Your Retention Please II

A few posts back I had begun to discuss latest US military success; the incredible retention rates, as young people are "voting with their feet" and choosing to stay in the service.

Here, from the Air Force Times, a story of a result of that success:

Air Force cuts SRB program dramatically

The Air Force will slash its Selective Re-enlistment Bonus offerings, eliminating bonuses entirely for about 80 career fields and reducing payments for many more.

The cuts, which take effect April 30, are the most drastic changes in the SRB program in at least a decade. They are due to the strong recruiting and retention trends of recent years and the Air Force?s plans to cut nearly 17,000 airmen from the force.

Given those trends, ?there?s just not a business case? to offer as many bonuses, said Senior Master Sgt. Maria Cornelia, chief of retention and bonus programs at the Pentagon.

The SRB program divides each Air Force Specialty Code into three zones, based on time in service. The changes announced Tuesday will eliminate bonuses for about 200 individual zones, and reduce payments in 40 others.

It?s the second set of cuts in less than a year. Last June, the Air Force announced cuts or reductions in about 100 zones.

Hooray.

Here's an example of what that means for a typical first term Airman approaching the end of a four year enlistment and considering a career in the Air Force.

As an E4 with over three years in our Airman earns 1,726.80/month. His career field, if it had a bonus, would have had a multiplier assigned. For our case we'll use "3" - a fairly high multiplier. Multiply that base pay times 3 for 5180 dollars. Now multiply that times the number of years (4? 6?) our hero elects to commit and you'll arrive at a total of 31k + (pre-tax) dollars that was just removed as incentive for our 1700-a-month Airman to go 6 more years.

Some career fields have had higher multipliers, 4.5 or even 5. And some fast-burners make higher rank (E5, 1900/month) before re-up time. Those folks just discovered they will not be getting 50-60k bonuses they had perhaps counted on.

By the way, the payout was half up front and the remainder divided over the span of the enlistment period, delivered on the anniversary month. And oh yea, taxed at 28%.

Some might have you believe that George W Bush is to fault for this loss of potential income - not so. Its fiscal reality and a classic catch 22. The bonuses were there to shore up reenlistment rates. Goals are met, retention is secured, and the bonuses go away. If reenlistments plummet, the bonuses will likely return.

The reader can make up his or her own mind as to the wisdom of the approach.