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Research Questions

  1. How does military pay for active component personnel in 2016 compare to civilian pay, and, in particular, is military pay above the 70th percentile of civilian pay, the benchmark recommended by the Ninth QRMC based on 1999 data?
  2. How do the results for 2016 compare to those for 2009, the year studied by the 11th QRMC?
  3. Given that military pay relative to civilian pay has increased since 1999 when the Ninth QRMC benchmarked military pay, what is the association between relative military pay and recruit quality?

In the all-volunteer military, pay is one of the most important policy tools for recruiting and retaining personnel. Military pay must be high enough to attract and retain the personnel needed to meet manning requirements, and one measure of pay adequacy is how it compares to the pay of civilians with similar characteristics.

In 2002, the Ninth Quadrennial Review of Military Compensation recommended that regular military compensation (RMC) for enlisted personnel be at around the 70th percentile of the earnings of civilian workers with some college and, for officers, at around the 70th percentile of earnings of civilians with four or more years of college.

RAND researchers found RMC for enlisted members and officers in 2016 to be at the 84th and 77th percentiles, respectively, averaged over all education levels. RMC was at the 87th percentile for enlisted members with some college and at the 85th for those with associate's degrees. For officers, RMC was at the 86th percentile for those with bachelor's degrees and around the 70th for those with master's degrees or higher. Controlling for the change in education levels among service members, the researchers also found the same overall percentiles for 2009.

RMC has risen faster than civilian pay since 1999. The researchers found that, as this occurred, three military services (but not the Army) increased the quality of their recruits. The authors recommend further research into services' recruit-quality requirements and question whether broad increases in pay are cost-effective for increasing quality.

Key Findings

The regular military compensation (RMC) percentile for 2016 was above the 70th percentile

  • In 2016, the overall RMC percentile was at the 84th percentile for enlisted personnel and the 77th percentile for officers.
  • RMC for enlisted members was at the 87th percentile on average for those with some college and the 85th percentile for those with associate degrees.
  • For officers, RMC was at the 86th percentile for those with bachelor's degrees and around the 70th percentile for those with master's degrees or higher.

The RMC percentile was about the same in 2016 as in 2009

  • The overall RMC percentiles in 2009 for enlisted personnel and officers are virtually the same as for 2016.
  • RMC increased steadily relative to civilian wages from 2000 to 2010 and leveled off afterward. Civilian wages adjusted for inflation trended down from 2000 to 2013, although they have tended to increase since 2013.

Recruit quality rose in three services as the RMC/wage ratio increased

  • Recruit quality is positively associated with the RMC/wage ratio for the Navy, Marine Corps, and Air Force but not the Army.

Recommendations

  • If RMC decreased from its current level relative to civilian pay, the services would need either to allow a decrease in recruit quality or to make up for the decrease in RMC by increasing recruiting resources and special and incentive pays.
  • In balancing the cost of recruit quality with achieving military force capability, it is important to verify whether today's recruit quality is at the right level in the Navy, Marine Corps, and Air Force, in which quality has risen, and in the Army, in which it has not. It is also important to determine whether providing broad pay increases is the most efficient way to obtain the appropriate level of quality.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Military and Civilian Pay Comparisons and Regular Military Compensation Percentiles

  • Chapter Three

    Recruit Quality and Military and Civilian Pay

  • Chapter Four

    Closing Thoughts

  • Appendix A

    Regular Military Compensation Percentile and Regular Military Compensation/Wage Ratio

  • Appendix B

    Recruiting Rates for Armed Forces Qualification Test Categories I Through IIIB and Regression Estimates

  • Appendix C

    Why Not Compare Basic Pay to the Employment Cost Index?

  • Appendix D

    A Two-Goal Model of Recruitment Resource Allocation

This research was sponsored by the Office of the Deputy Assistant Secretary of Defense for Military Personnel Policy and conducted within the Forces and Resources Policy Center of the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND Corporation research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

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