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Pay grades [1] are used by the eight structurally organized uniformed services of the United States [2] (Army, Marine Corps, Navy, Air Force, Space Force, Coast Guard, Public Health Service Commissioned Corps, and NOAA Commissioned Officer Corps), as well as the Maritime Service, to determine wages and benefits based on the corresponding military rank of a member of the services.
Specifically, the code states that the ECI for wages and salaries of private industry workers will be used. Essentially, when the ECI goes up, so does military pay, so that military salaries do not fall behind civilian ones. For example, because the ECI increased 1.4 percent in 2009, that was the military pay raise in 2010.
The pay scale was originally created with the purpose of keeping federal salaries in line with equivalent private sector jobs. Although never the intent, the GS pay scale does a good job of ensuring equal pay for equal work by reducing pay gaps between men, women, and minorities, in accordance with another, separate law, the Equal Pay Act of 1963.
In the United States Navy, a rate is the military rank of an enlisted sailor, indicating where the sailor stands within the chain of command, and also defining one's pay grade. However, in the U.S. Navy, only officers carry the term rank, while it is proper to refer to an enlisted sailor's pay grade as rate.
The present-day commissioned corps has its origins in the career corps of the Marine Hospital Service, which was established by federal legislation on January 4, 1889.The service adopted naval ranks in order to impose military discipline on the doctors of the service, [3] and corresponded their service rank and grade with their medical title.
The rank of private was divided into two ranks of private (Grade E1 and Grade E2), and private first class (Grade E3). Corporal was regraded as Grade E4. Sergeant (Grade E5) was a career soldier rank and its former three-chevron insignia was abolished and replaced with the three chevrons and an arc of the rank of staff sergeant.
Typically, pay grades encompass two dimensions: a “vertical” range where each level corresponds to the responsibility of, and requirements needed for a certain position; and a “horizontal” range within this scale to allow for monetary incentives rewarding the employee's quality of performance or length of service.
[1] - US DoD, The United States Military Rank Insignia All Warrant Officer grades are authorized, but not used by the Air Force [2] - Office of the Law Revision Counsel. "U.S. Code TITLE 42-THE PUBLIC HEALTH AND WELFARE, section 207(a)-Grades, ranks, and titles of commissioned corps (2006)" (PDF).