The Economy and Enlisted Retention in the Navy

• Activity Number: 179
• Type: Contributed
• Date/Time: Monday, August 4, 2014 : 10:30 AM to 12:20 PM
• Sponsor: Section on Statistics in Defense and National Security
• Author(s): Yevgeniya Pinelis*+ and Jared Huff
• Companies: and CNA
• Keywords: Navy ; Retention ; Enlisted ; Economy ; Principal Components ; Segmented Regression

Abstract

At the end of their service obligations, sailors decide whether to reenlist in the Navy or to enter the civilian workforce. The Navy is a closed labor force: it relies solely on sailor retention to maintain its ranks and grow senior leadership. Retention forecasts affect planning of all personnel functions, like readiness, advancements, and recruiting. Generally, a decline in the economy is correlated with high retention and, during times of economic expansion, the Navy struggles to retain sailors. But, without knowing the functional form behind this relationship, drafting personnel policies or accurately budgeting for retention incentives is challenging. Using 20 years of data, we model retention as a function of the civilian economy and sailor attributes. Going beyond the unemployment rate to represent the economy, we use various statistical methods to account for multicollinearity of economic indicators, economic tipping points, and retention climate effects. Our model can be used to forecast Navy retention as a function of the civilian economy. We combine our results into useful and usable tripwires to help Navy leaders identify when retention policies need to be activated.