The statement is frequently made that the present system of retiring naval officers who have not been selected for promotion adds to the expense of the government. An increasing number on the retired list because of service in grade retirement is assumed to augment the total cost of maintaining the Naval Establishment. This assumption is used as an argument against retention of the present promotion system. In the face of such assertions it is of interest to show, by example, that instead of an increase in expense it is possible, on the contrary, to effect an immediate and an ultimate saving by retiring passed-over officers rather than retaining them on the active list.
The complications of the pay table, whether the officers are on sea or shore duty, the number and kind of dependents—whether legally recognized as such or not-the rate of promotion, normal attrition, life expectancy, and other factors which enter into a study of personnel costs tend to make such a computation exceedingly involved. However, it is possible to adopt certain reasonable assumptions for a particular group of officers which permit the completion of a satisfactory study. It will be shown in the present instance that the assumptions, if anything, militate against the premise rather than favor it.
The statements and figures which follow relate to officers of one staff corps. Similar studies could be made concerning officers of other staff corps, using the appropriate average ages, life expectancies, and grades.
Dental officers are appointed with the rank of lieutenant, junior grade, at an average age of slightly more than 28 years. Accordingly, the average age of a dental officer with 21 years' service is approximately 49 years. A dental officer has either been selected for promotion to commander or passed over for such promotion by the end of 21 years of service. The American Experience Table of Mortality, given in part below, shows that the life expectancy of the 49-year-old officer is 21.63 years.
American Experience Table of Mortality (in part) | |
Age | Life Expectancy |
25 | 38.81 |
26 | 38.12 |
27 | 37.43 |
28 | 36.73 |
29 | 36.03 |
30 | 35.33 |
31 | 34.63 |
32 | 33.93 |
33 | 33.21 |
34 | 32.50 |
35 | 31.78 |
36 | 31.07 |
37 | 30.35 |
38 | 29.62 |
39 | 28.90 |
40 | 28.18 |
41 | 27.45 |
42 | 26.42 |
43 | 26.00 |
44 | 25.27 |
45 | 24.54 |
46 | 23.81 |
47 | 23.08 |
48 | 22.36 |
49 | 21.63 |
50 | 20.93 |
51 | 20.20 |
52 | 19.49 |
53 | 18.79 |
54 | 18.09 |
55 | 17.40 |
56 | 16.72 |
57 | 16.05 |
58 | 15.39 |
59 | 14.74 |
60 | 14.10 |
61 | 13.47 |
62 | 12.86 |
63 | 12.26 |
64 | 11.67 |
65 | 11.10 |
66 | 10.54 |
The question is whether it less, (1) to retain the passed-over lieutenant commander on the active list until reaching the age of 64 years, or (2) to retire him at the end of 21 years of service. In the first case he would be replaced by a newly appointed officer when he reached the statutory age for retirement. In the second case he would be replaced by a new officer at the end of the 21 years, or at the age of 49.
It is assumed herein that all the officers under discussion draw the maximum allowances for grade and length of service. Actually, of course, there are three rates of total compensation for officers on the active list. The officer with a legally recognized dependent draws full compensation whether on sea or shore duty. An officer without a legally recognized dependent while on duty ashore receives less total compensation than an officer of the same rank and length of service who has a legally recognized dependent. When the officer without such a dependent is on sea duty his total compensation is at a still lower rate. Since some junior officers are without such dependents their actual average total compensation is somewhat less than that shown in the accompanying Table I. There may be some lieutenant commanders with 21 years' service who have no legally recognized dependents, making the average total compensation less than that shown in the table, but the possible degree of difference can be expected to be less than in the cases of the junior officers.
A less tangible cost to the government is the transportation of the recognized dependents of an officer when the officer has a change of station. It is reasonable to suppose that the average number and ages of such dependents of junior officers are less than of those of the lieutenant commanders. In other words, it can be expected that replacing a lieutenant commander by a newly appointed officer would, on the average, reduce the outlay for transportation of dependents.
In a similar way there is a saving on the cost of transportation of household effects. There is a definite allowance, by weight, for each grade, the junior officers having smaller allowances. Probably there is less likelihood of junior officers using the full allowances for shipment of household goods than in the case of lieutenant commanders of 21 years' service. It is not uncommon for junior officers to be without worldly goods subject to shipment at government expense.
The assumption, then, for this discussion, is that even the newly appointed officers draw the maximum compensation. It is further assumed herein that the new officer, brought in to replace the officer going to the retired list, will be selected for promotion the first time eligible in each grade. Thus his compensation increases as rapidly as possible. Actually a proportion of the officers so brought in would, in turn, not be selected, with a consequent lowering of the average cost. Likewise such normal attrition as is due to resignations, deaths, and dismissals tends to lower the average cost because replacement officers come in at a lower rate of compensation and the departure of a staff officer, below the rank of rear admiral, from the active list does not result in the promotion of any officer.
Table I shows, in column c, the annual compensation of a dental officer who, drawing full allowances at all times, is selected and promoted each time eligible. In column d is shown, from the 20th year on, the compensation of a passed-over lieutenant commander if he were continued on active duty until 64 years of age and then retired on three-fourths of his base pay. In the last column, column e, is shown the annual compensation of a passed-over lieutenant commander, from the 20th year on, if he were retired at the end of 21 years' service.
Table II sets forth the cost of retaining the passed-over lieutenant commander on the active list until the age of 64 years as compared to retiring him at the end of 21 years' service. In column b, Section A, of the table is shown the annual compensation of the passed-over officer on the active list until the end of his 36th year of service and the age of 64 years, and his retired pay thereafter. Since his life expectancy at the age of 49 is 21.63 years, the table shows the retired pay continuing until the expected death of the officer at the age of 70.63 years. The compensation of the new officer replacing the one going to the retired list is shown in column c, the 37th year for the older officer being the first year of service for the new officer. The total cost for compensation to maintain one officer on the active list under this plan is shown in column d.
Section B of Table II sets forth the cost by the plan of retiring the lieutenant commander at the end of 21 years' service. His retired pay is shown in column e. The compensation of the officer replacing him appears in column f, the 22d year for the first officer being the first year of service for the new officer. The total cost for compensation under this plan is shown in column g.
A comparison of the entries in columns d and g shows that, in the 22d year, the total cost of compensation is $622.75 less under B. In other words, there is an immediate saving by retiring the lieutenant commander at the end of 21 years' service. As shown in column h, there is an annual saving each year to and including the 33d year. Column i shows that the accumulated saving at the end of that year would amount to $12,732.
Commencing with the 34th year the current cost would be greater under B. However, such increased cost would not exceed the previous saving and, at the expected time of the death of the retired officer, there would be a final net saving of $5,872.91.
Chart I indicates, more clearly than the table, the comparative costs for compensation under the two plans. The solid line, V to X, represents the compensation rate under the plan of keeping the passed-over lieutenant commander on the active list to the age of 64 years, then replacing him. The dotted line, Y to Z, indicates the compensation rate of the officer retired at 21 years' service plus that of the new officer replacing him. One sees at a glance that the area between the lines VM and YM, which area indicates reduction in cost, is greater than the area between the lines MZ and MX, the latter area indicating increase in cost.
Chart II shows the cumulative saving effected by retiring the lieutenant commander at the end of 21 years' service.
This discussion has dealt primarily with a comparison of costs of two methods of dealing with passed-over officers of 21 years' service. Since it has been restricted to officers of the Dental Corps some comment on efficiency may be permitted. On the side of increased efficiency by retiring passed-over dental officers at the end of 21 years' service it may be stated that the dental officer's duties call for a high degree of physical fitness. Operations at the chair require unhampered vision and ability to withstand continued nerve strain. Even with corrective lenses the dental surgeon is considerably hampered in his professional field by impaired vision.
A dental officer 49 years of age cannot stand at the operating chair for as long hours and accomplish as much treatment as one who is younger. A lieutenant commander of the Dental Corps is subject to assignment to duty in the field with an expeditionary organization. The conditions of such duty may be very trying for an officer of the age of the passed-over lieutenant commanders. If they are given easier billets it penalizes those who have not been passed over.
As the passed-over lieutenant commander advances in years it becomes increasingly difficult for him effectively to perform the usual duties of his grade. For efficiency it would be better for him to be retired and a young appointee brought into the service to take his place.
To sum up, the placing on the retired list of a lieutenant commander of the Dental Corps, who has been passed over for selection for promotion, on the completion of 21 years' service effects an immediate and an ultimate saving in cost to the government and permits the Dental Corps to have more efficient personnel.