October 10, 2012: The U.S. military continues to offer bonuses for those in certain jobs as an inducement to remain in uniform, or to persuade other troops to undergo training and switch to jobs that are hard to fill. The U.S. Army has long been the most frequent user of bonuses but with the war winding down, there is less money available for this. For example, the max bonus has been reduced from $150,000 to $90,000 and there are more restrictions on who can get a bonus.

While some of this money goes to combat specialists, most of it is paid to non-combat experts. Two years ago the army implemented a new bonus system for scarce medical and other technical specialists. The new program enabled 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 as temporary contractors.

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 three 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 have quickly slid back to their pre-Iraq levels.

But in some areas there were no cuts. In the last five years the U.S. Department of Defense has paid nearly $200 million in retention bonuses to over 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 many 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 and are now attracting some operators who can retire. Most of the billions in bonus money went 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. They got a major recession four years ago but it was not enough to keep many scarce specialists in uniforms.