The basic goals of the military’s compensation system are to attract, retain, and motivate the number and quality of people needed to maintain national security. In fiscal year 2002, Congress appropriated more than $100 billion in compensation for military personnel. DOD is the single largest employer and trainer of youth and recruited about 196,000 individuals into active duty in 2001. Although a unique institution, the military nevertheless competes with academia and other organizations for qualified people. The military may face increased competition for qualified people over the next few years because of continued increases in the number of high school graduates going on to college and labor shortages projected through at least 2010. The U.S. Department of Education projects that the number of high school graduates will increase by 11 percent by 2010-2011, and enrollment in degree-granting institutions is predicted to increase 20 percent by 2011. The 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. In May 2002, DOD issued a strategic human capital plan addressing quality- of-life issues and benefits. The plan, entitled A New Social Compact: A Reciprocal Partnership Between the Department of Defense, Service Members and Families, emerged in response to a presidential directive requiring the Secretary of Defense to review measures for improving the quality of life for military personnel and to provide recommendations for their implementation. 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 service members and their families. The Social Compact focuses on the efforts DOD has or plans to make to improve housing, education, health care, work-life issues, and family and community support for service members and their families. It emphasizes the need to maintain programs and services viewed as benefits by service members. The Under Secretary of Defense for Personnel and Readiness has oversight of career development, recruitment, and pays and benefits for active duty personnel. Within this office, the Assistant Secretary of Defense for Force Management Policy develops policies, plans, and programs for military personnel management, including quality-of-life issues for service members and their dependents. The Deputy Assistant Secretary of Defense for Military Community and Family Policy is responsible for policies and programs that establish and support programs such as child care, spousal employment assistance, and other family support programs. The active duty force has undergone several demographic changes since the end of the draft and the advent of an all-volunteer force in 1973. It has become older and better educated, it has experienced increases in the representation of minority and female service members, and a greater proportion of its service members are married and have children. Recognizing that a family’s satisfaction with military life can influence retention, Congress and DOD have responded by establishing and increasing support services for military families. However, opportunities exist to further improve benefits in this area. 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 service members increased from 20 percent to 35 percent of the active duty force between 1974 and 2000, and the proportion of female service members increased from 4 percent to 15 percent. Although reliable data on married personnel is not available for 1973-77, various DOD studies cite statistics showing that the percentage of married enlisted personnel increased from approximately 40 percent of the force in 1973 to approximately 50 percent in 1977. After dropping slightly from 1977 to 1980, the marriage rate rose again through the mid-1990s. For each year between 1980 and 2000, married service members, including both enlisted personnel and officers, made up at least half of the active duty force. DOD attributes the rate increases to the gradual aging of the active duty force. Other DOD data also indicates growth in the proportion of service members who have family obligations. The percentage of service members with children increased from 43 percent to 45 percent between 1990 and 2000, while the proportion of single service members with children increased from 4 percent to 6 percent. Figure 1 shows the composition of the active duty force, by family status, in 2000. (See app. II for additional information on demographic changes in the active duty military.) Congress and DOD have responded positively to the growth in the proportion of service members with family obligations by authorizing and implementing a number of family-friendly benefits. Research has shown that family satisfaction with military life can influence a service member’s decision whether to remain in the military. Consequently, Congress has authorized, and DOD instituted, a number of services to support military families. The Military Family Act of 1985 established a spousal employment assistance program. In 1989, Congress directed DOD to establish a relocation assistance program. In 1992, DOD established guidance for implementing, overseeing, staffing, and funding family support centers at installations to deliver programs such as personal financial management training, employment assistance, relocation assistance, deployment assistance, and child and spouse abuse prevention programs. Health care benefits for military families have also been enhanced. For example, Congress recently eliminated most copayments for active duty families enrolled in DOD’s managed health care program and extended benefits for dependents living with a member of the uniformed services in remote areas. In the area of education, Congress authorized DOD in the National Defense Authorization Act for Fiscal Year 2002 to grant reenlisting service members who possess critical skills the option to transfer a portion of their educational assistance benefits to their spouse and dependents. With respect to child care, DOD has made progress improving the quality, availability, and affordability of military child care. DOD is working to expand capacity to meet a range of child care needs, including initiatives to extend care hours, subsidize the cost of obtaining child care at commercial centers, offer cash incentives to increase the number of family child care providers, and construct additional child development centers on installations. Lastly, DOD has identified a need to reach out to the two-thirds of military personnel and their families who reside off of installations, to make them aware of their benefits, and to deliver services to them. One approach DOD is taking is to increase its use of the Internet by adding information and transactional features to Web sites. Although a number of family-friendly benefits are available to active duty service members, opportunities exist to improve current benefits in this area that could aid in the retention of military personnel. DOD has planned initiatives for expanding its spousal employment assistance program but lacks information on the effectiveness of employment assistance services offered at installations. DOD authorizes 6 weeks of paid leave for new mothers but does not offer extended time off for the care of newborn or adopted children. Spousal Employment Assistance DOD has begun to pay increased attention to employment assistance for the military’s 700,000 spouses, who must move frequently (on average every 2 years) with their spouses to different parts of the country or the world and face many challenges when trying to find work. Many service members are in dual-income households, with spouses contributing on average about 25 percent of the family’s income. In 1999, 48 percent of officers’ spouses and 55 percent of enlisted members’ spouses were employed in the civilian labor force, while 7 percent of officers’ spouses and 8 percent of enlisted members’ spouses were unemployed and seeking work. Many working spouses are underemployed. According to a 2002 DOD study, the spouses of military service members 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 face several other employment challenges, such as frequent relocations that make it difficult to sustain a career and accrue retirement benefits. The families of junior enlisted personnel face particular financial difficulties as the result of housing and transportation costs, the high cost of credit, and child care expenses. The income that spouses earn can help to mitigate some of these problems. DOD believes spouse employment is necessary for many military families to meet basic family expenses. In the last few years, DOD has taken a number of steps to enhance its spousal employment assistance program, which has been in existence since 1985. DOD held a “spouse employment summit” in 2000 to identify needed actions. DOD is now 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 such as the different state residency and licensing requirements for jobs in teaching, nursing, and child care. DOD is seeking Labor’s assistance to help spouses who work in these fields overcome employment barriers when they relocate. The Navy and the Marine Corps have also 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. At installations, DOD offers services to help active duty military spouses find civilian jobs. Services include job searching and career planning, skills assessments, training to facilitate entrance into the workforce, resume writing, interviewing, and networking. Neither DOD nor the services have systematically tracked demand for employment assistance at installations or developed outcome oriented performance measures to help evaluate which of these kinds of services provided by installations contribute most effectively to spousal employment.