Conditions.--(1) If, because of national emergency or serious economic 
conditions affecting the general welfare, the President determines that 
the pay adjustment otherwise required by this section for a year is 
inappropriate, the President may prepare a plan proposing such 
alternative pay adjustments as the President considers appropriate. The 
President shall submit the plan, together with the reasons for the 
alternative pay adjustments, to Congress before March 1 of the 
preceding year.
    ``(2) In evaluating an economic condition affecting the general 
welfare under this subsection, the President shall consider pertinent 
economic measures including the Indexes of Leading Economic Indicators, 
the Gross National Product, the unemployment rate, the budget deficit, 
the Consumer Price Index, the Producer Price Index, the Employment Cost 
Index, and the Implicit Price Deflator for Personal Consumption 
Expenditures.
    ``(3) The President shall include in the plan submitted under 
paragraph (1) an assessment of the impact that the alternative pay 
adjustments proposed in the plan will have on the ability to recruit 
and retain well-qualified members of the uniformed services.
    (d) Definitions.--Such section, as amended by subsection (c), is 
further amended by adding at the end the following new subsection:
    ``(i) Definitions.--In this section:
            ``(1) The term `Employment Cost Index' means the Employment 
        Cost Index (wages and salaries, private industry workers) 
        published quarterly by the Bureau of Labor Statistics.
            ``(2) The term `base quarter' for any year is the three-
        month period ending on September 30 of such year.''.
    (e) Conforming Amendment.--Subsection (d)(2) of such section is 
amended by striking ``in the General Schedule rates of basic pay for 
civilian employees.'' and inserting ``in the rates of monthly basic pay 
under this section.''.
Output: Military Pay Comparability Act of 2003 - Requires the monthly rates of basic military pay to be adjusted effective January 1 of each year. (Currently, such rates are adjusted whenever the General Schedule (GS) of Compensation for Federal employees is adjusted.)Requires equal annual pay percentage increases for all military personnel to be based on percentage increases in the Employment Cost Index (currently on GS adjustments). Increases percentage adjustments by one-half percent for FY 2004 through 2006.Requires new annual rates of pay to be published in the Federal Register and the Code of Federal Regulations.Authorizes the President, upon determining that annual pay adjustments would be inappropriate because of national emergency or serious economic conditions, to prepare and transmit to Congress a plan for an alternative pay adjustment. Requires the President to consider under such plan the impact that the alternative adjustment would have on the Government's ability to recruit and retain well-qualified members of the armed forces.