Analysis of a Time-in-Grade Pay Table for Military Personnel ...

COR PORAT ION

BETH J. ASCH, MICHAEL G. MATTOCK, PATRICIA K. TONG

Analysis of a Time-inGrade Pay Table for Military Personnel and Policy Alternatives

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Preface

Federal law mandates that every four years the Secretary of Defense conduct an assessment of the military compensation system, resulting in a Quadrennial Review of Military Compensation (QRMC). In response to a request articulated in Section 603 of the Senate Armed Services Committee version of the National Defense Authorization Act of 2019, the 13th QRMC is providing an assessment of the effects of a time-in-grade pay table for military personnel, particularly on readiness. A time-in-grade pay table would set pay based on pay grade and years of service within a grade, in contrast to the current time-in-service pay table, which sets pay based on pay grade and years of service in the military. While interest in a time-in-grade pay table is not new, and in fact it was assessed by past commissions, including the 10th QRMC, interest in it has been renewed because of efforts at the congressional level and within the services to more flexibly manage military personnel to attract, retain, and promote better performers. The primary means by which military personnel are financially rewarded for superior performance is through faster promotion, so a time-in-grade pay table may increase performance by providing a permanent reward to those who are promoted faster. The current time-in-service pay table provides only temporary financial rewards to those who are promoted faster.

The 13th QRMC asked the RAND Corporation to assist in its assessment of a time-ingrade pay table. This report describes the results of these analyses. It should be of interest to those concerned about the setting of military pay and its effects on readiness.

The research was sponsored by the 13th QRMC and conducted within the Forces and Resources Policy Center of the RAND National Security Research Division (NSRD), which operates the RAND National Defense Research Institute (NDRI), 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 enterprise.

For more information on the RAND Forces and Resources Policy Center, see or contact the center director (contact information is provided on the webpage).

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Contents

Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

CHAPTER ONE

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Research Questions and Approach.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Previous Commission and Study Group Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 How This Study Builds on and Extends Past Efforts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Organization of This Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

CHAPTER TWO

A Time-in-Grade Pay Table and Estimates of Basic Pay over a Career. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Effects on Pay of Time in Grade for Members with Differing Promotion Times.. . . . . . . . . . . . . . . . . . . . . . . 12 Warrant Officers with Prior Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Commissioned Officers with Prior Enlisted Service.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Lateral Entry.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CHAPTER THREE

Extending the Dynamic Retention Model to Analyze the Effect of a Time-in-Grade Pay Table .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Extending the DRM Mathematical Structure to Account for Promotion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Estimation Methodology.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Data.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Model Estimates and Model Fits for Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Model Estimates and Model Fits for Enlisted Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Simulation and Extension of the DRM to Model a Time-in-Grade Pay Table. . . . . . . . . . . . . . . . . . . . . . . . . . 47 Incorporating Performance into the Dynamic Retention Model Simulation Capability. . . . . . . . . . . . . . . 47 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

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