Please refer to the images below and then answer the question.Refer to 'Pay in the Military'.How has the military responded to a shortage of skilled military personnel in the past? (Show any two steps being taken). Over the past decade the military changed its wage structure to maintain an effectivefighting force. First, a 2.7-percent pay raise went into effect in 2007, followed by a 3.9-percent raise in 2009 and a 3.4-percent raise in 2010. Even so, military pay remains low:As of 2011, a private first-class earned $20,470, a sergeant $24,736, a captain $43,927,and a major $49,964.4 However, the military went a step further, increasing the numberand size of its reenlistment bonuses. Selective reenlistment bonuses were targeted atskilled jobs where there were shortages. The military also took advantage of thesustained high unemployment rates in the United States from 2008 to 2011 byemphasizing the substantial technical training that it provided, along with free orsubsidized housing, food, medical care, and education. The result of these policies wasto move the market for skilled labor in the military back toward the equilibrium market-clear wage w* depicted in Figure 14.1310.Pay in the military has continued to improve during recent years. Table 14.30 showspay scales for different ranks along with the number of years usually needed to achievethat rank. While the salary itself is less than what one could earn in the private sector, itonly accounts for about half of total compensation. The rest takes the form of variousbenefits (health care, generous retirement pay, child care, and free or heavilysubsidized food, housing, and education). In addition, soldiers receive "Special Pay,"which is an additional amount of salary for special duties or skills, such as knowing aforeign language, having a computer background, and so on.Table 14.3 Pay in the Military (2015)RankPrivate firstclassSergeantCaptainMajorColonelAnnualSalary$23,256$30,972$62,628$79,908$119,724Years of Service Needed toAttain Rank2441022Percent That AttainRankNearly 10070Nearly 1008050Sources: January 2015 Active Duty Pay (http://militarypay.defense.gov/Pay/BasicPay/Active DutyPay.aspx) http://www.army-portal.com/pay-promotions/officer-promotions.html Pay in the MilitaryThe U.S. Army had a personnel problem for many years. During the Civil War, roughly 90percent of the armed forces were unskilled workers involved in ground combat. Sincethen, the nature of warfare has evolved. Ground combat forces now make up less than20 percent of the armed forces. Meanwhile, in the latter half of the twentieth century,changes in technology led to shortages in skilled technicians, trained pilots, computeranalysts, mechanics, and others needed to operate sophisticated military equipment.How did the military respond to this shortage? Economics provides some answers.The military pays officers primarily based on years of service. Consequently, officerswith differing skill levels and abilities were usually paid similar salaries. Moreover, someskilled officers were substantially underpaid relative to salaries they could receive inthe private sector. Figure 14.13 shows the inefficiency that resulted from this paypolicy. The equilibrium wage rate w+ is the wage that equates the demand for labor tothe supply. With an inflexible wage structure, the military paid a wage w., which isbelow the equilibrium wage. At wo, the quantity of labor demanded is greater than thequantity supplied, and there is a shortage of skilled workers.Figure 14.13 The Shortage of Skilled Military PersonnelWage20*WoShortageSLDL= MRPLNumber of skilled workersWhen the wage w* is paid to military personnel, the labor market is in equilibrium. When the wageis kept below w*, at wo, there is a shortage of personnel because the quantity of labor demanded isgreater than the quantity supplied.

The point where demand and supply curves intersect each other is known as the equilibrium point. At…

Please refer to the images below and then answer the question. Refer to 'Pay in the Military'. How has the military responded to a shortage of skilled military personnel in the past? (Show any two steps being taken).

Please refer to the images below and then answer the question. Refer to 'Pay in the Military'. How has the military responded to a shortage of skilled military personnel in the past? (Show any two steps being taken).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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