Labor Substitution in the Military Environment

Implications for Enlisted Force Management

by Mark J. Albrecht

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Analyzes the potential for cost savings associated with the substitution of first term and career personnel at the occupational level. Its analysis of the measurement and evaluation of labor productivity in the military environment makes it possible to assess the potential for making first term/career substitutions. For this research, actual productivity measures and work unit background data were used to estimate the parameters of a two-tiered constant elasticity of substitution labor aggregation function. The results of the analysis indicate that higher skill occupations overutilize first term labor inputs and lower skill occupations underutilize them. Thus, a redistribution of existing first term and career personnel within the set of occupations analyzed would mean almost a $20 million annual cost savings, with no loss of overall effectiveness. The findings of this research suggest that the attainment of currently stated objected force goals would be associated with a substantial reduction in overall effectiveness.

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