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The period since military conscription was ended in 1973 has been marked by a gradual shift toward greater seniority in the active enlisted forces. This shift is likely to continue into the 1990s, with large increases in the numbers of senior career personnel adding significantly to personnel costs and perhaps increasing productivity. This report, produced at the request of the Subcommittee on Military Personnel and Compensation, House Armed Services Committee, projects the future levels of experience in the enlisted forces and examines the cost and benefits of seniority growth. It also develops alternatives to the services' enlisted strength plans that reflect increased productivity. In accordance with the mandate of the Congressional Budget Office (CBO) to provide objective analyses, the report makes no recommendations.

Richard L. Fernandez of CBO's National Security Division prepared the report under the general supervision of Robert F. Hale and Neil M. Singer. Elizabeth Sterman, also of the National Security Division, prepared much of the data. The author thanks Stanley A. Horowitz of the Institute for Defense Analysis for his insightful review of an earlier draft. (External reviewers bear no responsibility for the final product, which rests solely with CBO.) Thanks go also to the Policy and Systems Integration Office, Directorate of Manpower and Organization, Headquarters United States Air Force, which provided unplublished data from an earlier study sponsored by the Air Force. CBO staff members Elizabeth Chambers, Paul Christy, and Michael A. Miller provided helpful comments. Francis S. Pierce edited the manuscript, assisted by Nancy H. Brooks, and Rebecca J. Kees prepared it for publication.
 

Edward M. Gramlich
Acting Director
September 1987
 
 

SUMMARY

I - INTRODUCTION

• Background

II - PROJECTED EXPERIENCE STRUCTURES, AND COSTS, FOR THE ENLISTED FORCES

• Projected Experience Structures
• Projection Assumptions
• Cost Projections
• The Costs of Seniority Growth

III - EXPERIENCE AND PRODUCTIVITY

• The Enlisted Utilization Survey
• The RAND Air Force Study
• Projections of Aggregate Productivity
• Limitations and Qualifications
• Conclusions

IV - AGGREGATE PRODUCTIVITY LEVELS AND ENLISTED STRENGTH PLANS

• Assumptions and Procedure
• Enlisted Strengths and Costs
• Conclusions

APPENDIXES

A - Pay and Unemployment Elasticities
B - Development of Productivity Indexes from the RAND Air Force Study
 

TABLES
S-1.	Sources of Growth in Personnel Costs over 1987 Levels
S-2.	Enlisted Strengths and Costs under Defense Department Plan and Changes under CBO Alternatives
1.	Enlisted Personnel Cost Projections by Category, Four-Service Total, 1987-1994
2.	Sources of Growth in Personnel Costs over 1987 Levels
3.	Percent Distribution of Enlisted Forces by Pay Grade, 1985 Actual and 1992 Projected
4.	Projected Costs of Seniority Growth Arising from Maintaining Promotion Rates and Timings
5.	Projected Costs of Seniority Growth Arising from Longevity Increases in Pay
6.	Seniority Growth Costs and Productivity Improvements: 1992 versus 1987
7.	Personnel Strengths, Present and Planned, with Alternatives under Three Productivity Cases
8.	Personnel Costs, Present and Projected, with Alternatives under Three Productivity Cases
A-1.	Assumptions for Pay and Unemployment Elasticities, by Service and Year of Service
FIGURES
S-1.	Projected Changes in Average Productivity (Case 1)
1.	Junior Noncommissioned Officers as Percent of Enlisted Force, 1974-1985
2.	Projected Distribution of Active Enlisted Personnel, by Years of Service, 1985-1994
3.	Planned Changes in Enlisted Strengths from 1987 Levels
4.	Productivity Indexes by Service and Year of Service
5.	Relative Task Completion Times
6.	Productivity Indexes by Year of Service
7.	Projections of Average Productivity in the Enlisted Force of Each Service
8.	Changes in Enlisted Strength Levels from 1987: Case 2

 

Since the end of the draft in 1973, there has been a trend toward more senior enlisted forces. This trend, resulting from the higher reenlistment rates of true volunteers as compared with draftees and draft-motivated volunteers, has important consequences for personnel costs. The Congressional Budget Office (CBO) projects that seniority growth--that is, the increase in average years of service of enlisted personnel--in the four active services will raise real personnel costs in the early 1990s substantially above their 1987 levels. Over the five years 1988 to 1992, added costs will total at least $1.4 billion, and perhaps as much as $2.8 billion; in 1992 alone, costs will be higher by as much as $720 million.

These projected cost increases, amounting to 0.8 percent to 1.4 percent of total enlisted personnel costs in 1992, are an obvious target for efforts to reduce Defense Department personnel expenditures. Seniority growth thus raises two important questions:

• Will more senior forces offer benefits in terms of greater capabilities that will balance their greater costs?
  
  
• How would increased capabilities affect the appropriate sizes of the enlisted forces?

This study provides preliminary answers to these two questions, as well as projecting the coming changes in enlisted seniority and in personnel costs. Available evidence on experience/productivity trade-offs in the military indicates that, as seniority increases through the early 1990s, all four enlisted forces will become considerably more capable. This may be a fairly inexpensive way to improve defense capabilities. Seniority growth also means that cuts in enlisted strengths below planned levels could perhaps be made without reducing planned capabilities.

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