On July 1, 1973, the Army instituted the All-Volunteer Force, capping off a tumultuous decade of debate and ending the longest uninterrupted period of conscription (23 years) in our nation’s history. The transformation was a triumph particularly for 1976 Nobel Prize-winning economist Milton Friedman, whose towering intellectual presence on President Nixon’s Gates Commission provided the analytical framework that blunted the significant institutional inertia favoring the status quo. But, as the Army currently wrestles with the most severe recruiting shortfall over the past fifty years, is it now time to re-look the state of volunteer military service, especially in light of the existential military threats from peer competitors like China and Russia? Are the underlying assumptions in Friedman’s argument still valid today?
Conscription in America, a brief history
In the 248 years since the U.S. Army was formed on June 14th, 1775, the nation has used conscription only sparingly. As detailed in Bernard Rostker’s (RAND Corp.) 2006 detailed book, I Want You! The Evolution of the All-Volunteer Force, up until 1950, the U.S. employed volunteers for all conflicts outside of the Revolutionary War, Civil War, and World Wars I and II. Conscription was not even attempted for other battles, even those that required fairly significant manpower and spanned multiple years, such as the Mexican-American War, the Indian Wars, and the Spanish-American War.
Throughout America’s history, even during the fight for America’s independence in the Revolutionary War, conscription has been unpopular. Alexis de Tocqueville, during his well-documented travels in the United States during the 1830’s observed this fact, helping illustrate why after the Revolutionary War it was not attempted until the Confederacy instituted it in 1862. The drafts in both the North and South were unevenly implemented – falling predominantly on the lower class - and so despised, they caused riots in many cities and forced elected officials to pay expensive bounties to fill the ranks. It was not until the Selective Service Act was passed four days after the U.S. entered World War I in 1917 that the U.S., learning from the mistakes of the Civil War, implemented a lottery-style draft whereby all men between the age of 18-45 would register but only a limited number would serve, with service requirements ending four months after the end of the conflict. For World War II, the concept of “equal sacrifice” was paramount for success, limiting deferments to those with specific occupations. Even married fathers were required to serve unless they received a special deferment from the President. The draft of World War II lasted almost six and a half years, from the end of 1940 until March of 1947.
After a brief, three month draft period in 1948 at the onset of the Cold War, the longest uninterrupted conscription period in the nation’s history began in June 1950 as the U.S. entered the Korean War. Even after the signing of the Korean Armistice in 1953, selective service endured, as opposition was low and call-ups were few. More than 90% of men received deferments due to college, marriage, or paternity. The draft had become so engrained in the culture that the House of Representatives voted 387-3 to extend the authority as late as 1963. Still, it was at this time, just prior to the build-up in Vietnam, that significant questions about the viability of returning to a volunteer Army began to surface. The next decade would see multiple studies and commissions - composed of diverse groups of government officials, military professionals, and academia - debating the cultural, moral, and economic merits of returning to an all-volunteer force while operating under the shadow of the Vietnam conflict and the Cold War.
The Gates Commission and intellectual gravitas of Milton Friedman
Starting in 1964, no fewer than three formal studies from Federal entities were undertaken to examine the viability of eliminating the draft while maintaining the nation’s defenses. The first study, completed internally at the Pentagon, was released to Congress in 1966. Just a few days later, President Johnson issued an Executive order establishing the Marshall Commission to further study the issue. Not to be outdone, the House Armed Services Committee appointed their own civilian advisory panel, with retired Army General Mark Clark at the helm. After a year of study and several divergences of opinion, both the Marshall Commission and Clark’s panel agreed that an all-volunteer force was infeasible.
But, there were a few prominent voices with different opinions.
When Milton Friedman published his book Capitalism and Freedom in 1962, the case for an all-volunteer Army based on economic principles was a radical idea. Up until this time, other social scientists such as psychologists and sociologists exercised authority over military personnel issues. Despite not yet earning the Nobel Prize in Economics, which he was awarded in 1976, Friedman had already gained considerable stature by the mid-1960’s, fighting against what he viewed as a pervasive “collectivist intellectual opinion” across the Federal government.
In pushing against the prevailing view that the budgetary costs of an all-volunteer force were prohibitive, Friedman suggested this opinion excluded important moral and economic arguments. Succinctly summarized in a speech he gave at the University of Chicago in 1966, Friedman made the case that in order to understand the real cost of conscripting men into the Army, one must include the opportunity cost of what else that soldier could be doing if not forced into service. Friedman also appealed to the immorality of paying soldiers roughly half of what a Department of Defense study showed would be necessary as a starting wage to attract an all-volunteer force, which President Nixon referred to as a “huge hidden tax” that “cannot be squared with our whole concept of liberty, justice, and equality under the law.” Nixon, just months after inauguration, commissioned former Secretary of Defense Thomas Gates, Jr. to develop the plan for an all-volunteer force. Though not explicitly composed of members preconditioned to favor the all-volunteer force, the “Gates Commission” included several University of Chicago economists, led by Friedman, such that the intellectual predilections of the most influential members made it seem that this option was a forgone conclusion.
Friedman’s arguments for the all-volunteer force generally followed three lines of reasoning: it was immoral to conscript men in a free society, the economic cost of conscription, especially on the middle class, was greater than the benefit, and the constant turnover of conscripts made it difficult to inculcate the skills and professionalism necessary for a technologically advancing military.
Under the framework of rational choice theory, Friedman observed that young men were making suboptimal choices simply to avoid the draft, such as enrolling in college even if not interested in higher education. Others who went into the workforce delayed starting certain careers to avoid having to quit if conscripted. Some men rushed into marriage and having children under the belief it would lower their chances of getting drafted. These were the “hidden tax” choices to which President Nixon was referring.
Based on economist calculations within the DOD and on the commission, salaries needed to roughly double from the 1969 level to attract a sufficient number of volunteers to meet the military’s demand. Friedman argued that though this would comprise a substantial increase to the Federal budget of between 5-10%, it would still be significantly less than the economic costs imposed on society writ large.
What happened, what didn’t happen
The All-Volunteer Force came into effect on July 1, 1973, after recommendations from the Gates Commission won over debate on Capitol Hill. President Nixon signed the bill on September 21, 1971 after the House of Representatives (250-150) and Senate (55-30) passed the legislation. The impacts were profound. The annual pay and housing compensation (in current dollars) of an E1 jumped 80% from $2,444 in 1971 to $4,406 in 1973, a figure which did not include enlistment bonuses that reached as high as $2,500 for certain Army specialties. This represented a huge increase in wages as compared to men’s overall mean income in the country at time, which only rose by 18% ($7,892 to $9,289) from 1971 to 1973. As the recruiting force ramped up and pay increased in 1972 and 1973, volunteers were sufficient such that no draft call-ups were even required the final six months (January-June 1973) that it was still in force. By this measure, the transition was a success.
With regard to the predictions Friedman made about an All-Volunteer Force once implemented, his record was mostly correct with a few misfires. He believed that better pay for those serving would lead to less political appetite to grant veteran’s benefits. Although this mostly held true prior to 9/11, benefits have greatly expanded in the years since, and the current Veteran’s Affairs budget has grown inexorably in real terms over the past twenty years even while pay has grown in tandem. Friedman also predicted that the volunteer force would not necessarily result in a disproportionate number of racial minorities joining as compared to their population makeup in the country at large. However, the percentage non-white soldiers did grow by several percentage points by the late 1970’s and still today is not as balanced in the Army as it was during conscription. Friedman did correctly forecast that a disproportionate racial makeup would not lead to outsized racial tensions in the military, which were sadly common in civil society at the time. He believed that the large, professionalized armed forces would not be a threat to political freedom, a prediction with which most observers would not disagree. As he predicted, the armed forces have also been able to attract more high school graduates. The original goal was to have only 55% of the force earning a high school degree, when in fact 93% of enlistees currently have a high school diploma.
What’s gone wrong and where to go from here
Just prior to his death in 2006, Friedman stated in an interview with economist Russ Roberts that the advent of the volunteer Army was the only radical idea he was able to decisively achieve from his original 1962 treatise, quite an admission from one of the most famous economists in history. But is even this accomplishment at risk? Despite outsized pay increases and bonuses along with numerous other programs and benefit enhancements, all of the services are currently mired in a recruiting crisis spanning multiple years.
Breaking apart this issue, it is difficult to claim that military spending on direct compensation or even quality of life amenities has lagged those of the general population. Though a somewhat simplistic measure, a new enlisted soldiers’ pay in 1973 was roughly 47% of men’s mean income in 1973. This figure was actually less than the starting annual pay and housing benefits for new soldiers in 2021, which totaled $36,000, or 52% of U.S. men’s mean income and 80% of women’s. This does not include large bonuses, improved food stipends, and highly subsidized medical care. The military continues to match large civilian employers with benefits such as generous paternal leave, sabbaticals, tuition assistance, and other policies that are only indirectly tied to the improvement of military combat readiness.
From a pure numbers perspective, population trends and a smaller overall Army today as compared with 1973 should make recruiting easier. The population of 18-29 year olds is 30% larger today (52M) than 50 years ago (41M). 95% are high school graduates compared with only 75% in 1973. However, as many observers have noted, the percentage of youth that don’t qualify for military service due to physical or mental health problems has exploded, limiting the pool significantly.
Still, the accessions mission in 1973 required providing for a much larger authorized Army of 1.4M soldiers, including 801,000 in the active component. In 2023, the active Army was authorized 452,000, with the guard (325,000) and reserve (177,000) making up a total authorized force of under one million soldiers. The unemployment rate of 5.1% in 1973 was low by historical standards, even if not as low as the current 3.5% rate. Additionally, the opportunities for women to serve in any occupational specialty today has increased the pool of potential recruits. Women serving on active duty in the Army has increased from only 2% in 1973 to 17% in 2021.
So why has the Army continued to struggle and what can we do about it?
Most importantly, Friedman’s economic analysis is just as relevant today as it was in 1969. Developing the framework for this analysis requires not just accounting for compensation and quality of life improvements, but also quantifying cultural differences between the values of Millennials and Gen Z as compared to Baby Boomers and Gen X. In economic terms, the aggregate utility functions between generations are very different, and this poses unique problems for an institution like the Army, whose core mission requires sacrifice and risk.
For example, after twenty years of conflict around the world, the Army’s own polling shows today’s youth have a disproportionate perception of their likelihood of being injured, killed, or suffering from post-traumatic stress disorder (PTSD) if they join the military. A large percentage of women believe they will be sexually harassed or assaulted. According to a recent Wall Street Journal poll, far fewer today believe patriotism is important (23%) than those in 1998 (70%). Today’s military-age adults value flexibility, self-expression, individual identity, and leisure. They are much more likely to believe that climate change is a greater existential threat than is China or Russia.
These types of variables are rolled up into the difficult-to-quantify “propensity to join” statistic that is often mentioned as a large factor in current recruiting woes. How does one place a monetary value on concepts as nebulous as “patriotism?” Would a bonus of an additional $25K induce a young man or woman to join even if they believe that they stand a high chance of putting their life or health at risk?
In all likelihood, there is nearly no amount of money that can convince an 18-year old man or woman that they should sacrifice their life for the good of their country. The desire to serve one’s country to protect liberty and freedom must spring from a deeper metaphysical feeling that transcends monetary compensation. Placing too much emphasis on the financial benefits of joining military may actually dissuade some recruits who see the “service” aspect reduced to a purely fiscal transaction. Money can’t buy “meaning.”
Even if the military were able to improve potential recruits’ perception of risk, or reduce the number of suicides and assaults, or improve upon the other negative factors, the lifestyle and sacrifice demanded of a soldier does not appear to correspond well with the self-professed values of today’s young adults. And trying to place a budgetary number on those values is proving to be a very expensive proposition. According to budgetary figures released by the DOD – especially in the Army - pay, benefits, and quality of life spending in military are a growing share of the budget, crowding out maintenance, procurement, and research & development. In a country that is $31T in debt and growing fast, does our Federal budget even have the capacity to continue with an all-volunteer force that may necessitate vastly higher overall compensation to meet the needs of our national defense while maintaining our technological edge?
Barring a long, major recession, an improbable improvement in nationwide health, or a dramatic shift in societal perceptions toward patriotism and service, the military is left with only difficult options that the Gates Commission never needed to consider. One shortcoming in the all-volunteer force that Friedman himself recognized was it was not tenable in a total war situation. Indeed, one of the primary arguments by those supporting the preservation of conscription was that it was much more adaptive to the need for rapid build-up of forces, a point that was very germane during the Cold War and is quite possibly again today. Re-instituting a draft, whether for the military or some other kind of national service, seems less likely to garner wide public support than even in 1973.
Everything must be on the table. In today’s highly technological military, senior leaders may have to re-think the types of jobs that can be performed by civilians and contractors as well as between officers, warrant officers, and enlisted personnel and the balance between the active and reserve components. The military may need the authority and ability to shift uniformed personnel between civilian and military jobs at certain ranks, and how to leverage technological advances to reduce overall force size. These are the factors that Friedman’s analysis, properly adjusted to account for today’s cultural milieu, can help answer. But as the perceived gap between civilian and military values grows wider, and civil society becomes more polarized between right and left, the military will have to wrestle with how to maintain the time-tested culture necessary to defend the nation while still attracting enough people willing to serve the idea that “America” is worth preserving and defending. Because, if we can’t even agree on that, no amount of spending on national defense will be adequate to convince today’s citizenry that sacrificing their life for their country is worth the cost.
NOTE: Col. Michael Mai is the deputy chief of staff, G8, for USASMDC and formerly director of Strategic Initiatives for the Assistant Secretary of the Army, Financial Management & Comptroller
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