By Emily Domenech
Monday, October 05, 2015
Last month, former Federal Reserve Chairman Ben Bernanke
spoke at the Brookings Institution about the economic impact of defense
spending. After laughing about how fortunate he was to receive a “high draft
number” during the Vietnam War, Bernanke delivered some harsh words on the
value of military service.
“The evidence appears to be that there really is not an
advantage…if you go into the military at age 18 — versus an identical person
who stays in the private sector and takes a private sector job — 10 years
later, if you leave the military, your skills and wages are probably not going
to be quite as high on average as the private sector person.”
Unfortunately for Bernanke, his comments provide a narrow
view of the cost and benefits of military service, particularly when
considering the broad range of opportunities afforded those who choose to
serve.
Bernanke’s
Misplaced Assumptions
First, Bernanke arbitrarily chooses a 10-year career as a
benchmark for military service. As Michael O’Hanlon (the Brookings fellow
moderating the event) noted, active-duty pay is very competitive with civilian
pay for similarly qualified individuals. So why would the former fed chairman
assume the average service member has no choice but to leave the military after
less than 10 years of service to search for a better job?
While approximately 80 percent of active-duty troops
separate from the military before the 20-year retirement threshold, lack of
competitive pay does not dictate this choice. Particularly in the enlisted
ranks, active-duty troops far out-earn their civilian counterparts when
compared to civilians with similar education, even without incorporating health
care, housing allowance, commissary, or post-military education benefits, not
to mention additional pay and bonuses available to military personnel serving
in combat zones or those with specialized skills.
In a clear-cut, by the dollars comparison, serving in the
military wins every time. Over 78 percent of active-duty personnel have less
than a college degree, and 93 percent of enlisted service members fall in this
category. According to the National Center for Education Statistics, median
earnings for high-school graduates with less than a four-year degree are less
than $40,000 per year.
In contrast, the average annual regular military
compensation (which includes benefits like housing and subsistence allowances
in addition to basic pay) provided for the lowest enlisted rank is over
$41,500. By the time they are promoted to E-5 a few years later, the average
service member makes over $60,000, well above civilian counterparts. This trend
continues with commissioned officers—all without including the value of
additional benefits like health care, commissary, and special pay.
While Bernanke is making a specific judgement on the
economic value of military service over a lifetime, the value of continuing in
active-duty service is too important to dismiss, particularly when considering
how Veterans Administration (VA) disability pay, health care, and military
retirement add to lifetime earnings.
Second, Bernanke relies on outdated analysis that does
not reflect the benefits and opportunities available to today’s service
members. Bernanke specifically cites a single 1990 study by Massachusetts
Institute of Technology professor Joshua Angrist, comparing individuals who
were drafted in Vietnam with individuals who received a high draft number and
were not required to serve. This study concludes that Vietnam veterans earned
significantly less over their lifetime than individuals who did not serve in
the military, with earnings losses up to 15 percent of annual wages.
While Angrist went on to conduct extensive research
evaluating the impact of Vietnam-era military service (including a study
concluding that military education benefits narrow the earning gap for Vietnam
veterans), his research is clearly focused on a specific generation of service
members. Without acknowledging generational differences, Bernanke seconds the
study’s conclusion on the cause of this income disparity—that military
experience does not measure up with civilian labor market experience and
veterans pay the price throughout their careers.
Today’s military faces a radically different
post-military experience, from high-profile industry hiring initiatives for
veterans to more flexible and accessible VA benefits available for veterans and
their families after service. Challenges to post-service employment remain,
particularly for those suffering with post-traumatic distress disorder or other
combat injuries. But even those setbacks are no longer seen as limitations to
productive private-sector employment, particularly as the corporate world
learns more about those who chose to serve.
Military Benefits
Are More Than Money
But what about the skills and opportunity military
service provides that Bernanke dismisses so quickly? In my family, we’ve seen
firsthand the benefit of specialized skills and career opportunity the military
can provide.
After high school, my husband Eric and his brother worked
in the stockroom of a local Florida grocery store. When he bumped into a
recruiter after an all-night shift, Eric signed up to join the Marine Corps,
and was in boot camp at Parris Island four days later. Twenty-two years later,
Eric’s military career has taken him around the world, where he served as a
computer technician, an Army field artillery operator, and as a federal law
enforcement agent working felony investigations and protective service
missions.
He’s protected senior Department of Defense officials
around the world, reaching the top of his career field. Every skill,
certification, and specialized training he’s acquired over the years came
straight from the Army—skills and experience that will make him a highly
competitive candidate for high-paying, specialized security jobs after he
retires, if he chooses to continue in the field. While he’s still working to
finish his bachelor’s degree through the Army tuition assistance program, he
will still be able to pass on his post-9/11 GI bill benefits to put his
children through college, saving our family thousands of dollars in student
loans.
While Eric’s brother has built a successful career,
working his way up to grocery store management in his hometown, the opportunity
and training military service has provided my husband simply does not exist in
the private sector, particularly for civilians without a four-year degree.
There is no comparison, and for Bernanke to dismiss military skills and
training off-hand is simply ignorant of the opportunities that exist in today’s
military.
My daughter’s experience reflects similar life-changing
opportunity. Her dad’s G.I. bill benefits and an Army ROTC scholarship have
made her undergraduate degree possible. In four years, she will graduate from
an elite university without a penny of debt, and will have the opportunity to
serve her country and develop a resume most private-sector recruiters would
jump at the chance to hire. While her peers graduate with an average of $28,000
in student debt, my daughter will graduate with a clean slate, commission as a
U.S. Army Second Lieutenant, and immediately out-earn the majority of her
peers.
Bernanke Misses
the Point
While Bernanke fairly admits that research on the value
of service (particularly for the reserves and National Guard) is both limited
and outdated, he overlooks the significant differences between post-9/11 and
Vietnam veterans. The simple fact is, today’s military experience is radically
different than a draft-heavy military during the Vietnam War.
Today’s all volunteer force is just that: young men and
women who saw the army as their best chance for meaningful work and worthwhile
employment. Instead of being met with ignorance and disinterest when they
return from military service, today’s veterans have opportunities in education,
community engagement through organizations that take advantage of military operating
skills, and diverse employment opportunities that simply do not compare with
the benefits and private-sector support available to Vietnam vets. Today’s
service members receive these opportunities regardless of their gender,
ethnicity, or rank.
I fully agree that more research is needed to ensure that
veterans are accessing the opportunities available, and to examine any holes
that may remain in military transition programs to lower veteran unemployment
rates. But Bernanke misses the mark by boiling down the value of military
service down to an outdated number. The U.S. military remains a great
equalizer, offering the 1 percent of Americans who choose to serve incredible
opportunity for long-term success.
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