August 29, 2010:  The U.S. military is adopting a new bonus system for scarce medical and other technical specialists. The new program would enable the military to pay market rates for specialties like brain surgery and Internet security. In the past, the bonus program was not directly linked to the market salaries for needed specialists, who would not join and work for existing pay levels linked to rank and time in the service. In many cases, where specialists were needed for a short time, qualified civilians were hired. This specialist shortage has been a growing problem, including for purely military specialists. Currently, the military spends about half a billion dollars a year for bonuses, although during the height of the Iraq war, that more than doubled.

In wartime, with an all-volunteer force, bonuses were paid just to get recruits for all sorts of jobs. But in the last two years, the army (which paid most of these bonuses) sharply cut back on its enlistment, and re-enlistment bonus program, mainly because the economic recession reduced the competition recruiters get from civilian employers. The bonuses are quickly slid back to their pre-Iraq levels.

But in some areas, there were no cuts. In the last few years, the U.S. Department of Defense has paid over $100 million in retention bonuses to nearly 2,000 experienced Special Operations operators. Most of those getting the bonuses were Special Forces and SEAL personnel who were eligible for retirement, and being offered high paying civilian security jobs, or simply the prospect of relaxing. Appeals to patriotism, and bonuses of up to $150,000, persuaded most of those operators to stay in uniform. This was a bargain for the government, as well as for troops in question.

It would cost millions of dollars, and nearly a decade of effort, to replace each of those twenty year vets. Bonuses of under $100,000 worked for troops not yet eligible for the half-pay pension. Most of the billions in bonus money goes to a small number of specialists, like Special Forces, SEALs, explosives disposal (they deal with roadside bombs), intelligence and electronics specialists.

The bonus program has been around for decades, but has been used more aggressively in the last decade, as the civilian economy boomed, and increasingly saw highly skilled military personnel as potential hires. Recruiters, while not admitting it, look forward to an occasional recession, to take the heat off.

The recession fueled boom in enlistments has allowed the army to raise its recruiting standards again. Two years ago, recruiting standards had been lowered and screening methods improved. Before the fighting in Iraq got bloody (2004-7), less than ten percent of army recruits had been high school dropouts. But during that period, that has grown to 24 percent, with no noticeable decline in the quality of troops. Same thing with those receiving "moral waivers" (for having a police record). That has gone from 4.6 percent six years ago, to 6.2 percent in 2007. Now all those standards are going back to the pre-2003 levels.

But as the army raises the bar for new recruits, and existing troops to stay in, they again encounter an ancient problem; whether to hang on to combat proven veterans who are troublesome in peacetime. It's long been known that some soldiers, who appear to have attitude and discipline problems in peacetime, turn out to be exceptional performers in combat. Commanders can take the easy way out, and discharge these guys at the first sign of trouble. Or, mindful of how valuable these wild men are in combat, go the extra mile to hang on to them. The army and marines don't like to even admit people like this exist. But combat veterans, especially those who make a career of the military, know the problem, or opportunity, is real.

And then there was another oddity. During 2004-7, the army has had the most problems recruiting troops for non-combat jobs. Patriotism, low casualties, and a sense of adventure, brings in plenty of recruits for the infantry. But with support jobs, the army is competing with the civilian economy. And this is where the new bonuses come in. As the military adds more technology faster, there is a need for more skilled people to maintain, and even operate (as in large computer networks) the stuff. If the military doesn't pay market rate, it doesn't get the people it needs to win on the battlefield.