Research for Civilian Personnel

The Ninth Quadrennial Review of Military Compensation (QRMC)is reviewing ways to structure military compensation to improve military recruiting, retention and manning. Retirement pay is a significant component of the current compensation package, and there is concern that the structure of these benefits is not competitive with that offered by the private sector. The current military retirement system is a defined benefit program, with some limited ability to participate in a thrift savings plan (TSP). In contrast, the private sector increasingly uses defined contribution plans, which give the employee an opportunity to manage at least part of the retirement plan benefits. Expansion of the TSP component of military retirement benefits would potentially increase the attractiveness of military compensation. Given the sheer size of the military, however, several concerns have been raised about the implications of such a dramatic shift in compensation. At least four major questions have been asked-questions surrounding the level of service member participation, potential effects on total saving, implications for federal tax revenues, and the administrative costs associated with such a program. In light of these concerns, this research memorandum summarizes both the theoretical and empirical literature devoted to these issues. The evidence suggests that participation and contribution rates are strongly related to the size of matching contributions made by the employer. In addition, surveys show that military personnel would increase participation in TSP if the government were willing to make matching contributions. Given the financial risk associated with these plans relative to insured, defined benefit plans, there is also evidence that financial education (preferably provided by the emplyer) increases employee saving and improves contribution allocation.

The Navy is considering outsourcing some ship functions to civilians. This report focus directly on the issues related to the outsourcing of service functions aboard deploying ships and examines practical issues that arise in integrating civilians into a military working environment on board the ship. Our main interest in this effort is to get an accurate sense of the fleet's issues and concerns, particularly the sailors who will have to work with civilians, should the Navy decide to outsource. This research memorandum identifies the main issues and discusses their effect on the compatibility of a mixed crew of active duty personnel and civilians.

The Personnel Readiness Division of the Joint Chiefs of Staff (J1) asked CNA to examine the earnings of enlisted personnel and to compare them with the earnings of similar people in the civilian labor market. We used multiple regression to estimate civilian earnings of non-college-graduates and used these models to predict the earnings potential of enlisted military personnel. We found that earnings in the civilian and military sectors are similar and that both fell, when adjusted for inflation, between 1992 and 1996 (the year for which the most recent civilian data were available).

During the 1990s the Department of Defense set out on a path to reengineer many of its functions in order to reduce cost and improve efficiency. In 1993, in the area of civilian personnel management, the Office of the Secretary of Defense took the lead in coordinating a Defense-wide effort to reduce the number of personnelists - the staff that provides and manages civilian personnel services - to a servicing ratio (personnelists per civilian employee) of 1:85 by the end of FY99, and of 1:100 by the end of FY01. At the beginning of FY95, the servicing ration stood at 1:67. Real reductions are forthcoming for the civilian personnel management world. By the end of FY01, personnel management resources will be reduced by over 40 percent. Consolidation of operations and technical modernization will accompany the resources reduction. Personnel services delivery will be split into small onsite units and offsite hubs. We consider the DoN s proposed regional consolidation of the system of civilian personnel management. We ask: By the end of FY99, will efficiency increase as expected?