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Research Questions

  1. How does military pay for active-component personnel in 2017 compare with comparably educated civilian pay?
  2. What has happened to recruit quality given the relative changes in military and civilian pay since 2000?
  3. How does the difference between civilian and military pay change across geographies within the United States?

Given an all-volunteer force, compensation and benefits are critical for attracting and retaining the quantity and quality of military personnel necessary for the United States to achieve its military goals. The military must set pay high enough to draw quality recruits away from other jobs that they could obtain, while also appropriately managing public funds. Analyzing data from 1999, the Ninth Quadrennial Review of Military Compensation (QRMC) recommended in 2002 that regular military compensation (RMC) — which is the sum of basic pay, basic allowance for housing, basic allowance for subsistence, and the federal tax advantage resulting from allowances not being taxed — be at around the 70th percentile of comparably educated civilian wages. The authors' analysis indicates that RMC has consistently remained above that benchmark and has thus continued to support readiness. The authors also found that as the RMC/wage ratio increased over time, recruit quality increased in the Navy, Marine Corps, and Air Force, but not in the Army. In addition, they saw large differences in how RMC compares with civilian pay across geographies for individuals of different education levels: Whereas officers and those with more education in general are likely to find military pay higher relative to civilian pay if they live in less-urban areas, enlisted military with a high school degree are likely to find military pay as attractive in urban as in nonurban areas. On average, RMC in 2017 was at the 85th percentile for active-component enlisted personnel and at the 77th percentile for active-component officers.

Key Findings

RMC continues to support readiness and lies above the benchmark of the 70th percentile set by the Ninth QRMC

  • RMC for active-component enlisted personnel in 2017 was at the 85th percentile of comparably educated civilian wages.
  • RMC for active-component officers in 2017 was at the 77th percentile.
  • These percentiles were similar to what they were in 2009.

As the RMC/wage ratio increased, recruit quality increased in the Navy, Marine Corps, and Air Force, but not in the Army

  • The Navy, Marine Corps, and Air Force increased the quality of their recruits as the RMC/wage ratio increased.
  • Army recruiting may have become more difficult during the 2000s because of extensive deployments in support of operations in Iraq and Afghanistan, or the Army may have set its recruiting quality goals to hold recruit quality constant as RMC increased.

There appear to be large differences in how RMC compares with comparably educated civilian pay across geographies for individuals of different education levels

  • Enlisted military with a high school degree are likely to find military pay relative to civilian pay as attractive in urban as in nonurban areas — a change from earlier years when military pay was relatively less attractive in urban areas.
  • Officers and those with more education in general are likely to find military pay higher relative to civilian pay if they live in less urban areas than if they live in more urban areas.

Recommendations

  • Weigh the defense capability gained from recruiting more high-quality recruits against the added cost of higher RMC, which increases the entire personnel budget. Although the authors' analysis has shown to what extent recruit quality increased as military pay increased, it cannot place a value on the increased quality, which is the services' domain.
  • Determine whether the increase in recruit quality for three of the four services between 1999 and 2017 could have been accomplished in a more cost-effective manner than increasing RMC relative to civilian pay.
  • Address these issues when setting RMC in the future.

This research was sponsored by the 13th Quadrennial Review of Military Compensation and conducted by the Forces and Resources Policy Center within the RAND National Defense Research Institute.

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