All Commentary
Tuesday, October 1, 1974

The High Cost of the Draft

Messrs. McNown and Lee are Assistant Professors, Department of Economics, University of Colorado at Boulder. This article is based on a chapter from a book by Professors Lee and McNown, to be published by Science Research Associates, Incorporated in 1975.

With the exception of the recent post-war period, the United States has always maintained an army of volunteers in times of peace. But it is claimed that our need for a large standing army because of the cold war would make an all-volunteer force prohibitively expensive. No one would deny that it is possible to staff an army of most any size with quality personnel if we were willing to offer sufficiently generous salaries. The objection is that this would simply be too expensive.

That an all-volunteer force is more costly than a system with conscription is an illusion. Manpower costs are not less under the draft, they are simply shifted onto one particular group, namely the draftees. The cost of a young man’s service in the military is measured by the value of those opportunities forgone. Generally the opportunity sacrificed here is a civilian job, with a value equal to the salary he could expect to receive. The President’s Commission on an All-Volunteer Armed Force estimated that the military pay for draftees is only half that which they could receive in civilian work. Add to this salary discrepancy a possible preference for civilian over military employment, and it is apparent that the true cost of the draft is quite high. To the individual draftee the opportunity cost of military service is equal to the salary which he would have to be offered in order to be attracted to military service. Thus whatever savings the taxpayers garner through the lower military pay permitted by conscription appears as a cost to the individual draftee. Military budgets may be lower with a system based on conscription, but this does not imply that the social costs are lower. The draft merely shifts the burden of manpower costs from the taxpayers onto the young men of draft age.

Suppose, for example, that it would require a salary increase of $3000 per man to attract volunteers equal in number to the present volume of draftees. For every man drafted to serve, the taxpayers save $3000, but the individual draftee suffers a cost in terms of income forgone and aversion to military duty valued at $3000. Manpower costs to society as a whole are no different in either case. The only difference is in who pays the costs — the taxpayers as a whole or the men who are unfortunate enough to be drafted.

Less Costly

Actually there are strong reasons for believing that an all-volunteer system will involve lower social costs than a system with conscription. Budget outlays will be higher of course, but this is not indicative of true relative social costs.

The most important savings to society will come in the form of lower rates of induction of those men with the highest opportunity costs. Those most productive in civilian life are those who earn handsome salaries. These are of course the ones least likely to be attracted by military service, unless the military is willing to offer them comparable salaries. With the exception of medical doctors, however, the military will not generally be interested in paying salaries which would attract those who are unusually productive in civilian life. Movie actors, corporate executives, scientists, and writers, for example, are unlikely to make contributions to the military which are comparable to those made in civilian life, and it would be highly inefficient to have them inducted.

There will be additional savings through a more efficient use of all men of draft age, including those threatened by the draft but never inducted. Many men subject to the draft have gone to great lengths to redesign their lives in order to avoid conscription. Enrollment in colleges and seminaries, employment in draft deferred positions, and legal action to avoid the draft cost society $2.50 for every $1.00 saved the taxpayers through the draft.¹ The entire social fabric has been strained by military conscription, for in no other sphere of activity in our society do we permit such an arbitrary system of involuntary servitude.

Another reason for anticipating lower manpower costs would be that volunteers are likely to have a substantially higher reenlistment rate than draftees. Thus with an all-volunteer force there will be considerable savings in training costs as a result of the lower turnover rates. With a two-year tour of duty involving six months of basic training and a couple of months of processing for discharge, the military actually receives very little benefit from draftees who do not reenlist.

Finally, with manpower costs accurately portrayed by the salaries paid, the branches of the armed forces will have an incentive to utilize men more efficiently. When all inductees, from college graduate to high school drop-out, are paid a token wage of $115 per month, and when an ample supply of men is guaranteed by conscription, there is virtually no incentive for the service to economize on the use of manpower. Stories of highly skilled or educated draftees being sent off to do menial labor were commonplace in the “old army.” With the military paying the true cost of labor services there will be an incentive to allocate scarce labor resources to lines of activity for which they are most suited. It will also become worthwhile to substitute non-human resources and civilian personnel for military manpower in those cases where such tasks can be performed more cheaply. When the cost to the army of an enlisted man is a nominal $115 per month, there is little reason to seek ways to economize on the use of this resource.

The All-Volunteer System Under Trial

Largely on the basis of such arguments, the Congress was induced to try out the all-volunteer system. As of January, 1973, the armed forces have officially been attempting to fill their manpower needs without use of conscription. Higher salaries, more attractive life-styles, and large promotional activities have been employed in the effort to attract volunteers. After about one year of this system, the all-volunteer army has come under attack from several influential military officials and congressmen. They cite several reasons why they believe the all-volunteer army is bound to fail.

Firstly, they bring up the old argument that it is just too expensive to support a two-million plus army on a voluntary basis. But we have seen that this argument is fallacious. Whatever savings the taxpayers realize is a burden imposed directly on the draftees. The issue is not concerning a difference in total costs; it is rather over who incurs those costs.

The critics of the all-volunteer system also contend that neither quality nor quantity quotas are being satisfied with present recruitment programs; that a return to conscription is needed to acquire the educational and skill backgrounds needed in today’s army. This could be merely a problem of transition. Re-enlistment rates for draftees are understandably lower than those for volunteers. As we move towards an all-volunteer army, the overall re-enlistment rate should rise as the proportion of draftees in the army from previous years is gradually reduced. Once transition is completed some of the quality and quantity deficiencies should be overcome through higher re-enlistment rates. It is also likely that salaries are still inadequate to attract the high caliber of personnel the army desires. A recruit today is paid $307 per month, and a sergeant with four years of service makes about $450 plus $80 to $120 per month in housing benefits. While this is a considerable improvement over wages of four years back, it is not hard to imagine that more attractive salaries may need to be offered if skilled and educated men are to be attracted into a highly disciplined, often dangerous career. The military pay bill which was to permit us to move towards an all-volunteer system did not provide for a level of pay which the President’s Commission on an All-Volunteer Armed Force recommended. Compromises were made particularly at the expense of the new enlistees. Considering that this group received no pay increases between 1952 and 1965, we might expect that salary increases will need to be somewhat more generous if we are to attract the caliber of personnel desired by our armed forces.

Some also fear that the higher manpower costs will lead to cutbacks in non-personnel defense expenditures. If this were to come about, it could only be a result of citizens and congressmen reacting to new information about the true cost of military activities to society. If the only way in which citizens can be convinced to maintain an extravagant military is by hiding some of the costs behind the blanket of conscription, then it seems clear that too many resources are in fact being allocated to military purposes.

Minority Control

Finally, there is the fear that an all-volunteer army would become dominated by blacks and other disadvantaged minority groups. It certainly is the case that economically disadvantaged groups will be attracted in disproportionate numbers because of their relatively low alternative income earning opportunities. Blacks have in fact accounted for 20 per cent of enlistments in recent months, while they comprise only 14 per cent of the service-age population. A disproportionate number of blacks in the armed forces may or may not be an undesirable thing. Some would take the position that the army is interested in particular skills and abilities, and the color of the body in which these attributes are housed should make little difference. What is objectionable about a disproportionate number of black enlistees is the underlying economic condition which this reflects. It is appropriate to try to deal with economic inequalities at the source, not to circumvent a result of these inequalities by imposing a new inequity, namely involuntary servitude.

In conclusion, it is apparent that most of the objections to an all-volunteer force derive from the position that it is simply too expensive. This is, however, an illusion. A reasonable measure of the social costs of a standing army obtained by any method is the value of the opportunities forgone. The social costs of a standing army of 2.2 million men is approximately equal to the incomes sacrificed when these men are taken from the civilian sector. A $5 billion savings to the taxpayers in lower military pay as the result of conscription is merely a transfer from one group — the draftees — to another, namely the taxpayers. A less equitable system could hardly be imagined.

1 The Report of the President’s Commission on an All-Volunteer Armed Force, Washington, D.C. 1970.

  • Dwight R. Lee is the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.