Over the past two decades, the proportion of enlisted service members--particularly midcareer and senior enlisted personnel--with some postsecondary education has increased. The Department of Defense (DoD) has responded to that increase by awarding higher-than-average pay raises to all midlevel and senior enlisted personnel.

This Congressional Budget Office (CBO) paper--prepared in response to a request from the Senate Budget Committee--examines the basis for those targeted pay raises. It reviews trends in the educational attainment of the enlisted force and analyzes the effect of education on the retention of enlisted personnel with 3 to 17 years of service. The paper also compares total compensation for enlisted personnel (including retirement and medical benefits) with compensation for civilian workers of similar ages and levels of experience. Finally, the paper looks at alternative ways to increase the quality of the enlisted force that could be more cost-effective than targeted pay raises. In keeping with CBO's mandate to provide objective analysis, this paper makes no recommendations.

Adebayo Adedeji of CBO's National Security Division wrote the paper under the supervision of Deborah Clay-Mendez and J. Michael Gilmore. At CBO, Daniel Frisk provided valuable assistance in describing the higher education programs that DoD offers to military personnel, Chad Goldberg helped with data processing, and Carol Frost provided programming assistance for the statistical analyses. Nabeel Alsalam, Robert Dennis, Cary Elliot, Seth Giertz, Roger Hitchner, Arlene Holen, and Elizabeth Robinson of CBO offered thoughtful comments on an earlier draft, as did Glen Gotz of the Institute for Defense Analyses.

Christian Spoor edited the paper, and Juyne Linger proofread it. Maureen Costantino designed the cover and prepared the report for publication. Lenny Skutnik produced the printed copies, and Annette Kalicki prepared the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
February 2004