Career options for military service personnel are not keeping
pace with skyrocketing defense manpower costs, expanding use
of Reserve forces, and the rapid changes in the American workplace.
The Pentagon needs a new paradigm for compensating its military
personnel that allows them to move seamlessly through active
duty, the Reserves, the National Guard, and civilian employment
without concern for how their career decisions will affect
their health care and retirement benefits. A "rucksack" of benefits
that they select themselves and can carry with them would be a
critical tool in recruiting and retaining a trained and ready
volunteer military. At the same time, Congress needs to address
spiraling military manpower costs. In short, the rucksack for
America's armed forces needs to be both transportable and
Changing Times. An effective military workforce strategy
must address three critical contemporary challenges.
Military Manpower. Manpower costs consume the largest
part of the Pentagon's budget. Indeed, future increases in the per
capita cost of military compensation could crowd out needed
spending on military modernization in the core defense budget
because Congress and the Administration plan to permanently
increase the Army and Marines over the near term by about 100,000
active duty personnel. Evidence suggests that the current
compensation system is too heavily weighted in favor of
in-kind and deferred compensation over direct cash
Active Reserve. Unlike during the Cold War, today's
National Guard and the Army, Navy, Air Force, Marine, and Coast
Guard Reserves are operational forces that conduct missions at home
and around the world during wartime and peacetime. For
example, from September 11, 2001, to the end of 2003, over 319,000
citizen soldiers-27 percent of the Reserve Components-performed
active duty. The reserves have proven themselves an effective means
of rapidly expanding military capacity to meet changing
national security requirements, but this requires reserves that
have the flexibility to deploy when the nation needs them.
A Changing Nation. Demographic shifts will further
alter the character of the military. Although the rate of U.S.
population growth will continue to slow, the total population will
continue to grow and age, which means that a smaller proportion of
the population will be suitable for military service. The cost
of military manpower will also increase as the armed forces find
themselves competing with the private sector for talented young
people. The total size of the military relative to the nation as a
whole will likely continue to decrease in the years to come.
At the same time, the American workplace is changing. Workers
change jobs, careers, and geographic location with increasing
frequency. They leave and reenter the workforce and the schoolroom
throughout their lives.
Thinking Differently About Active and Reserve Forces. The
key to recruiting and retaining a quality, all-volunteer force is
to adopt career models that are consistent with both the changes in
the American workforce and the nation's national security needs.
The chief characteristic of this system must be flexibility
that allows individuals to decide when and how to volunteer their
time and talents. The Pentagon calls this concept "continuum of
service," providing more opportunities to move back and forth
between active and reserve service and civilian employment, to
shift career fields within the military, and to choose options for
Among other things, establishing an effective continuum of
service will require a package of incentives that best serve
the nation and the individual. The right mix will require a
combination of immediate targeted compensation (e.g., cash
bonuses, career options, and educational opportunities) and the
confidence to accept voluntary deployments knowing that the
decision will not adversely affect health care and retirement. The
Pentagon needs to be able to offer each soldier a "rucksack" that
could accompany that individual whether or not the soldier
chooses to serve on active duty or in the ready or inactive
reserve. In short, health care and retirement should be
portable and follow the soldier.
What Congress Should Do. Congress can speed this process
by using the military to pioneer entitlement reform. Congress
- Create a more flexible military retirement system. For
example, the military would be an ideal population to pioneer the
use of voluntary retirement accounts, which allow individuals to
set aside a portion of their Social Security taxes. In addition,
the Pentagon might create a variety of retirement contribution
options. Right now, personnel that are separated from active
service before 20 years receive no retirement benefits. The
Department of Defense needs to offer a greater variety of options
that are completely portable, following the soldier from active
duty to reserve duty and civilian life.
- Move the military health care system toward a defined
contribution plan and away from a defined benefit plan (for
medical services other than those related to operational missions
and deployments). Such programs are both more economical and more
flexible. Military and civilian health care systems share a common
problem: In many cases, they preclude individuals from
assuming at least some of the responsibility for making
decisions about their care. As a result, they encourage
beneficiaries to treat health care as a free good or service.
Structuring the military health care system as a defined
contribution plan would allow participants greater freedom of
choice and more control. Greater individual control would likely
impose more discipline on the system regarding the use of its
resources and allow individuals to build personal health care
programs that could accompany them from active duty to reserve duty
to civilian employment.
A 21st Century System for a 21st Century Military.
Creating a rucksack for health care and retirement would help
the Pentagon get the military that it needs when it needs it while
helping to rein in spiraling manpower costs. The rucksack not only
would serve the military well, but also could become a model for
the civilian workforce of the future.
James Jay Carafano,
Ph.D., is Assistant Director of the Kathryn and Shelby
Cullom Davis Institute for International Studies and Senior
Research Fellow for National Security and Homeland Security in the
Douglas and Sarah Allison Center for Foreign Policy Studies at The