Research for compensation

Alternative sea manning concepts (ASMCs), such as flexible deployment concepts, optimal manning, and rotational crewing, will modify not only the ratio of operational to nonoperational billets but also the amount and nature of actual sea time associated with being in an operational billet. In this document, we first define some of the relevant ASMCs and discuss what is known about how they will affect Sailors. In particular, we focus on the effect of ASMCs on how sea-intensive Sailors’ careers will be. We then look at past, current, and forecast sea/shore ratios to provide a baseline and see how this baseline compares with what we might expect under the ASMCs. Finally, we examine the extent to which the changes in Sailors’ careers might affect retention and the implications for compensation.

The current military retirement system dates back to 1947, when Congress implemented a common 20-year system for all services and for officers and enlisted personnel alike. Over the years, critics have charged that the system is (1) excessively costly and unfair to taxpayers, (2) inefficient, (3) unfair to the vast majority of entrants who do not serve long enough to receive any benefits, and (4) inflexible and hampers force management. The purpose of this paper is to provide these groups and other interested readers with a discussion of the issues relating to the military retirement system. To set the stage for the discussion that follows, the first main section outlines what a personnel system should do. Here, the purposes of compensation and personnel policy are reviewed and certain institutional constraints that influence the structure of the military compensation system are identified. The next section highlights the structure of the current compensation system and the outcomes that result from this structure. The third main section evaluates the past criticisms of the retirement system. The fourth section discusses the retirement reform recommendations of several past commissions and identifies the broad features of a revised system.

The Navy officer personnel system allows some officers to transfer from one community to another during the course of a career. These lateral transfers often flow from the unrestricted line (URL) to RL and Staff communities within the first 5 or 6 years of service and give these communities valuable warfare experience used to support the URL. Most warfare-qualified laterals come from Surface Warfare. Surface Warfare accesses and trains more junior officers than it needs partly to support lateral transfers to RL and Staff communities. This excess of junior officers reduces the quality of training and overall readiness and increases total personnel costs. We find that reducing yearly Surface Warfare accessions from 780 to 620 and cutting laterals from the Surface community to RL and Staff communities by one-third saves $91 million per year in personnel costs. This reduces the number of warfare-qualified officers in RL/Staff communities by 448 without a large effect on overall officer seniority. A warfare-qualified RL/Staff officer would have to be worth about $200,000 more than a non-warfare qualified RL/Staff officer in the same billet for the above SWO accession cuts and consequent restrictions on laterals not to be cost-efficient.

Policy-makers have proposed replacing the current system of reservist participation with a new model, termed a Continuum of Service. This new paradigm will give reservists the ability to move seamlessly between full- and part-time status, and it relies on enhanced volunteerism by providing more options for participation. A reliance on volunteerism requires provision of adequate incentives. Before making any changes, however, it is important to understand existing manning problems and those that could arise as a result of a Continuum of Service. Therefore, this study analyzes recent data to identify existing, chronic, and potential manning challenges for each Reserve and Guard Component. Most Components have experienced recent increases in retention. This is notable because mobilizations and deployments have increased over this time period. While overall retention is high and rising, there are still certain groups with low retention. Junior enlisted personnel have very low retention, while there is strong evidence that retirement benefits heavily influence retention decisions of senior personnel. The data also provide evidence that retention varies with the strength of one’s civilian earnings opportunities. Finally, it appears that many people work toward their college degrees while in the Reserves but choose to leave after finishing their education.