Is Enlisted Retention too High?

Large military pay raises and a weak economy have generated record reenlistment levels for the Navy. The consensus appears to be that higher retention is better for the Navy; more experienced Sailors improve readiness and allow the Navy to devote fewer resources to the recruiting, training, and acculturation of new accessions. Given recent increases in reenlistment rates and bonuses, however, further increases may not be cost-effective. This study examines the costs and benefits of retention, and thus develops rating-specific reenlistment goals for the Navy. (U) We estimate that most enlisted personnel are in ratings for which the costs of reenlistment exceed the benefits. In other words, we conclude that the cost-effective level of reenlistment is lower than current goals. The Navy should not, however, make drastic cuts to reenlistment bonuses. Advocating lower-than-recent increases in basic pay, without decimating the SRB budget, is a more cost-effective and flexible approach to lowering reenlistment. (U) Our results also indicate that economic conditions affect the cost-effective reenlistment level. A deterioration of the economy generates higher retention without any increase in bonuses. In contrast, improvements in economic conditions act like a "tax" on SRB effectiveness. Therefore, reenlistment goals will often change with economic conditions.