Considering a Cadre Augmented Army - RAND Corporation

-239- An Operational Analysis of Cadre
B.1.2—Personnel Cost
The personnel cost of a cadre unit relative to an AC unit depends on two things: the
number of personnel retained in each grade and the relative cost of personnel in each grade.
Chapter Two outlines five possible cadre grade structures specifying the number of
personnel retained in each grade for each. Given these structures, we only need to calculate
the relative cost of personnel in each grade to calculate the overall personnel cost of a cadre
unit. Under the assumption described in the previous section, we use relative personnel cost
as an estimate of the relative total cost of a cadre unit throughout this paper.
Personnel costs could be measured in any number of ways. However, because the
analyses in this dissertation focus on relative cost, we do not need to have a perfect measure
of total personnel costs, but instead to have a reasonable measure of the relative cost of
soldiers in different grades. We decided that the simplest and most transparent way to do
this would be to base the relative cost of personnel on the difference in annual total
compensation for the average soldier in each grade. We used data provided in the Fiscal Year
2008 Army Personnel budget justification to calculate total compensation. From this data,
we calculated how basic pay, allowances for housing and subsistence, and retirement accrual
costs varied across grades. 167 Figure B.1 shows how annual total compensation varies by
grade.
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167 We calculated compensation by summing basic pay, BAH (weighed by: the fraction of domestic and
overseas personnel with or without dependents, bachelors, and in substandard conditions), BAS, and
retirement accrual from Department of the Army (2007a). This calculation does not include accrual for
veterans’ benefits or tax advantages because these are not broken down by grade in Department of the Army
(2007a). CBO (2007) includes these values in their calculation of average compensation for enlisted personnel.
Section B.1.3 shows how our estimates compare.