In 1999, the nation faced a defense manpower crisis, characterized by a decline in recruit quality and unmet recruiting targets. Additionally, there were issues of fairness in military compensation. Congress's response was the FY00 National Defense Authorization Act, which raised military pay; increased bonus ceilings; reformed military retirement benefit options; and increased special pays. It also mandated that the Department of Defense report annually to Congress on the act's effectiveness. This document contains material relevant to that report. Focusing on the recruitment of high-quality recruits and the reenlistment of first- and second-term enlisted personnel, it presents estimates of the predicted effects of the act's basic pay increases for FY00 and FY01. Further, in an effort to describe the complexity of issues characterizing today's manpower supply environment, it provides rich, contextual information about enlisted recruiting and retention trends, officer retention, and other items.

Introduction -- Predicted effects of the FY00 pay legislation -- Contextual information on recruiting -- Contextual information on retention and continuation -- Concluding thoughts -- Appendix A: tables of enlisted retention rates and officer annual continuation rates -- Appendix B: method for computing an effective increase in military pay.