This is probably a stupid question, but I don’t have any military in my family or closest friends: are military personnel’s raises strictly mandated, or do they receive merit increases for a job well done just like private sector employees? Just curious.
Raises come several ways. Congress can authorize a cost of living raise. You get raises for the ammount of time you are in, usually every two years. The only other way I know is to get promoted. Bonuses are sometimes given when you reenlist.
Mostly no. Military base pay is based on pay grade and time in service, AFAIK with no variation. Some types of extra pay and allowanced are at the discretion of the command and no doubt it is sometimes used as incentive or reward. In the early '80s I collected flight deck pay ($85 a month) whenever I was shipboard but not everone got this pay even if they had to occasionally work on the flight deck.
Not directly. Military pay is based strictly on a table that has rank on one axis and years of service on the other. (You can find a pay table at www.dfas.mil.) There are additional pays available for those with special skills, but none of those are really merit based. If pilots get $850/month after 8 years, then all pilots get it.
The only way for officers to get more pay is to get promoted earlier than their peer group. This is realistically limited to Lieutenant Commanders/Majors (O-4) and above, and usually only happens at most a year earlier than peers. So best case, you promote a year ealy to O-4, a year early to O-5 and a year early to O-6 (for this to happen would be truly remarkable, almost unheard of). This would mean you make O-6 3 years earlier than those you got commisioned with. The total pay differential over a full career would be maybe a few tens of thousands of dollars over 25 years of service – not a very high differential. Of course particularly bad officer may not promote at all and can eventually be drilled out of the service. Also, only the best of the best will select into the ranks of Admiral / General, and of course those ranks make more money.
Bottom line is that two LTs who join at the same time and have the same job classification will make exactly the same money, even if one is the best LT in the Navy and the other is the worst.
Enlisted pay works the same way, but promotions are more flexible. In the Navy, a commanding officer can meritoriously promote usually 2 sailors every year without going through any outside selection process. He just says “congratulations, you’re promoted,” and they are. There’s also a lot more room to promote faster based on performance and therefore make somewhat more money comparatived to peers.
Unit CO’s are left to reward special performance with “attaboys” and minor benies like primo parking spots and extra time off.
You also get a raise if you add to your family. One cool thing about the military, is there are allowances for your spouse and children. Having an extra child will mean you get extra housing money and extra food money.
So using those two LTs as an example, if the really really bad one is married with three kids, he will actually make a bit more money than the single LT, dispite the other LT’s superior performance.
Another good way is to join the Guard and get activated for a few years. If you live far enough away you get monster per diem, which basically doubles your pay.
I unfortunately live just a bit too close, but far enough that I have to refill my damn tank twice a week when I’m active. I should just move and be done with it.
In the guard an reserve it works the same way, you are paid a rate depending on rank and time in service. On active duty the pay is based on a monthly rate. In the guard/reserve its based on a “drill day”. These are usually computed as unit training assemblies(UTA). A UTA is basically the active duty monthly pay divided by 30. A regular Sat/Sun weekend drill is 4 UTAs. Sometimes you have to come in on Friday night and get 5 UTAs. On an Annual Training period you are considered on active duty and you get one day of pay per day of AT. Usually 15 days pay. On annual training you get the allowances you would get if you have dependants on active duty. When its a weekend drill you get none of that.
Depends on were you get activated to. My per diem isn’t that great but I don’t have to fill my tank twice a week.
Of course my car is in my driveway and thousands of miles away from me right now 
Clarification: the military offers pay “with dependent” and “without dependent”. Equivalent ranks in the same city area get the same pay being a single mom that you do being married, or married with ten kids.