Function 050 - National Defense
Replace Some Military Personnel With Civilian Employees
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
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The workforce of the Department of Defense (DoD) consists of members of the active-duty and reserve military, federal civilian employees, and private contractors. According to data from DoD, thousands of members of the military work in support, or "commercial," jobs that could be performed by civilian employees or contractors at a lower overall cost. Many of those jobs do not involve functions that could raise concerns about personal safety or national security and are performed in military units that do not deploy overseas for combat.
Under this option, DoD would replace over four years 80,000 of the roughly 340,000 active-duty military personnel in commercial jobs with 64,000 civilian employees. As a result, active-duty end strength (the number of military personnel on the rolls on the final day of the fiscal year) would decrease by 80,000.
Although DoD has replaced military personnel with civilian employees before (converting about 48,000 military positions to 32,000 civilian jobs between 2004 and 2010), only a small percentage of all military positions have been reviewed for that purpose. Moreover, the mix of military and civilian employees used to perform various commercial functions differs across the services. The Army fills 27 percent of its finance and accounting jobs with military personnel, for example, whereas the Marine Corps staffs 64 percent of those jobs with military personnel. The Navy employs military personnel for 8 percent of its jobs in motor vehicle transportation services; the Air Force, 67 percent. If each service adopted the personnel mix with the lowest percentage of military personnel in commercial occupations, up to 100,000 jobs currently held by military personnel could be opened to civilians, the Congressional Budget Office estimates.
Effects on the Budget
By CBO's estimate, replacing 80,000 military personnel with 64,000 civilian employees would reduce discretionary outlays by about $14 billion between 2019 and 2028 if appropriations were reduced accordingly. Most of the savings would come from replacing military personnel with fewer civilians. (CBO estimates that the cost of each civilian employee in the occupations examined in this option is only a few percentage points lower than the cost of a military service member, on average.) The long-term savings from this option would exceed the amounts shown here because some of the budgetary effects would not be fully realized for a few decades, when new employees began to retire and collect benefits. For example, most of the costs of deferred benefits, such as health care that DoD provides to military retirees under age 65 and that the Department of Veterans Affairs offers to veterans of all ages, occur beyond the 10-year budget period. In addition, the higher tax revenues that would flow to the federal government because a smaller proportion of civilian pay than military pay is exempt from federal taxation are not shown here.
The savings under this option would reach about $2 billion a year, but not until around 2024, when the replacement of the military personnel with the smaller number of civilians was complete. Fewer civilians could perform the work done by the military personnel they replace because those civilians receive less on-the-job training, do not have to devote part of the work year to general military training, and typically do not rotate among positions as rapidly as military personnel do. Savings would be proportionally smaller if fewer military personnel were replaced with civilians, but at the same ratio of 1:1.25. If, instead, a given number of military personnel were replaced with even fewer civilians, the savings would be larger, although using replacement ratios above 1:1.25 would boost the risk that capabilities would be lessened. (It would probably be increasingly difficult for fewer and fewer civilians to perform the same quantity of services—at the same quality—that a given number of military personnel could perform.)
The savings in this option are somewhat uncertain, for at least two reasons. First, the number of military positions in support jobs could be smaller in the future. For instance, DoD could respond to changes in the national security environment or new missions by restructuring its military forces and converting military positions in support jobs to combat positions. Such actions would result in fewer military positions being available for transfer to civilians. Second, the average cost of civilian employees in comparison with the cost of military personnel could change. Compensation for the occupations examined in this option, many of which are professional, could grow at a slower rate than military pay in the future. In that event, the average pay of the added civilians relative to the average pay of the eliminated military positions would fall, increasing the potential savings.
One argument for converting military to civilian positions is that civilians require, on average, less job-specific training over their careers. Unlike military personnel, civilian employees are not subject to frequent transfers, so the military services can employ, on average, fewer civilians to provide the same quantity and quality of services.
An argument against this option is that even though many service members might spend part of their career in jobs that could be performed by civilians, most are trained fighters who could be deployed if needed. Replacing such military personnel with civilians could reduce DoD's ability to surge quickly if called upon to do so. Moreover, despite the potential cost savings, the military services try to avoid converting certain types of positions because doing so could lead to reductions in effectiveness or morale and hinder their workforce management objectives. For example, the Navy provides shore positions for sailors so that they do not spend their entire career at sea—even though some of those positions could be filled at a lower cost by civilians.