In fiscal year 2002, the Congress appropriated over $100 billion for pays and benefits. The basic goals of the military’s compensation system are to attract, retain, and motivate the number and quality of people needed to maintain our national security. Although a unique institution, the military nevertheless competes with other organizations for qualified people. It is the single largest employer and trainer of youth, recruiting about 196,000 individuals into active duty in 2001. The military may face increased competition for qualified people over the next few years in response to projected labor shortages through at least 2010. The U.S. Bureau of Labor Statistics projects that the civilian labor force will increase by 12 percent by 2010 while total employment will increase by 15 percent. The active duty force has undergone several demographic changes since the draft ended and the military became an all-volunteer force in 1973. The force has become older and better educated, and the force has experienced increases in the representation of minority and female servicemembers. The percentage of personnel over age 25 increased from about 40 percent of the active duty force in 1974 to nearly 55 percent in 2000. The proportion of enlisted personnel with at least a high school diploma increased from about 80 percent of the enlisted force in 1974 to about 95 percent in 2000. During that time period, the percentage of officers attaining a degree beyond a bachelor’s degree increased from 25 percent to 43 percent of all officers. The proportion of minority servicemembers increased from 20 percent to 35 percent of the active duty force between 1974 and 2000, and the proportion of female servicemembers increased from 4 percent to 15 percent. One of the most significant demographic changes has been an increase in servicemembers with family obligations. While reliable marital data is lacking for the years immediately following the advent of the all-volunteer force, various DOD studies cite statistics showing increases in the percentage of married enlisted personnel. According to these studies, the percentage of enlisted personnel who were married increased from approximately 40 percent of the force in 1973 to approximately 50 percent in 1977. After a slight decrease from 1977 to 1980, the marriage rate increased through the mid-1990s. DOD attributed the overall increases in marriage rates to the gradual aging of the active duty force. Between 1980 and 2000, at least half of the active duty force consisted of married servicemembers. Other DOD data also indicate that servicemembers today have increased family obligations. The percentage of servicemembers with children increased from 43 percent to 45 percent between 1990 and 2000. During that time period, the proportion of single servicemembers with children increased from 4 percent to 6 percent. Figure 1 shows the composition of the active duty force, by family status, in 2000. A significant body of research by the military services shows that family satisfaction with military life can significantly influence a servicemember’s decision to stay in the military or leave. On the basis of this research, DOD during the last 2 decades established a variety of institutions and services to support military families. For example, family support centers were established at installations to deliver programs such as personal financial management training, spousal employment assistance, relocation assistance, new parent support programs, and deployment assistance. Health care benefits for military families also have been enhanced. For fiscal year 2001, for example, the Congress eliminated most co-payments for active duty families enrolled in TRICARE Prime (the military’s managed care health program) and expanded benefits for family members living in remote areas. In the area of education, the Congress authorized DOD in fiscal year 2002 to grant reenlisting servicemembers who possess critical skills the option to transfer a portion of their Montgomery GI Bill benefits to their spouse and dependents. Since the summer of 2001, DOD has been reviewing its quality of life programs in an effort to articulate what it terms a “new social compact” with servicemembers and their families. According to DOD officials, the social compact is needed to ameliorate the demands of the military lifestyle, which includes frequent separations and relocations, and to provide better support to servicemembers and their families. The social compact focuses on education, housing, work-life, family and community support, and health. Although DOD has responded positively to increases in servicemembers with family obligations by incorporating a number of family friendly benefits, opportunities exist to improve some current benefits in this area. DOD has identified needs to expand child care and spousal employment assistance. Another potential area for improvement is maternity/paternity leave. In addition, DOD faces challenges in reaching out to servicemembers to increase their awareness and use of benefits. Active duty servicemembers have a strong demand for child care. In 2000, the services had more than 600,000 active duty members with children, and about 85,000 of these members were single parents. Of the 1.23 million military children in 2000, nearly three-fourths were 11 years old or younger. DOD has placed a significant emphasis on improving and expanding its child care system which includes child development centers, family care centers, and school-age care programs. DOD also operates centers for youths and teens. In 1982, we reported that many military installations had child care centers that were not suitable for the purpose and did not meet fire, health, and safety standards. Following the passage of the Military Child Care Act of 1989, DOD worked to improve the quality, availability, and affordability of military child care. In 1997, the president praised the high quality of the military’s child development programs, citing improved resources, oversight, and training, as well as a commitment to meeting national accreditation standards. Today, 99 percent of the 450 child development centers the military operates are accredited. DOD is working to expand capacity to meet a range of child care needs, including initiatives to extend care hours and subsidize the cost of obtaining child care at commercial centers. The department is seeking to add 45,000 child care slots to the approximately 176,000 slots that exist today. DOD hopes to meet 80 percent of its members’ child care needs by 2005. DOD also has begun to pay increased attention to employment assistance for military spouses. In 1999, 48 percent of officer spouses and 55 percent of enlisted spouses were employed in the civilian labor force, while 7 percent of officer spouses and 8 percent of enlisted spouses were unemployed and seeking work. According to a March 2001 study conducted for DOD, working spouses of military servicemembers contribute up to 40 percent of the family’s income and earn an average of 24 to 30 percent less than their civilian counterparts. In part, this wage differential, which increases for those with higher levels of education, is due to local labor market conditions. Some installations are located in remote areas characterized by relatively poor labor market conditions. Military spouses also face several other employment challenges. For example, frequent relocations make it difficult to sustain a career and amass retirement benefits. Junior enlisted families face particular financial difficulties as the result of housing and transportation costs, the high cost of credit, and child care expenses. However, income from a spouse’s job can help to mitigate some of these problems. Although DOD has had a formal spousal employment assistance program since 1985, the department has taken a number of recent steps to enhance the program. DOD held a spousal employment summit in 2000 to identify needed actions. The department is focusing on establishing partnerships with private-sector employers who can offer jobs with “portable tenure,” which enables spouses to relocate and stay with the same employer. Other efforts include expanding employment preference for spouses working in Europe and establishing partnerships with federal agencies to increase private-sector career opportunities. For example, DOD is developing a partnership with the Department of Labor to resolve issues that occur at the state level. According to DOD officials, each state maintains varying residency and licensing requirements for jobs such as teaching, nursing, and child care. Spouses who work in these fields and relocate may need to be recertified after meeting residency requirements. DOD is seeking Labor’s assistance to help spouses overcome these employment barriers. The Navy and Marine Corps also have launched a partnership with a civilian employment services firm at two installations. These initiatives are in the early stages of development. As a result, it is too early to gauge their effectiveness in promoting spousal employment. Up to 10 percent of active duty female servicemembers become pregnant each year, according to the military services. As of March 2001, there were about 75,000 military children under the age of 1. While new military mothers and fathers may take time off after the birth of a child, the military does not offer extended leaves of absence to new parents. New mothers may take 6 weeks of paid convalescent leave, which is similar to sick leave in the private sector. Both new mothers and new fathers may use annual leave. The services stated that they do not track information concerning the number of women who separate permanently from active duty service because of parental leave policies. We previously reported that of the 28,353 women without prior military service who enlisted in fiscal year 1993, 2,074 separated because of pregnancy from the 7th through the 48th month of their enlistment. These separations represented approximately one-fourth of all female attrition. The Family and Medical Leave Act of 1993 does not cover military personnel. The act requires private-sector employers with more than 50 employees to allow their employees to take 12 weeks of unpaid leave to meet family obligations, such as maternity or paternity leave, adoptions, and care for a spouse, child, or parent with serious health conditions. Paid maternity and paternity leave in the private sector appears to be rare. In 1997, only 2 percent of employees had access to paid family leave programs, according to the Bureau of Labor Statistics. Of nine private-sector companies we contacted, one allows employees to take up to 3 years of unpaid leave after the birth of a child and to return to a comparable position.