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.