Transitioning From the Military to the Civilian Workforce: The Role of Unemployment Compensation for Ex-Servicemembers
The Defense Department spent $310 million (in 2017 dollars) on unemployment benefits in 2016, down from $1 billion in 2011. Nearly half of soldiers in the active Army in 2013 applied for those benefits (that share has probably fallen).
People who leave the military often face different challenges when searching for civilian employment than people who move from one civilian job to another. The recession of 2007 to 2009 increased policymakers’ focus on how well veterans who left active-duty service during or after the recession have fared in the civilian labor market. In its new report Labor Force Experiences of Recent Veterans, CBO compares the labor market outcomes of veterans who have left active-duty service since September 2001 with the outcomes of civilians (people who have never served on active duty in the armed forces). In this companion report, CBO describes the use of unemployment benefits among service members who have recently transitioned to the civilian workforce.
Unemployed veterans who are newly separated from the military’s active component (the regular Army, Navy, Marine Corps, or Air Force) or who are deactivated after serving on active duty in the reserve component (the National Guard or Reserves) may be eligible for a special type of unemployment insurance, called Unemployment Compensation for Ex-Servicemembers (UCX). The UCX program is administered by the states on behalf of the Department of Labor, but it is paid for by the military, as the recipients’ former employer. In all, the Department of Defense (DoD) spent $310 million on UCX benefits in 2016, down from a peak of $1.0 billion in 2011. (Those amounts, which are expressed in 2017 dollars, include spending for Extended Benefits, additional weeks of unemployment benefits that are available in states with especially high unemployment rates.)
CBO analyzed data from the Army about the UCX program in fiscal year 2013 (the most recent year for which complete data were available when the analysis was conducted). In that year, nearly half of the soldiers who left the Army’s active component applied for UCX benefits, as did about 20 percent of Army reservists who had served for at least 90 days on active duty and then been deactivated. Those data are only for the Army and cover only one year, so the results do not necessarily reflect the Army’s experience in other years—particularly as the economy has improved—or the experiences of the other military services. However, because veterans generally begin receiving UCX benefits shortly after they leave the military, those data suggest that many soldiers did not or could not find a job near the end of their Army enlistment or soon thereafter.