I Want You! The Evolution of the All-Volunteer Army

Chapter Four

The President’s Commission on an All-Volunteer Armed Force – the Gates Commission – and Selective Service Reform (1969-1970)

The Gates Commission

Parallel to the workings of Selective Service reform, the Gates Commission was formed, did its work and reported to the President. At the outset, as an indication of the importance of the commission to the administration, Anderson suggested to the President that the first meeting of the commission be held in the White House. Nixon agreed, and the first meeting was scheduled for the Roosevelt Room on Thursday, May 15, 1969. The meeting was to start at 9:30 a.m., with the President to “drop-by at approximately 10:15 a.m.” (Anderson, 1969d^{0.4 MB}).

The tone for the Gates Commission was set at the first meeting, when Crawford Greenewalt asked the chairman “whether the Commission was obligated to recommend an all-volunteer force plan.” He was told “it was not necessary for the Commission members to assume at the outset that an all-volunteer solution was either feasible or desirable.” Greenewalt replied that “his only concern was that he be free to reject the all-volunteer solution” (President’s Commission on an All-Volunteer Armed Force [Gates Commission], 1969^{0.1 MB}).

While there was initial skepticism on the part of the noneconomists on the commission about the arguments that had been honed during the previous years of debate, the views expounded on by the economists who had taken part in the earlier debate prevailed.³⁸ Lee, citing the transcripts of the commission’s public sessions, noted that Chairman Gates questioned the “hidden tax” argument

on the grounds that it was difficult to understand and involved “fairly esoteric reasoning.” Some members thought it was politically unrealistic to advocate an All- Volunteer Force on the grounds that it would involve no increase in true economic costs, since both Congress and the public would think in terms of the increase in budgetary expense and taxes that might be required if the draft were eliminated.³⁹

Mr. Greenewalt thought that the burden of combat in a volunteer force would fall upon “the poor and the black” and that there was something immoral about seducing them to die for their country with offers of higher pay.

General Norstad . . . felt that elimination of the draft could mean that people with better education and backgrounds would not enlist and the Military Services would be less effective as a result. (Lee and Parker, 1977, p. 43^{21.7 MB})

By December 1969, after the commissioners reviewed the staff papers that had been prepared for them, they came together in the unanimous recommendation that the nation’s interests would be better served by an all-volunteer force.⁴⁰ The commission argued in their February 1970 report that

The United States has relied throughout its history on a voluntary armed force except during major wars and since 1948. A return to an all-volunteer force will strengthen our freedoms . . . . It is the system for maintaining standing forces that minimizes government interference with the freedom of the individual to determine his own life in accord with his values.

The often-ignored fact . . . is that our present armed forces are made up predominantly of volunteers. . . .

Reasonable improvements in pay and benefits in the early years of service should increase the number of volunteers by these amounts. . . .

In any event, such improvements are called for on the ground of equity alone. Because conscription has been used to provide raw recruits, the pay of men entering the services has been kept at a very low level. It has not risen nearly as rapidly as the pay of experienced military personnel, and it is now about 60 percent of comparable civilian pay. Similarly, the pay of first-term officers has not been kept in line with the pay of more experienced officers, or with comparable civilians. . . .

If the Commission’s recommendations are put into effect for fiscal 1971, they will entail a budget increase of an estimated $3.3 billion. . . . (Gates, 1970, pp. 6-7^{6.7 MB})

Commission’s Review and Rejection of Arguments Against an All-Volunteer Force

In reaching their recommendation, the commissioners reviewed and dismissed the major arguments that had been put forward by opponents of an all-volunteer force. Table 4.1 shows the arguments and the counterarguments cited in the commission’s February 1970 report.

The commission’s recommendation to move to an all-volunteer force echoed the arguments that had been heard at the University of Chicago Conference on the Draft in 1966. First, as the commission put it, “conscription is a tax.” They found the tax to be inequitable and regressive. They argued that a full accounting for the true cost of the draft meant that, even given the higher budget costs of an all-volunteer force, a mixed system of volunteers and conscripts was more costly to society than an all-volunteer force. Second, by not accounting for the true cost of the labor the DoD employed, the armed forces were “inefficient” and were wasting society’s resources.

Conscription is a Tax. The role of the conscription tax in arguing for an all-volunteer force was so central to the commission’s conclusion that they devoted a whole chapter — Chapter 3 — to presenting their argument. They invoked Benjamin Franklin’s writings on the impressing of American sailors to ask if it was “just . . . that the richer . . . should compel the poorer to fight for them and their properties for such wages as they think fit to allow, and punish them if they refuse?” The importance of this argument was highlighted, as the final report notes:

This shift in tax burden lies at the heart of resistance on “cost” grounds to an all- volunteer armed force. Indeed, this shift in tax burden explains how conscription gets enacted in the first place. In a political democracy conscription offers the general public an opportunity to impose a disproportionate share of defense costs on a minority of the population. (Gates, 1970, p. 25^{6.7 MB})

The report followed Oi’s argument, originally presented in the 1966 papers given at the University of Chicago Conference (Oi, 1967b^{0.3 MB}) and the annual meeting of the American Economic Association (Oi, 1967a). The commission accepted the estimate of the lost wages that draftees could have earned in their best civilian alternatives — estimated to be $2 billion — as their measure of the conscription tax. They added to that the income forgone by volunteers who did not get the benefit of the wage rate that would be required to attract the marginal volunteer. This was estimated at an additional $1.5 billion.⁴¹

Specifically, the commissioners noted,

This concept of the tax does not include the income loss suffered by true volunteers whose military compensation is held below the level which would be required to maintain an all-volunteer force, nor does it include the amount by which all- volunteer pay rates would exceed the pay levels at which some of the current draftees and draft-induced enlistees would enter on a voluntary basis. (Gates, 1970, p. 26^{6.7 MB})

To these costs, a new category was added to reflect the experience of the Vietnam War draft. These were the costs that prospective inductees incurred to escape conscription, which manifested themselves in a variety of ways, such as additional college attendance, movement into occupations that carry deferments, immigration, etc. The commission recognized that

The fact that conscription imposes a tax is not in itself immoral and undesirable. Taxes are required to enable government to exist. What is of questionable morality is the discriminatory form that this implicit tax takes, and even more, the abridgement of individual freedom that is involved in collecting it.

The tax is discriminatory because the first-term servicemen who pay it constitute a small proportion of the total population. . . . The extent of the discrimination resulting from conscription depends on the proportion of the population forced to serve, and on the level of compensation provided to those who serve. . . . In addition to being discriminatory, conscription as a tax is also generally regressive, falling on individuals whose income is low. (Gates, 1970, pp. 27-28^{6.7 MB})

The argument concerning the discriminatory nature of the “conscription tax” not only swayed the commission, it also proved critical when Congress debated the commission’s recommendations. Lee noted that

It was also important that the Administration spokesmen separated the issue of military compensation from the more controversial issues of the draft extension, the war in Vietnam, and the [all-]volunteer force. Though increased compensation was the main tool for achieving the volunteer force, the Administration supported the pay raise primarily on the grounds of equity and fairness, and was thus able to draw nearly universal support for increased compensation from both sides of the AVF [All-Volunteer Force] draft issue and the war issue. Administration witnesses frequently argued that competitive pay was a sound policy because it was intrinsically fair, rather than because it would obtain more voluntary enlistments. (Lee and Parker, 1977, p. 98^{21.7 MB})

The Draft Misallocates the Nation’s Resources. Besides the issue of the “conscription tax,” the commission argued that an all-volunteer force would be a more effective force than a mix of volunteers and conscripts. As the commission saw it,

[c]onscription induces the military services to use manpower inefficiently. They make manpower decisions on the basis of the costs as they perceive them, namely, those that are reflected in their budget. (Gates, 1970, p. 29^{6.7 MB})

The commissioners projected that

[w]hen military compensation is raised to a level consistent with an all-volunteer armed force, the services will find it desirable to economize on manpower. In particular, they will discover ways to substitute non-human resources for manpower in a wide variety of activities. (Gates, 1970, p. 30^{6.7 MB})

They also projected that

[p]ersonnel turnover in an all-volunteer force will be reduced for several reasons. If the draft is continued, it is projected that about 42 percent of accessions into the Army (for a force of 2.5 million men) will be draftees who serve for only two years, compared with three and four-year tours for voluntary enlistments. Moreover, the re-enlistment rates of draftees and draft-motivated volunteers are considerably lower than those of men who voluntarily choose military service. . . . Our projections indicate that, by 1980, 45 percent of Army enlisted men will have four years or more of service experience, as compared with 31 percent for a mixed force of the same size. (Gates, 1970, pp. 40-41^{6.7 MB})

The Standby Draft

The commission saw a standby draft as an integral part of an all-volunteer force. In their report, the members explicitly cited “[t]he rationale for providing a standby draft is the possible urgent need for the nation to act quickly” (Gates, 1970, p. 120^{6.7 MB}). The commission understood, however, that “a standby draft will not supply effective military forces in [the beginning] . . . [but would] provide manpower resources for the second stage of expansion” (Gates, 1970, p. 120^{6.7 MB}). They believed a standby system that authorized the President to invoke the draft at his discretion could lead to adventurism on the part of the President. Because of the issue of personal freedom and inequities inherent in conscription, invocation of a draft should require congressional approval.

The commission did not have specific recommendations concerning how a standby system might be organized or managed, except that the authority to conscript should be held by Congress. The organization of the Selective Service System and its ability to implement a standby draft would, however, become a significant issue later in the decade. The failure of the administration to develop a feasible standby draft would be one argument that the opponents of the all-volunteer force would use to return to conscription.

Means of Achieving an All-Volunteer Force

Although the commissioners argued that “[p]ay is not the only, and perhaps not even the primary motivating force for joining or remaining in the military services” and recommended “a number of changes in military manpower procurement and management practices to improve the non-monetary conditions of military life and thereby help increase the attractiveness of military careers” (Gates, 1970, p. 49^{6.7 MB}), their clear emphasis was on increasing first-term pay.

Views on Compensation. As the commission saw it,

[m]ilitary compensation in the early years of service is now so low that it will not sustain an all-volunteer force of the quality desired. Until that condition is corrected, an all-volunteer force cannot be realized. (Gates, 1970, p. 49^{6.7 MB})

At the heart of their recommendations was the research done by their staff. In the final report, the commission noted that it had

used several methods to estimate directly the effect of increases in first and second term pay on voluntary enlistments and re-enlistments. Based on these studies, and on the observed impact on retention of proficiency pay and the variable re- enlistment bonus, we estimate that a 10 percent increase in the current value of first-term regular military compensation will result in an increase of about 12.5 percent in the voluntary enlistment rate from the 17 to 21 year old civilian population. In the case of the Army, a 40 percent pay raise would increase the voluntary enlistment rate from about 1.388 to about 2.079 per 100 men in the 17 to 21 age cohort. The same percentage increase in officer compensation will induce a roughly comparable rise in the voluntary enlistment rate from the college population. (Gates, 1970, p. 56^{6.7 MB})

Besides an across-the-board increase in first-term pay, the commission called for skill differentials and hostile-fire pay. The skill differentials were to “attract some persons with special skills or unusual aptitudes” (Gates, 1970, p. 60^{6.7 MB}). The hostile-duty pay was “a matter of equity . . . [and would] provide compensation flexibility in conflict situations” (Gates, 1970, p. 61^{6.7 MB}).

Views on “Compensation in Kind” and “Fringe Benefits.” One of the most important decisions made by the commission was to endorse the

development of a military salary system comparable to that in the civilian sector, including the substitution of cash for some benefits that are now provided in-kind, and the modification of the present retirement system, including the introduction of vesting. (Gates, 1970, p. 56^{6.7 MB})

As far as it went, this was consistent with the recommendations for structural reform that came out of the First Quadrennial Review of Military Compensation, a study lead by Navy Rear Admiral Lester Hubbell (Hubbell, 1967^{11.5 MB}). This was predictable, given the underlying bias of the economists on the commission and their staff. The commission accepted the argument that

[p]roviding compensation in cash has an inherent advantage in that . . . it allows each individual to decide how he or she will use whatever he earns. He can thus get the full value of whatever costs are incurred by the government in paying him. When he is compensated in non-cash form, however, the value of what he receives is often less to him than its cost to the government. (Gates, 1970, p. 63^{6.7 MB})

The problem, however, was that the Hubbell recommendations were for a salary system for the career force only, with first-term personnel continuing to be covered by a pay and allowance system. The low pay for first-term personnel that the Hubbell system also recommended had assumed the continuation of the draft and was out of step with the transition to an all-volunteer force. As a result, the administration withdrew support for the Hubbell salary system, and a unique opportunity to transform military compensation was lost. While a number of commissions have proposed over the past 30 years converting the military to a salary system, the military has never implemented such a system. Steadfast opposition to a salary system from the enlisted leadership of the services has replaced the support the concept enjoyed in the late 1960s.⁴² The military continues to use a “pay and allowances” system where “compensation-in-kind” is a significant part of total remuneration.

In practice, military leaders charged with managing the transition to an all- volunteer force had to work within the existing system of pay and allowances. They tried to develop a balanced program. Unlike the commission, the services recommended that funds be provided to improve benefits and income-in-kind. In fact, over time, billions of dollars would be spent to improve the quality of life of service members and their families as an inducement to enlist or reenlist in the military. It can be debated whether or nor this was the most efficient use of resources. What cannot be debated, however, was the commission’s decision “against recommending general increases in . . . benefits or in income-in-kind items of pay” (Gates, 1970, p. 63^{6.7 MB}). This placed it at odds with those charged with implementing the commission’s recommendations. For example, the program “to improve the conditions of military service” that the commission recommended was much smaller than the program the services had recommended. The commission’s notion of “improving the conditions of military service and the quality of military life” to attract and retain “higher quality personnel” (Gates, 1970, p. 64^{6.7 MB}) was limited to the following:

• “elimination of the present system of obligated terms of service so that enlisted personnel would be recruited and retained on the same basis as commissioned officers” (Gates, 1970, p. 64^{6.7 MB})
• “expansion of the current program whereby enlistees are permitted to specify their choice of occupation as a condition of enlistment” (Gates, 1970, p. 65^{6.7 MB})
• expansion of the “entitlement to reimbursement of family travel expense and dislocation allowance . . . to all enlisted personnel” (Gates, 1970, p. 67^{6.7 MB})

Views on Recruiting. Anticipating what would become a sustained theme over the next thirty years, the commission recognized the importance of recruiters.⁴³ In their report they noted that

[s]tudies indicate that a relatively small increase in recruiting expenditures would produce as much as a 10 to 20 percent rise in enlistment rates. . . . Clearly, elimination of the draft will increase the need for effective recruiting and the budget required. (Gates, 1970, pp. 83-84^{6.7 MB})

The commission understood that managing recruiters would demand new concepts; for example, “successful recruiters should be allowed to extend their tours of duty, while the unsuccessful are assigned elsewhere” (Gates, 1970, p. 85^{6.7 MB}). The commission also anticipated the need for an “improved incentive system for recruiters” and the

elimination of the present system under which each district, city and individual recruiter receives an enlistment quota. Substantial evidence indicates that this system eliminates the incentive to seek enlistees in excess of one’s quota. (Gates, 1970, p. 85^{6.7 MB})

In what would prove to be an understatement, the commission felt “[m]ore advertising in mass media will be both required and rewarding” (Gates, 1970, p. 85^{6.7 MB}). Over time, advertising became the most-flexible tool that personnel managers had in supporting the all-volunteer force.

Areas of Concern

The commission recognized that in two areas of concern, they were not sanguine that they knew how they would meet the manpower needs of the armed forces without conscription. But, as the commission saw it, “there is time not only for further study, but for experimentation” (Gates, 1970, p. 87^{6.7 MB}). The areas of concern were physicians and reserves.

Physicians. The critical need for physicians and the central role the draft played in making sure that the military services had the physicians they required was illustrated by data presented in the final report. According to the commission, “[e]ighty percent of all male physicians in the United States under 35 have served in the armed forces or have held reserve commissions” (Gates, 1970, p. 87^{6.7 MB}). Even more impressive, “[o]nly four percent of male physicians under 35 who are eligible for service have not yet served” (Gates, 1970, p. 87^{6.7 MB}). The commissioners understood that, “[i]f the draft is eliminated, dramatic action will be required to insure the continuation of health care now provided by the military medical system” (Gates, 1970, p. 90^{6.7 MB}). They recommended both reducing the demand for military physicians through civilianization, e.g., using civilian doctors to treat military personnel and their dependants on military bases, and increasing the remuneration of military physicians. Anticipating a program that would be very effective over the coming years, the commission focused on “[a] variety of forms of subsidies to medical students.” This would eventually include the scholarship programs at civilian medical schools (Gates, 1970, p. 93^{6.7 MB}) and the creation of DoD’s own medical school, the Uniformed Services University of the Health Sciences.

Reserve Forces. Citing survey results that showed that “perhaps 75 percent of the enlisted personnel fulfilling their initial six-year military service obligation in the reserves are there only because of the draft” (Gates, 1970, p. 97^{6.7 MB}), the commission identified the reserves as a “special . . . problem.” The commission thought the problem could be significantly reduced by eliminating

approximately 113,000 men in paid drill status (“spaces”) without significantly affecting reserve effectiveness. . . .

[S]hortfalls from present levels in the reserves are not a serious threat to national security. (Gates, 1970, p. 100, emphasis in the original^{6.7 MB})

Again, anticipating research that would come later in the 1970s (Shishko and Rostker, 1976^{0.5 MB}), the commission argued that the reserves had the potential to be a significant “part-time” job. Without the formal analysis of the economics of moonlighting, the commission noted that

[t]he prospect of securing volunteers for reserve service is surely related to pay levels. All too often it is said that drill pay is nearly irrelevant to a young man deciding whether to devote free time to unit activity. Yet almost one-third of men with less than six years of service describe drill pay as one of the most significant factors in their decision. . . .

[While drill pay] is not a large amount compared to total family earnings . . . the more meaningful economic comparison is with part-time employment alternatives. . . . The typical E4 . . . closely resembles the Department of Labor’s portrait of the typical multiple jobholder — “a comparatively young married man with children who feels a financial squeeze.” . . .

[A] necessary if not sufficient condition for voluntary reserve participation is a level of drill pay attractive enough to make military instruction preferable to other part-time activities. (Gates, 1970, p. 102^{6.7 MB})

The commission also understood that, because of the Vietnam War (and the related ease the reserves had had in attracting draft-induced, non–prior service volunteers), the personnel profiles of the reserve components was skewed in favor of new recruits. The reserve components did not try to attract personnel who were leaving active service,⁴⁴ and their own reenlistment rates were pitifully low. The commission noted that, between 1962 and 1969, over 4.8 million men left active service, while reserve components recruited “fewer than 900,000 of them into paid drill status” (Gates, 1970, p. 110^{6.7 MB}). The reserve components reported a reenlistment rate during these years of 7.2 percent. The commission suggested that, by focusing on prior service personnel and reenlistments and with a pay elasticity of 1.25, “the projected enlistments appear to be adequate for the reserve forces associated with the 2.25 million force and 2.5 million man active forces” (Gates, 1970, p. 116^{6.7 MB}).

The Gates Commission Finishes Its Work

Within the Gates Commission, not only had there been unanimity that the nation should move toward an all-volunteer force, but they all agreed on how it should be done. However, DoD had formed its own options on the best way to achieve an all- volunteer force. As the Gates Commission proceeded to “prebrief” the services on their emerging recommendation, it became clear that the commissioners’ views were different from those prevailing in the Pentagon. The Gates Commission, while saying that “[p]ay is not the only, and perhaps not even the primary motivating force for joining or remaining in the military services” (Gates, 1970, p. 49^{6.7 MB}), emphasized programs to “increase . . . military compensation . . . required to sustain an all-volunteer force” (Gates, 1970, p. 50^{6.7 MB}). Assistant Secretary of Defense Roger Kelley’s staff thought that changes in personnel management practices were the way to implement the all- volunteer force.

In August 1969, in response to a request for comments on proposals being considered by the commission staff, Kelley told Harry Gilman, the commission’s Director of Military Manpower, Supply, and Compensation, that DoD objected to the use of pay differential and bonuses (Kelley, 1969b^{0.6 MB}). After the commission’s vote in December, Gates tried to persuade senior members of DoD to go along with the commission. On the evening of January 9, 1970, over dinner, he privately discussed the commission’s recommendations with Secretary of the Army Stanley Resor and his Assistant Secretary for Manpower, Bill Brehm. Resor had been well prepared by his staff and told Gates of the Army’s concerns, both “the more technical aspects of the staff analysis upon which cost estimates and hence feasibility ultimately will be based . . . [and some] qualitative points” (Resor, 1970^{0.5 MB}). Clearly, the Army had the details of the commission’s recommendations and methodologies before the meeting because, the next day, Resor sent Gates a substantial paper detailing the Army’s concerns and raising questions about the commission’s methodologies. Resor ended the paper by telling Gates “I hope you will give serious thought to these questions in your deliberation. We have at stake both the security of the nation, and how we shape its future” (Resor, 1970^{0.5 MB}). Resor and the Army, however, were not the only opposition the commission would face.

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³⁸ A more-complete discussion of the deliberations of the commission can be found in Witherspoon (1993, pp. 343-365).

³⁹ Oi recalled that the “conscription tax” argument was “drummed into the heads of the commission members” (Oi, 1996, p. 45) by the economists.

⁴⁰ It is noteworthy that this Presidential commission did its work without holding public hearings. The prevailing view seemed to be that “hearings would only impede the staff and Commission’s work, and delay the submission of a report to the President” (Callard, 1969a^{0.1 MB}). David Callard, the commission’s administrator, expressed his concern to Martin Anderson that “The Commission’s failure to solicit public opinion vigorously on a very important and sensitive issue is all the more glaring in view of the President’s sincere interest in generating more public participation in the governmental process” (Callard, 1969a^{0.1 MB}). Nevertheless, this was one commission that did its work behind closed doors.

⁴¹ Economists refer to this category of lost income as “economic rent.”

⁴² For example see the statements of support from the Army (Resor, 1969^{0.1 MB}), Navy (Chafee, 1969^{0.1 MB}), Air Force (Brown, 1969^{0.1 MB}) and Joint Chiefs of Staff (McConnell, 1969^{0.1 MB}).

⁴³ The commission staff prepared a review of recruiter productivity based on commissioned studies done for the Assistant Secretary of Defense (Manpower) by Marcom Economics, Inc. (See Kemp, 1970^{5.8 MB}).

⁴⁴ In FY 1970, of the 105,172 first-term airmen who separated from the regular Air Force, only 289 joined the Air Reserves Forces — the Air National Guard and the Air Force Reserve (Rostker, 1973, p. 36^{1.6 MB}).

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