Archive for the ‘salaries and wages’ Category

New From the GAO

September 14, 2012 Comments off

New GAO Reports and Testimonies

Source: Government Accountability Office

+ Reports

1. Spent Nuclear Fuel: Accumulating Quantities at Commercial Reactors Present Storage and Other Challenges. GAO-12-797, August 15.
Highlights –

2. Federal Real Property: Strategic Partnerships and Local Coordination Could Help Agencies Better Utilize Space. GAO-12-779, July 25.
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3. Electronic Government Act: Agencies Have Implemented Most Provisions, but Key Areas of Attention Remain. GAO-12-782, September 12.
Highlights –

4. Recovery Act: Broadband Programs Are Ongoing, and Agencies’ Efforts Would Benefit from Improved Data Quality. GAO-12-937, September 14.
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5. The Distribution of Federal Economic Development Grants to Communities with High Rates of Poverty and Unemployment. GAO-12-938R, September 14.

6. Unmanned Aircraft Systems: Measuring Progress and Addressing Potential Privacy Concerns Would Facilitate Integration into the National Airspace System. GAO-12-981, September 14.
Highlights –

7. Medicare Savings Programs: Implementation of Requirements Aimed at Increasing Enrollment. GAO-12-871, September 14.
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8. Disaster Relief: Reimbursements to the American Red Cross for Certain 2008 Disaster Assistance. GAO-12-877, September 14.
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9. Disaster Assistance: USDA and SBA Could Do More to Help Aquaculture and Nursery Producers. GAO-12-844, September 11.
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+ Testimonies

1. SSA Disability Programs: Progress and Challenges Related to Modernizing, by Dan Bertoni, director, education, workforce, and income security issues, before the Subcommittee on Social Security, House Ways and Means Committee. GAO-12-891T, September 14.

2. Human Capital: The Department of Health and Human Service’s and Environmental Protection Agency’s Use of Special Pay Rates for Consultants and Scientists, by Robert Goldenkoff, director, strategic issues, and Robert Cramer, managing associate general counsel, before the Subcommittee on Health, House Committee on Energy and Commerce. GAO-12-1035T, September 14.
Highlights –

Salient Features of Vietnamese and Filipina Brides of American Citizens: Findings Based on the Micro Data of Recent American Community Surveys

September 5, 2012 Comments off

Salient Features of Vietnamese and Filipina Brides of American Citizens: Findings Based on the Micro Data of Recent American Community Surveys (PDF)

Source:  Journal of Population Studies
This paper studies the educational, employment, and income status of Vietnamese and Filipina brides of American citizens, based on the merged micro data of the 2005, 2006, and 2007 American Community Surveys. We found that the Vietnamese brides tended to be much less educated than the Filipina brides. This difference, together with the fact that the former tended to be much weaker in English language ability than the latter, contributed than did the Filipina brides, and (2) the finding that the economic niche of the employed Vietnamese brides (in the salon sector) tended to yield substantially lower wages than did the economic niche of the employed Filipina brides (in the medical service sector). Since better-educated brides had a better chance to get married to better-educated husbands, we naturally found that the husbands of the Vietnamese brides tended to be less educated than the husbands of the Filipina brides. However, the gap in educational attainment between the two groups of husbands was substantially smaller than the corresponding gap between the two groups of the brides. Underlying this gender difference was the fact that in addition to educational status, beauty and pleasant personality were also important criteria for selecting wives, and the possibility that beauty and pleasant personality were not positively correlated with educational status. With respect to household income, the gap between the two groups of brides was not large, partly because of the strong tendency of the Vietnamese brides toward hypergamy. A nice finding was that both Filipina and Vietnamese wives of American citizens were at rather low risk of being in poverty. The rather negative images of foreign brides in higher-income Asian countries conveyed by many ethnographic studies have been countered by our more sanguine finding about the Vietnamese and Filipina brides in the United States. With respect to the idea that women in lower-income countries tend to accept hypogamy at the personal level in order to achieve hypergamy at the societal level, it was moderately supported by the Filipina cases but largely negated by the Vietnamese cases.

Characteristics of Recent Science and Engineering Graduates: 2008

September 4, 2012 Comments off

Characteristics of Recent Science and Engineering Graduates: 2008
Source: National Science Foundation

This report presents data from the 2008 National Survey of Recent College Graduates (NSRCG) on the characteristics of men and women who received bachelor’s or master’s degrees in science, engineering, or health fields from U.S. institutions during the two academic years 2006 and 2007. The data reflect the employment, educational, and demographic status of individuals as of the survey reference week of 1 October 2008.

The data presented in this report measure the number of individuals with recently acquired science, engineering, and health degrees and do not necessarily coincide with the data on degree completions from the Integrated Postsecondary Education Data System (IPEDS). IPEDS is conducted by the U.S. Department of Education, National Center for Education Statistics. The IPEDS completions data file represents a count of degrees that graduates were awarded, whereas the NSRCG data represent estimates of graduates (persons).

The data tables present information on the number and median salaries of recent graduates by field of major, occupation, and various demographic characteristics. Tables are presented separately for bachelor’s and master’s degree recipients. Complementary tables for the two degree levels are numbered sequentially so that odd-numbered tables are for bachelor’s degree recipients and even-numbered tables are for master’s degree recipients.

New Report: The Low-Wage Recovery and Growing Inequality

August 31, 2012 Comments off

New Report: The Low-Wage Recovery and Growing Inequality

Source: National Employment Law Project

This report updates NELP’s previous analyses of job loss and job growth trends during and after the Great Recession.

We find that during the recession (2008 Q1 to 2010 Q1), employment losses occurred throughout the economy, but were concentrated in mid-wage

occupations. By contrast, during the recovery (2010 Q1 to 2012 Q1), employment gains have been concentrated in lower-wage occupations, which

grew 2.7 times as fast as mid-wage and higher-wage occupations. Specifically:

  • Lower-wage occupations constituted 21 percent of recession losses, but 58 percent of recovery growth.
  • Mid-wage occupations constituted 60 percent of recession losses, but only 22 percent of recovery growth.
  • Higher-wage occupations constituted 19 percent of recession job losses, and 20 percent of recovery growth.

Moreover, the unbalanced recession and recovery have meant that the long-term rise in inequality in the U.S. continues. The good jobs deficit is

now deeper than it was at the start of the century:

  • Since the first quarter of 2001, employment has grown by 8.7 percent in lower-wage occupations and by 6.6 percent in higher-wage occupations.
  • By contrast, employment in mid-wage occupations has fallen by 7.3 percent.

Why Has Regional Income Convergence in the U.S. Stopped?

August 28, 2012 Comments off

Why Has Regional Income Convergence in the U.S. Stopped?
Source: Social Science Research Network

The past thirty years have seen a dramatic decrease in the rate of income convergence across states and in population flows to wealthy places. We develop a model where migration drives convergence and its disappearance. The model predicts that increases in housing prices in rich areas generate (1) a divergence in the skill-specific returns to productive places, (2) a redirection of low-skilled migration, (3) diminished human capital convergence, and (4) continued convergence among places with unconstrained housing supply. Using a new panel measure of housing-supply regulations, we confirm these predictions and the role of housing in the end of convergence.

Should the Increase in Military Pay Be Slowed?

August 24, 2012 Comments off

Should the Increase in Military Pay Be Slowed?
Source: RAND Corporation

Conditions are favorable for slowing the increase in military pay. Recruiting and retention are in excellent shape, and manpower requirements are planned to decrease. Basic pay grew 45 percent from 2000 to 2011, more than the Employment Cost Index (ECI) (up 33 percent) and the Consumer Price Index (CPI) (up 31 percent). Regular military compensation (RMC) grew even more. After adjusting for inflation, RMC grew an average of 40 percent for enlisted members and 25 percent for officers. RMC growth was higher because of increases in the basic allowance for housing. RMC is above the benchmark of 70th percentile of civilian pay and stands at the 80th percentile or higher for enlisted personnel and officers with a bachelor’s degree and the 75th percentile for officers with more than a bachelor’s. The authors discuss several approaches to slowing the rate of increase in military pay: (1) A one-time increase in basic pay set at half a percentage point below the ECI, (2) a one-year freeze in basic pay, and (3) a series of below-ECI increases, such as ECI minus half a percentage point for four years. The first option has lower cost savings, leaves open possible further action, yet may create more uncertainty about future pay changes. The second and third options provide several times more cost savings but may be politically more costly.

Executive compensation tax deductions cost Treasury $30.4 billion over 2007-10

August 21, 2012 Comments off

Executive compensation tax deductions cost Treasury $30.4 billion over 2007-10
Source: Economic Policy Institute

A new EPI report, Taxes and executive compensation, by Temple University accounting professor Steven Balsam, provides estimates of the tax deductions and lost tax revenue associated with the executive compensation of publicly-held companies. The graph shows that tax-deductible executive compensation cost the federal treasury $30.4 billion over the years 2007–2010; $16.6 billion from performance-based compensation and $13.8 billion from other forms of compensation such as bonuses and salary.

Section 162(m) of the Internal Revenue Code, adopted in 1993 to discourage excessive executive pay, limits the deduction for executive compensation at publicly-traded corporations to $1 million in compensation per covered executive. An exception to the provision, however, allows corporations to deduct qualified performance-based compensation. This exception has a major weakness: While it requires that shareholders approve the performance-based compensation to preserve deductibility, corporations are only required to provide shareholders with general information. Thus, shareholders are asked to, and usually do, approve compensation plans without knowing the potential payouts from the plans or whether the performance conditions are challenging.

Improving School Leadership Through Support, Evaluation, and Incentives: The Pittsburgh Principal Incentive Program

August 21, 2012 Comments off
Source:  RAND Corporation

In 2007, the Pittsburgh Public Schools (PPS) received funding from the U.S. Department of Education’s Teacher Incentive Fund (TIF) program to implement the Pittsburgh Urban Leadership System for Excellence (PULSE), a set of reforms designed to improve the quality of school leadership throughout the district. A major component of PULSE is the Pittsburgh Principal Incentive Program (PPIP), a system of support, performance-based evaluation, and compensation with two major components: (1) an annual opportunity for a permanent salary increase of up to $2,000 based primarily on principals’ performance on a rubric that is administered by assistant superintendents and that measures practices in several areas and (2) an annual bonus of up to $10,000 based primarily on student achievement growth. The district also offered bonuses to principals who took positions in high-need schools. PPIP provided principals with several forms of support. This report examines implementation and outcomes from school years 2007–2008 through 2010–2011, with a focus on understanding how principals and other school staff have responded to the reforms, and on documenting the student achievement outcomes that accompanied program implementation.

CRS — Receipt of Unemployment Insurance by Higher-Income Unemployed Workers (“Millionaires”)

August 9, 2012 Comments off

Receipt of Unemployment Insurance by Higher-Income Unemployed Workers (“Millionaires”) (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The economic recession that began in December 2007 officially ended in June 2009 when the U.S. economy reached a trough, or low-point, in business activity. This recession lasted 18 months, making it the longest of any recession since World War II. To date, there is some growth in the nation’s Gross Domestic Product (GDP), and unemployment rates have fallen—but they remain persistently high in comparison to previous years. Peaking at 10.0% in October of 2010, the unemployment rate was 8.2% in May of 2012, up from 4.6% in May of 2006.

In response to the sustained period of high unemployment rates, Congress has extended Unemployment Insurance (UI) benefits several times. As a result of the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96, signed into law on February 22, 2012), UI benefits are potentially available for up to 99 weeks, which is longer than during any previous recession— although in practice, no state currently offers more than 79 weeks of benefits.

The temporary, long-term extension of UI benefits has occurred at a time when the federal government and the states face serious budget constraints. The recent debate in Congress over the latest extension took place in a climate of ongoing concern over the level of federal budget deficits. It was in this context that a proposal to restrict unemployment benefit receipt based on income emerged. Specifically, the House-passed version of H.R. 3630 (the Middle Class Tax Relief and Job Creation Act) included a provision that would impose an income tax on unemployment benefits for high-income individuals. Based on a scaled approach, the tax would increase to 100% for a single tax filer with Adjusted Gross Income (AGI) of $1 million (or AGI of $2 million for a married couple filing a joint return). The provision, however, was not included in the final version of the legislation that became P.L. 112-96.

Several other bills have been introduced in the 112th Congress that would restrict unemployment benefit receipt based on income (i.e., they would change the current requirement to provide unemployment benefits to all workers without income restrictions). S. 1944 would impose an income tax on unemployment benefit income for certain high-income tax filers, among other provisions. S. 1931 includes the same provisions for a tax on unemployment benefits received by high-income individuals as H.R. 3630. H.R. 235 and S. 310 would prohibit the use of federal funds to pay UI benefits to certain high-income individuals, among other provisions. While the recent debate in Congress commonly referred to restricting “millionaires” from receiving UI benefits, the various proposals specify different income thresholds at which the restrictions would apply (i.e., they vary in how they define high-income individuals).

To inform the policy debate, this report provides information relevant to proposals that would restrict the payment of unemployment benefits to individuals with high incomes. Three primary areas that may be of interest to lawmakers are addressed: (1) the current U.S. Department of Labor (DOL) opinion on means-testing UI benefits; (2) the potential number of people who would be affected by such proposals; and (3) policy considerations such as the potential savings associated with such proposals, particularly in terms of federal expenditures. The latter two issues are discussed because a small percentage (approximately 0.02%) of tax filers receiving unemployment benefit income had AGI of $1 million or more in tax year 2009 based on Internal Revenue Service (IRS) data.

Minimum Pay Scale and Career Length in the NBA

August 4, 2012 Comments off

Minimum Pay Scale and Career Length in the NBA (PDF)

Source: Research Papers in Economics

We use data from the National Basketball Association (NBA) to analyze the impact of minimum salaries on an employee’s career length. The NBA has a salary structure in which the minimum salary a player can receive increases with the player’s years of experience. Salary schedules similar to the NBA’s exist in public education, federal government agencies, the Episcopalian church, and unionized industries. Even though the magnitude of the salaries in the NBA differs from other industries, this study provides insight to the impact of this type of salary structure on career length. Using duration analysis, we find statistically significant evidence that minimum salaries shorten career length.

Do Women Choose Different Jobs from Men? Mechanisms of Application Segregation in the Market for Managerial Workers

August 2, 2012 Comments off

Do Women Choose Different Jobs from Men? Mechanisms of Application Segregation in the Market for Managerial Workers (PDF)
Source: Organization Science (via Wharton School, U Penn)

This paper examines differences in the jobs for which men and women apply in order to better understand gender segregation in managerial jobs. We develop and test an integrative theory of why women might apply to different jobs than men. We note that constraints based on gender role socialization may affect three determinants of job applications: how individuals evaluate the rewards provided by different jobs, whether they identify with those jobs, and whether they believe that their applications will be successful. We then develop hypotheses about the role of each of these decision factors in mediating gender differences in job applications. We test these hypotheses using the first direct comparison of how similarly qualified men and women apply to jobs, based on data on the job searches of MBA students. Our findings indicate that women are less likely than men to apply to finance and consulting jobs and are more likely to apply to general management positions. These differences are partly explained by women’s preference for jobs with better anticipated work– life balance, their lower identification with stereotypically masculine jobs, and their lower expectations of job offer success in such stereotypically masculine jobs. We find no evidence that women are less likely to receive job offers in any of the fields studied. These results point to some of the ways in which gender differences can become entrenched through the long-term expectations and assumptions that job candidates carry with them into the application process.

See: Why Do Women Still Earn Less Than Men? Analyzing the Search for High-paying Jobs (Knowledge@Wharton)

An overview of U.S. occupational employment and wages in 2011

July 28, 2012 Comments off

An overview of U.S. occupational employment and wages in 2011

Source: Bureau of Labor Statistics

A substantial share of U.S. employment in May 2011 was concentrated in a relatively small number of occupations. Just 10 occupations made up more than 20 percent of total employment, and the 20 largest occupations made up nearly one-third of employment—more than 41 million jobs. Most of these large occupations had below-average wages, as did most of the occupations with the highest job gains and losses between May 2007 and May 2011. Growth in the healthcare industry helped to shape employment gains in individual occupations, while construction and production occupations were concentrated in shrinking industries. Although the overall occupational structure of the U.S. economy generally reflected that of the private sector, education and protective service occupations were more prevalent in the public sector, particularly in local government.

This issue of Beyond the Numbers uses data from the Occupational Employment Statistics (OES) program to provide an overview of U.S. occupational employment and wages in May 2011. The first section presents employment and wage data for wage and salary workers in the largest U.S. occupations and selected occupational groups. The subsequent sections highlight occupations with the highest job gains and losses between May 2007 and May 2011, occupations prevalent in growing and shrinking industries, and occupational employment comparisons between the public and private sector.

2010 House Compensation Study: Guide for the 112th Congress

July 8, 2012 Comments off

2010 House Compensation Study: Guide for the 112th Congress (PDF)
Source: Chief Administrative Office, U.S. House of Representatives

This report summarizes the results of a survey administered from October 5, 2010 to October 15, 2010 for the Chief Administrative Officer of the U.S. House of Representatives on compensation, employment, organizational structure, benefits, and other office practices of House Member personal offices. The Web-based survey was sent to 440 Representatives’ offices; the remaining office was not contacted because the Chief of Staff position was vacant at the time of survey administration. A total of 133 (30.2%) offices provided responses to the survey.

The Negative Effects of Minimum Wage Laws

July 7, 2012 Comments off

The Negative Effects of Minimum Wage Laws
Source: Cato Institute

The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.

There is no “free lunch” when the government mandates a minimum wage. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that’s rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for.

This study reviews the economic models used to understand minimum wage laws and examines the empirical evidence. It describes why most of the academic evidence points to negative effects from minimum wages, and discusses why some studies may produce seemingly positive results.

Some federal and state policymakers are currently considering increases in minimum wages, but such policy changes would be particularly damaging in today’s sluggish economy. Instead, federal and state governments should focus on policies that generate faster economic growth, which would generate rising wages and more opportunities for all workers.

Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform

July 4, 2012 Comments off

Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform (PDF)
Source: National Bureau of Economic Research (via Wharton School)

We model the labor market impact of the three key provisions of the recent Massachusetts and national \mandate-based” health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating di erential for employer-sponsored health insurance (ESHI) | the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of \sucient statistics” that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We nd that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating di erential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.

CEO Pay and the Market for CEOs

July 2, 2012 Comments off

CEO Pay and the Market for CEOs
Source: Federal Reserve Board

Competitive sorting models of the CEO labor market (e.g., Edmans, Gabaix and Landier (2009)) predict that differences in CEO productive abilities, or “talent”, should be an important determinant of CEO pay. However, measuring CEO talent empirically represents a major challenge. In this paper, we document reliable evidence of pay for CEO credentials and argue that the evidence is consistent with models of the CEO labor market. Our main finding is that boards’ compensation decisions reward several reputational, career, and educational credentials of CEOs, with newly-appointed CEOs earning a 5 percent ($280,000) total pay premium for each decile improvement in the distribution of these credentials. Consistent with boards using credentials as publicly-observable signals of CEO abilities, we show that pay for credentials displays key cross-sectional features predicted by theory, such as convexity in credentials and complementarity with firm size. Our main finding is robust to a battery of identification tests that address selectivity and endogeneity concerns, including instrumental variables estimates and controlling for firm and CEO fixed effects. We also show that credentials capture variation in CEO human capital that is different from lifetime work experience, and are positively related to long-term firm performance and board monitoring, which helps to distinguish our results from alternative stories based on CEO general human capital, hype, and entrenchment. Overall, our findings suggest that sorting considerations in the CEO labor market are an important determinant of CEO pay. Our results also suggest that the rise in CEO pay over the last decades may owe at least in part to a rise in the CEO talent premium.

Gender Differences in the Salaries of Physician Researchers

June 29, 2012 Comments off

Gender Differences in the Salaries of Physician Researchers

Source: Journal of the American Medical Association


It is unclear whether male and female physician researchers who perform similar work are currently paid equally.


To determine whether salaries differ by gender in a relatively homogeneous cohort of physician researchers and, if so, to determine if these differences are explained by differences in specialization, productivity, or other factors.

Design and Setting

A US nationwide postal survey was sent in 2009-2010 to assess the salary and other characteristics of a relatively homogeneous population of physicians. From all 1853 recipients of National Institutes of Health (NIH) K08 and K23 awards in 2000-2003, we contacted the 1729 who were alive and for whom we could identify a mailing address.


The survey achieved a 71% response rate. Eligibility for the present analysis was limited to the 800 physicians who continued to practice at US academic institutions and reported their current annual salary.

Main Outcome Measures

A linear regression model of self-reported current annual salary was constructed considering the following characteristics: gender, age, race, marital status, parental status, additional graduate degree, academic rank, leadership position, specialty, institution type, region, institution NIH funding rank, change of institution since K award, K award type, K award funding institute, years since K award, grant funding, publications, work hours, and time spent in research.


The mean salary within our cohort was $167 669 (95% CI, $158 417-$176 922) for women and $200 433 (95% CI, $194 249-$206 617) for men. Male gender was associated with higher salary (+$13 399; P = .001) even after adjustment in the final model for specialty, academic rank, leadership positions, publications, and research time. Peters-Belson analysis (use of coefficients derived from regression model for men applied to women) indicated that the expected mean salary for women, if they retained their other measured characteristics but their gender was male, would be $12 194 higher than observed.


Gender differences in salary exist in this select, homogeneous cohort of mid-career academic physicians, even after adjustment for differences in specialty, institutional characteristics, academic productivity, academic rank, work hours, and other factors.

Report of the 11th Quadrennial Review of Military Compensation

June 22, 2012 Comments off

Report of the 11th Quadrennial Review of Military Compensation (PDF)
Source: U.S. Department of Defense

Since September 11, 2001, many demands have been placed on our nation’s men and women in uniform. Ten years of armed conflict have been marked with multiple combat deployments, shortened time between deployments, warriors returning with combat injuries that would have been fatal in earlier wars, and the National Guard and reserve playing a major role in the war effort. These and other factors have placed enormous stress on service members and their families. At the same time, the fiscal environment, dominated by a long recession, a slow recovery, and a rising federal budget deficit, is putting pressure on federal departments and agencies to apply resources more efficiently and effectively to accomplish their objectives. The Department of Defense (DOD) faces fiscal challenges on many fronts; among them is the rising cost of personnel.

It is within this context that the 11 th QRMC was chartered to examine whether compensation levels are sufficient to sustain recruitment and retention of the highcaliber men and women in uniform who serve our nation. As directed in its charter, t he 11 th QRMC examined four areas of the military compensation system:

  • Pay incentives for critical career fields such as mental health professionals, linguists/translators, remotely piloted vehicle operators, and special operations personnel
  • Compensation for service performed in a combat zone, combat operation, or hostile fire area, or while exposed to a hostile fire event
  • Compensation benefits available to wounded warriors, caregivers, and survivors of fallen service members
  • Compensation and benefits for the reserves and National Guard, consistent with their current and planned utilization

Additionally, the 11 th QRMC assessed the competitiveness of military compensation with the private sector—an understanding of which serves as a useful foundation for examining specific elements of the compensation system.

Military compensation has outpaced civilian wages and salary growth since 2002. Military pay began to increase in 2000, owing to a pay adjustment that responded to recruiting and retention difficulties, and was intended to bring military compensation back in line with civilian pay. The pay adjustment was accompanied by a commitment to increase basic pay in step with the Employment Cost Index (a benchmark for civilian pay growth) plus one-half of one percentage point from 2002 through 2006—a policy that was ultimately extended through 2010. The increase in military compensation also reflects rapid growth in the housing allowance, which increased by 5.7 percent in 2007, 4.7 percent in 2008, and 5.0 percent in 2009.

In contrast, there has been no real growth in civilian wages and salaries over much of the past decade—in part, reflecting a recessionary economy. At the same time, the cost of benefits in the civilian sector grew until about 2004, and then began to fall, only to increase again starting in 2010—fueled largely by growth in the cost of health care.

In 2009, average RMC for enlisted members exceeded the median wage for civilians in each relevant comparison group—those with a high school diploma, those with some college, and those with an associate’s degree. Average RMC for the enlisted force corresponded to the 90 th percentile of wages for civilians from the combined comparison groups. For officers, average RMC exceeded wages for civilians with a bachelor’s or graduate-level degree. Average RMC for the officer force corresponded to the 83 rd percentile of wages for the combined civilian comparison groups.

A comparison between military and civilian wages does not, by itself, determine if military pay is at the optimal level. As previously noted, other factors are also at play including: recruiting and retention experiences and outlook; unemployment in the civilian economy; political factors, such as a wartime environment or risk of war; and the expected frequency and duration of overseas deployments. But the relative standing of military compensation provides context to help make decisions about RMC and other elements of the compensation system, such as those studied by the QRMC.

See also: Eleventh Quadrennial Review of Military Compensation, Supporting Research Papers

See also: Individual supporting chapters, reference documents, and downloadable files

Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service

June 21, 2012 Comments off

Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service

Source: National Bureau of Economic Research

We study a recent recruitment drive for public sector positions in Mexico. Different salaries were announced randomly across recruitment sites, and job offers were subsequently randomized. Screening relied on exams designed to measure applicants’ intellectual ability, personality, and motivation. This allows the first experimental estimates of (i) the role of financial incentives in attracting a larger and more qualified pool of applicants, (ii) the elasticity of the labor supply facing the employer, and (iii) the role of job attributes (distance, attractiveness of the municipal environment) in helping fill vacancies, as well as the role of wages in helping fill positions in less attractive municipalities. A theoretical model guides each stage of the empirical inquiry. We find that higher wages attract more able applicants as measured by their IQ, personality, and proclivity towards public sector work – i.e., we find no evidence of adverse selection effects on motivation; higher wage offers also increased acceptance rates, implying a labor supply elasticity of around 2 and some degree of monopsony power. Distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities.

+ Full Paper (PDF)

The Potential Impact of Changes in Immigration Policy on U.S. Agriculture and the Market for Hired Farm Labor: A Simulation Analysis

June 7, 2012 Comments off

The Potential Impact of Changes in Immigration Policy on U.S. Agriculture and the Market for Hired Farm Labor: A Simulation Analysis
Source: U.S. Department of Agriculture, Economic Research Service

Large shifts in the supply of foreign-born, hired farm labor resulting from substantial changes in U.S. immigration laws or policies could have significant economic implications. A computable general equilibrium (CGE) model of the U.S. economy is used to evaluate how changes in the supply of foreign-born labor might affect all sectors of the economy, including agriculture. Two scenarios are considered: an increase in the number of temporary nonimmigrant, foreign-born farmworkers, such as those admitted under the H-2A Temporary Agricultural Program, and a decrease in the number of unauthorized workers in all sectors of the economy. Longrun economic outcomes for agricultural output and exports, wages and employment levels, and national income accruing to U.S.-born and foreign-born, permanent resident workers in these two scenarios are compared with a base forecast reflecting current immigration laws and policies.


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