A wage differential approach to managing special and incentive pay
James Hosek, Michael G. Mattock, Beth J. Asch.
Bok Engelsk James R. Hosek
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| Opplysninger | Special and incentive (S&I) pays allow the Department of Defense to address temporary personnel fluctuations, persistent differences between external pay and regular military compensation, personnel requirements for retention, and variations in external employment opportunities. The authors review Active Component S&I pays and assess the potential for converting some of them into a wage differential, under which such pays would be disbursed according to a stable schedule that could depend on occupation or duty, years of service, and pay grade, a possible advantage to which would be to provide greater stability in pay. They find that a large portion of total S&I pays are already akin to a wage differential, and note that if servicemembers are averse to pay uncertainty, it is more cost-effective to compensate for difficult-to-predict circumstances such as hostile deployment or variation in unemployment with S&I pays that are conditional on the realization of such circumstances rather than on an ex ante basis, as would be the case under a wage differential approach. Additionally, converting these pays to a wage differential would deprive the services of flexibility in responding to certain circumstances. Using RAND's dynamic retention model, they find that S&I pays with an incentive to select a longer obligation are more cost-effective and may be more beneficial than pays without such incentive, as would be the case under a wage differential.
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