Industry Market Trends
Military Veterans' Unique Barriers to Civilian Employment (and Efforts to Help)
March 4, 2013
Military veterans returning to the civilian workforce face unique barriers to job prospects. Here we look at the particularly high unemployment rates among individuals returning from wartime service relative to the rest of the labor force, as well as various efforts to connect hiring companies with job-seeking vets. 11.7 percent in January, while the unemployment rate for nonveterans in the civilian labor force was 8.3 percent. As of January 2013, roughly 844,000 veterans were unemployed and looking for work, including 252,000 post-9/11 veterans. While there are likely numerous reasons for the particularly high unemployment rates among individuals returning from wartime service relative to the rest of the labor force, a new study by the Federal Reserve Bank of Chicago shows that veterans who recently served long deployments overseas have struggled to find work because of worries over traumas of war or concerns their skills won't translate to the civilian workforce. According to the study, demographic differences between new veterans and nonveterans account for only a small fraction of the differences in unemployment rates. The Chicago Fed study's authors, senior economist R. Jason Faberman and senior associate economist Taft Foster, also find only limited evidence of an effect from the business cycle. Rather, the study finds evidence that deployments during wartime have "a strong negative effect" on the subsequent labor market outcomes of recent veterans. "Neither demographics nor simply being a new veteran by themselves can account for the rise in relative unemployment rates for new veterans," Faberman and Foster write. "Instead, our results suggest that prolonged deployments overseas account for much of the difference in unemployment rates between recent veterans and nonveterans." Faberman and Foster cite the "physical and psychological effects of warfare" among the reasons to believe that deployment during wartime may have an effect on the incidence of unemployment for new veterans. "Individuals who return from wartime service may suffer from a variety of issues when returning home that can affect their employment prospects and not be captured by our demographic controls," the study says. The authors also say the training received during a wartime deployment differs from skills acquired during peacetime deployment. "If skills gained from peacetime training are more transferable to the civilian labor market, then those veterans who return from wartime service may be at a relative disadvantage when seeking civilian employment," the study continues. Moreover, the economists also note that "higher demand for personnel during wartime may cause recruiters to reduce enlistment standards." While the economists identify long deployments overseas as the root cause for the high incidence of unemployment, they say it is hard to explain why this was the case. "While the effect of wartime deployments appears strong, the root causes of this effect are uncertain. Wartime deployments may affect the physical or psychological abilities of new veterans or restrict the amount of training they receive that would be transferable to the civilian labor market," the study says. "Deployments may also be a time of lax recruiting standards for the military, and the high unemployment rates may simply reflect the reentry into the labor force of individuals who would have had trouble finding work regardless of military service. "Finally," the paper continues, "wartime deployments may reduce the incentive for individuals to re-enlist and, consequently, lead individuals who were best suited to a military career to seek civilian employment instead. Such a mismatch of military skills with the civilian labor market for these individuals may lead to a lower job-finding rate." In such cases, workers in declining industries are eventually forced to search for work in industries where their skills are less valuable. As a result, they have a more difficult time finding work and, consequently, often earn lower wages. According to the Chicago Fed's analysis, new veterans tend to work in construction, manufacturing, transportation and utilities, and government - all industries that had especially weak growth during the Great Recession period. The authors conclude that the extended deployments that began in late 2001 and continue today have not only put a strain on these individuals during their military service, but also appear to be hampering their employment outlook upon re-entry to civilian life. With the end of the war in Iraq and the drawdown in Afghanistan, joblessness among post-9/11 military veterans is set to worsen. Between 2011 and 2016, more than 1 million service members are projected to leave the military. Increased Efforts to Utilize Military Vets' Skills and Experience Today, a dearth of anecdotal evidence indicates some companies are actively recruiting veteran talent to shore up their headcount. According to a CareerBuilder.com study released last fall, 29 percent of employers reported actively recruiting veterans to work for their organizations, up 9 percentage points from the prior year. Approximately 65 percent said they would be more likely to hire a veteran over another equally qualified candidate. "Corporate America already employs 10.3 million veterans, including 1.7 million recently separated veterans," according to G.I. Jobs, a post-military career development magazine. "That's not by accident, and it's not because company recruiters feel sorry for you or want to wave the flag. Hundreds of corporations want to hire you because they recognize the economic advantage of hiring ex-military." Each year, G.I. Jobs publishes its Top 100 Military Friendly Employers list, highlighting private-sector firms that are eager to hire military veterans. Since 2003, the average percentage of veterans hired by companies on the list has grown 138 percent, the average number of full-time military recruiters has grown 68 percent and military recruiting budgets have grown 268 percent, according to an announcement of G.I. Jobs' latest annual list. Meanwhile, the Obama administration and Congress have launched a number of efforts to better connect hiring companies with job-seeking vets. Last August, First Lady Michelle Obama announced that more than 2,000 American companies had hired or trained 125,000 veterans and military spouses in the past year through Joining Forces, a comprehensive national initiative to support service members and their families. This effort combined with policies and legislation resulted in a 20 percent decrease in veteran unemployment compared to the same time in 2011. A new report, released by the Executive Office of the President last month, details the barriers veterans and their families face as they seek employment as well as the administration's efforts to help them leverage their skills. Among the key takeaways:Returning to civilian life can present its own challenges for young military veterans, yet the transition is even more difficult when facing difficult job prospects. Recent veterans have had particularly high unemployment rates relative to nonveterans during and after the recession that technically ended in the United States in mid 2009. Unemployment has been a notable problem for young military veterans returning from the wars in Iraq and Afghanistan. Unemployment among post-9/11 military veterans (those who were in service during the "Gulf War II-era") stood at
- The administration is launching the next phase of its military credentialing and licensing efforts, partnering with the states to streamline state occupational licensing for veterans.
- The administration is expanding educational opportunities available to veterans who want to build on their military training and experience and earn degrees.
- The administration has outlined best practices for states to use to ensure that veterans receive appropriate licensure and academic credit for their experience.