Why Is Veteran Unemployment So High?

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Research Questions

  1. Why is veteran unemployment so high?
  2. What is the trend in veteran unemployment as time since separation from the military increases?
  3. Are veterans inherently disadvantaged in the civilian labor market?
  4. Should the federal government limit unemployment benefits to recently separated veterans?
  5. Are federal policies aimed at facilitating the transition of veterans into the civilian labor market effective?

Abstract

According to official statistics, the unemployment rate of young military veterans ages 18-24 reached 29 percent in 2011. This report seeks to put that statistic in perspective by examining the historical time-series of veteran unemployment, comparing the veteran unemployment rate to that of non-veterans, and examining how veteran unemployment varies with time since military separation. Between 2000 and 2011, younger veterans were, on average, 3.4 percentage points more likely to be unemployed than similarly situated younger non-veterans. However, this difference between veteran and non-veteran unemployment falls rapidly with age and time since military separation. The report concludes that the best available evidence supports the hypothesis that relatively high rates of veteran unemployment reflect the fact that veterans, especially younger veterans, are more likely to have recently separated from a job — namely, military service — and, consequently, are more likely to be engaged in job search, which takes time, especially during periods of slow economic growth. The available evidence lends little support to the hypothesis that veterans are inherently disadvantaged in the civilian labor market. Limiting unemployment benefits available to recently separated veterans would likely reduce the length of unemployment spells, but the net effect of such a policy action on the long-term federal budget is unclear. There is very limited evidence on the effectiveness of other federal policies aimed at facilitating the transition of veterans into the civilian labor market.

Key Findings

It Takes Time for a Young Veteran to Find a Civilian Job

  • Young veterans are more likely to be unemployed than their non-veteran peers, but this gap closes quickly with age and time since separation from the military.
  • The best available evidence supports the hypothesis that relatively high rates of veteran unemployment reflect the fact that veterans, especially younger veterans, are more likely to have recently separated from a job — namely, military service. Consequently, they are more likely to be engaged in job search, which takes time, especially during periods of slow economic growth.
  • The available evidence lends little support to the hypothesis that veterans are inherently disadvantaged in the civilian labor market.

Five Hypotheses for High Veteran Unemployment, Examined in Light of Research Findings

  • High veteran unemployment could be caused by poor health, selection, employer discrimination, skills mismatch, or job search.
  • Of these five possible causes, only job search speaks to the short-term spike in unemployment found in recent data on veterans newly separated from the military. Although they may be more likely than non-veteran peers to suffer an injury that affects ability to work, the evidence does not support this as a cause of elevated unemployment. According to the data, veterans are no more likely than non-veteran peers to have observable characteristics that would lead to difficulty in finding a civilian job (in fact, there is evidence of the opposite effect). Whatever skills mismatch may exist during the transition to the civilian labor market seems to be quickly overcome with education and training. Some employers discriminate against veterans, and more research is needed to understand this phenomenon, but there is no existing evidence that employer discrimination plays a major role in veterans' employment outcomes. Ultimately, the preponderance of evidence at this time points toward the simple explanation that veterans, being newly separated from (military) jobs, will inevitably be unemployed for a period while they search for suitable new ones.

Recommendations

  • Policymakers who wish to address veteran unemployment should focus attention on policies and programs that facilitate more efficient job search.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    The Facts About Veteran Unemployment

  • Chapter Three

    Five Hypotheses for High Veteran Unemployment

  • Chapter Four

    Can Veteran Job Search Be Shortened?

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by OSD, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND Corporation research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

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The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.

Document Details

  • Copyright: RAND Corporation
  • Availability: Web-Only
  • Pages: 44
  • Document Number: RR-284-OSD
  • Year: 2014
  • Series: Research Reports

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Loughran, David S.. Why Is Veteran Unemployment So High?. Santa Monica, CA: RAND Corporation, 2014. http://www.rand.org/pubs/research_reports/RR284.Loughran, David S., Why Is Veteran Unemployment So High?, Santa Monica, Calif.: RAND Corporation, RR-284-OSD, 2014. As of June 26, 2014: http://www.rand.org/pubs/research_reports/RR284

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