Perhaps you have seen the catchy TV ads for the various branches of the United States military. You know, the ones that tell you to "be all you can be...in the Army!." In the last decade, these advertisements have become necessary because compulsory military service (otherwise known as "the draft") no longer exists in the United States. Compulsory service, long required during time of war, was reinstituted in the United States in 1940, as the United States was on the brink of World War II. The draft remained in effect through the turbulent 1960s but was suspended by President Nixon in 1973. In the late 1970s, Congress passed legislation officially halting the draft.
- Calculate the percentage change in military strength over the last two decades.
- Hypothesize economic (and non-economic) explanations for these changes.
- Test hypothetical explanations by reading an economic analysis of the military strength issue.
- Calculate military wages and non-wage benefits to determine whether the wages paid to soldiers are greater than the minimum wage.
Perhaps you have seen the catchy TV ads for the various branches of the United States military. You know, the ones that tell you to "be all you can be...in the Army!" (Note: Teachers may wish to use the Army's Recruiting Page to introduce this lesson to your class). In the last decade, these advertisements have become necessary because compulsory military service (otherwise known as "the draft") no longer exists in the United States. Compulsory service, long required during time of war, was reinstituted in the United States in 1940, as the United States was on the brink of World War II. The draft remained in effect through the turbulent 1960s but was suspended by President Nixon in 1973. In the late 1970s, Congress passed legislation officially halting the draft.
Go Army Homepage: This is a recruiting page, designed to attract new members to the U.S. Army.
Legions Stretched Thin: This site discusses the U.S. Army's manpower crisis.
Percentage Change in Military Strength Worksheet: This EconEdLink worksheet allows the students to get a better understanding of the U.S. Army's manpower crisis.
Military Strength Change Calculator: This EconEdLink calculator allows students to track the change in military strength over a number of years.
Army Reserve Battling an Exodus: This 2003 article discusses how the war was seen as a drain on the ranks of the Army.
Basic Military Pay: This PDF provides a military pay table for 2006.
2008 Basic Allowance for Housing (BAH) Rates: This site shows the rates of tax-free housing allowance (Basic Allowance for Housing, or BAH) that are provided to military members (with and without dependents) who are authorized to reside off base at government expense.
Feeling the Pinch of a Marine Salary: This article explains the financial strain on some military families.
Census Bureau: Poverty 1999: This site provides information related to poverty rates in the 2000 Census.
Economics America National Standard 1: This EconEdLink page provides National Economic Standards, including Scarcity.
Economics America National Standard 4: This EconEdLink page provides National Economic Standards, including the Role of Incentives.
Role of Incentives
Military Officers Association of America (MOAA): Military Pay Raise Gap: This site provides information on the pay raise gap in the military compared to the private sector.
How has the elimination of compulsory service affected the number of military personnel that currently serve in the United States armed forces? What would you predict happened to the size of the military once the draft was eliminated? [answers may vary, but students' initial reaction might be that they expect a smaller military with no compulsory service.] Economists often compare certain economic indicators from one year to the indicators (e.g., gross domestic product, consumer price index) from another year in order to determine the percentage change from one year to the next. In order to test your predictions, you must calculate the percentage change in the size of the military from one year to the next. The formula for calculating percentage change in military strength is:
Percentage change = (military strength Year 2 - military strength Year 1) / military strength Year 1
First, visit the Department of Defense's personnel statistics, "Legions Stretched Thin
Next print out this worksheet. Use the formula above and the military strength numbers to complete the worksheet and then use this handy calculator to check your answers. You should be able to answer the following questions:
1. What was the percentage change in U.S. total military strength from 1980 to 1985? [+4.9%]
2. What was the percentage change from 1985 to 1990? [-5.0%]
3. What was the percentage change from 1990 to 1995? [-25.7%]
4. What was the percentage change from 1995 to 1999? [-8.7%]
5. What was the percentage change in total U.S. military strength from 1980 to 1999? [-32.4%]
As we might have expected, more young men and women were in the military service in 1980 (at the end of the draft) than were serving in 1999 (nearly 20 years after the end of compulsory service). However, the greatest percentage decrease in service personnel took place from 1990 to 1995, more than 10 years after the end of the compulsory service requirement. It looks as if some other factors may account for the dramatic drop-off in the number of military personnel in service. What might some of these factors be? [Budget cuts, low pay, military no longer seen as an attractive career, post-Viet Nam attitude changes, post-Desert Storm cutbacks.]
Robert Schlesinger has an economic explanation for this mystery in his article "Army Reserve Battling an Exodus
." What does Schlesinger say are the main causes of this mass exodus of military personnel? [ (a) Tight labor markets--U.S. prosperity means that most everyone has a job, and low-paying industries like fast food restaurants are forced to pay more than minimum wage to attract workers; (b) lack of prestige to military service; (c) mostly due to low wages relative to other, less dangerous occupations, the base pay of a private in the U.S. Army is about the same as starting wages at fast food restaurants.]
Let's test Schlesinger's theory by comparing the base salary of a private in the U.S. Army with what the same person might make earning the minimum wage in the civilian world. Currently the minimum wage in the United States is $5.15/hour. If our civilian worker is working 40 hours per week over 50 weeks then how much would he or she earn in a year? [$5.15/hr. X 40 hrs./week X 50 weeks = $10,300]
What does a private earn per year? Log on to the military monthly base pay table, Basic Military Pay . Assume that our private (rank rating of E-1) has less than two years experience. What is her annual salary? [$12,060]
Using a 2000 hour work year (as we did above), what is her hourly wage? [$6.03] So the private, who is risking her life for her country, is making $.88 an hour more than the civilian burger flipper!
In order to compete, the Army (and the other branches of service) must use other, non-salary incentives to attract personnel. What might some of these incentives be? [College tuition, enlistment bonuses, housing and food allowances.] Log on to the Army's Recruitment Page to find several examples of these incentives.
Let's look at how one of these incentives, the housing allowance, contributes to our private's income. Using the Army's Basic Allowance for Housing Database , chose your private's rank and state. What is the monthly housing allowance? [Answers will vary depending on location, but should be in the range of $425/month for a single soldier, $550/month for a soldier with dependents.] Adding this monthly allowance to the private's salary means an annual income of how much? [Approximately $17,160 for the single soldier; $18,660 for the solider with dependents.] With this additional income, our private is now clearly making more than the minimum wage worker, but is it enough to get by? To learn more about the financial strain some military families experience read Feeling the Pinch of a Marine Salary .
Is it possible that, even with housing and food allowances, many U.S. soldiers and sailors are--as the previous article implies-- living in poverty? If our private were the only breadwinner for her family of four (herself and three dependents), what is the US Census Bureau's Poverty Threshold ? [$16,954] Is our private 'living in poverty'? [Clearly no, but she's not too far removed...her income is only $1,700 above the poverty threshold for a family of four with three dependents and she's risking her life for her country...!]
Two basic tenets of economic behavior are that every decision has a cost (Economic Content Standard 1 ) and that people respond to incentives (Economic Content Standard 4 ). If U.S. citizens chose to join the military, they 'trade-off' the possibility of other (perhaps more lucrative) forms of employment. If the choice is between a potentially dangerous career in the military, then, or a safer, more stable civilian career where the pay is better, rational people will choose the latter. It would seem that Congress, the president and the nation's military leadership have recognized these issues (as well as the severity of this most recent labor shortage), as recent legislation has been passed that gives military personnel the largest pay raise (4.8%) since 1981. Perhaps those who are trying to "Be All They Can Be" can do so on a bit more than minimum wage. The article Military Pay Raise Gap does a nice job of exemplifying this dilemma.
“The military also provides housing, food, uniforms, and medical care. That needs to be added into the equation. I think the military personnel should get paid more, but they do get some good benefits. Also, they get 30 days paid vacation - is that in the equation also?”
“I like the lesson. I am concerned that students will not gain an understanding of the difference between "opportunity costs" and "trade-offs," which are not one in the same. This issue needs clarification.”
“Imperative are the benefits, additional special pays, and housing allowances that are added to the equation. As someone said, there are not only ancillary benefits but also a lack of expenses that a civilian might incur. While serving, there is a lack of utility, food, gas, transportation costs, etc. Essentially, besides taxes, there are no real fixed expenses that a member of the military would face. All in all, I do not at all disagree with the fact that those serving our nation should be paid more. That being said, of course, we must take an educated perspective when we evaluate the situation.”
“This article addressed a very important aspect of the decision about enlistment that many students are considering. Another aspect is; what will they be doing once in? Will they be serving the economic needs of big business, such as Marine Corp General Smedley Butler detailed in his 1934 classic "War is a Racket" or engaging in illegal wars? This is an issue that we have been shying away from sadly.”
“An excellent presentation that is current and appropriate! Great job.”
“Unfortunately, we work more than the standard 40 hour week. So the math here dilutes the nature of an hourly "minimum" wage. Don't forget to factor in the deductions on our pay statements for said food and insurance (tricare). This article does a good job giving a basic analysis of what is seen, but neglects to factor in "what isn't."”