Bad Idea: Paying Servicemembers More to Do the Same Amount of Work

From CSIS's Bad Ideas in National Security Series:

Because military pay is tied to the ECI, civilian wage increases drive commensurate increases in military pay. This helps retain an all-volunteer force that may be more inclined to leave military service if civilian wages were to increase at a faster rate. But, real increases in civilian pay reflect productivity growth. If the military matches those wage increases without commensurate increases in military productivity, we end up paying more each year for the same amount of output.

Alan Krueger on What Makes a Terrorist

I’m deeply saddened to learn that Alan Krueger has died. Many will recall his vast contributions to labor economics in the coming days. I had the honor of working for Alan on the Council of Economic Advisers, and he and I spoke about his work on the economics of terrorism. Alan focused his brilliant, analytic mind on society’s most pressing concerns.