Labor Force Experiences of Recent Veterans

More than 3.8 million members of the U.S. military have left active-duty service since September 2001, a period that some federal agencies call the Gulf War II era (as opposed to the Gulf War I era, which spanned the period from August 1990 to August 2001). More than 2 million of those Gulf War II veterans were deployed in support of military operations in Iraq and Afghanistan. For decades, large federal programs have helped service members make the transition to civilian life and employment by offering unemployment insurance benefits, education assistance, and disability compensation. However, the 2007–2009 recession prompted policymakers to focus greater attention on how well veterans have fared in the civilian labor market during and after that downturn.

How Do Labor Force Outcomes Compare for Male Veterans and Civilians?

For this analysis, CBO examined how rates of labor force participation and unemployment for male Gulf War II veterans during the 2008–2015 period compared with rates for male civilians—that is, men who had never served on active duty in the military. (The labor force participation rate measures the share of people who either are working or are available and looking for work. The unemployment rate measures the share of people in the labor force who do not have a job but are available and looking for work.) In the analysis, Gulf War II veterans include those who did not deploy to overseas operations as well as those who did.

In general, CBO found that the labor force outcomes of male Gulf War II veterans ages 22 to 44 were about the same as those of civilian men. In an effort to assess similar populations, CBO also compared the veterans most likely to be working or looking for work—those not in school or functionally disabled—with their closest civilian counterparts by accounting for differences in the average demographic characteristics of the two populations. That more detailed analysis also found that, overall, such veterans had labor force outcomes over the 2008–2015 period that were similar to those of men who had never served on active duty in the military:

• Labor force participation rates were nearly the same, on average, for male veterans as for comparable civilians for all three of the age groups that CBO examined (22 to 24, 25 to 34, and 35 to 44). Those rates were slightly lower for veterans than for civilians, with the youngest group of veterans experiencing the largest difference (1.1 percentage points, see figure below).
• Unemployment rates were nearly the same for male veterans over age 24 as for comparable civilians. But the 22- to 24-year-old veterans had an average unemployment rate that was about 2 percentage points higher than that of similar civilians.
• By 2014 and 2015 (the most recent years for which data are available), the gaps in labor force participation rates and unemployment rates between the youngest male veterans (ages 22 to 24) and civilians had narrowed substantially from the gaps seen during the recession years of 2008 and 2009.

CBO examined two other groups of male Gulf War II veterans: those who were enrolled in school and those who were functionally disabled. (The veterans and civilians considered disabled in this analysis are people who reported on federal surveys that they had difficulties with such things as sight, hearing, mobility, or independent living. Those functional disabilities are distinct from service-connected disabilities, which are determined by the Department of Veterans Affairs and form the basis for veterans’ disability benefits.) In its analysis of those two groups—which did not account for differences in the average demographic characteristics of Gulf War II veterans and civilians—CBO found the following:

• Over age 24, male veterans who were enrolled in school were generally less likely to participate in the labor force than male civilian students. In all three age groups, male veterans in school were more likely to be unemployed than male civilians in school. (The education benefits available to veterans may explain some of those differences.)
• Male veterans who were functionally disabled were much more likely to be in the labor force, and less likely to be unemployed, than civilian men with functional disabilities.

What Data Did CBO Use?

To estimate differences in employment outcomes for Gulf War II veterans and comparable civilians, CBO used data from the Census Bureau’s American Community Survey (ACS) for a sample of households from 2008 through 2015. The ACS is one of the biggest surveys that the Census Bureau administers, reaching roughly 1 in 40 U.S. households each year. CBO relied on the ACS because it offers a larger data set than the one typically used for national employment statistics.

CBO’s use of ACS data is the main reason that its findings differ from those of the Bureau of Labor Statistics (BLS), which regularly publishes reports about veterans’ labor force experiences. BLS relies on data from another Census Bureau survey, the Current Population Survey (CPS). That survey showed large differences in the labor force participation and unemployment rates of young male veterans and civilians in some years of the 2008–2015 period. However, the CPS surveys far fewer households than the ACS and is therefore less reliable for analyzing small groups, such as the youngest Gulf War II veterans. (For details about differences between the two surveys and about why CBO used ACS data, see Appendix A.)

What Was CBO’s Analytic Approach?

CBO limited the analysis to people between the ages of 22 and 44 because veterans in that age range are likely to have transitioned to the civilian workforce more recently than older veterans. People in that age range also make up a sizable majority of Gulf War II veterans. In addition, CBO focused its analysis on the labor force outcomes of male veterans and civilians, addressing the outcomes of women separately and in a more limited way. Women tend to have different labor force experiences than men, so analyzing both sexes together would make differences between veterans and civilians harder to interpret. In addition, women made up only 17 percent of Gulf War II veterans during the 2008–2015 period.

For the analysis, CBO first examined all male Gulf War II veterans ages 22 to 44 and then divided that population into three groups:

• Veterans who were enrolled in school (24 percent of male Gulf War II veterans),
• Veterans who were functionally disabled (11 percent), and
• Veterans who were neither in school nor functionally disabled (69 percent).

Veterans enrolled in school or reporting a functional disability (which are not mutually exclusive groups) were analyzed separately because their labor force decisions probably do not resemble those of other veterans.Furthermore, large federal programs are available to help those two groups.

Veterans who were neither in school nor functionally disabled were the veterans most likely to be employed or actively looking for work. Any differences between their labor force outcomes and those of civilians may be of particular concern to policymakers because those veterans constitute the largest of the three groups and have fewer programs to assist them. To ensure that its analysis of labor force outcomes compared the veterans who were likely workers with the civilians who most closely resembled them, CBO adjusted the ACS data to account for ways in which the veteran and civilian populations may differ, on average—including in such observable characteristics as age and educational attainment.

Nevertheless, people who have served in the military have unobservable traits and experiences that may be difficult to quantify and may affect their labor market outcomes in different ways, pushing veterans either out of the labor force or toward employment. For example, the military may be better able than the civilian sector to screen for higher-ability applicants, using information not generally available to private employers. If that is the case, veterans may have better job prospects than their civilian counterparts. However, some skills that veterans learn in the military may not transfer well to the civilian sector. In addition, people who are leaving the military often face different challenges in searching for civilian employment than people who are moving from one civilian job to another.1 This report describes such factors and their potential effects briefly but does not quantify them.