Veterans in the Labor Force

Nathaniel Kressen 00:06
Welcome to Bank Notes, the podcast from the Federal Reserve Bank of New York. This episode, we're focusing on veterans in the labor market, with a particular focus on equity. Since May 2023, one team in our research department has been studying trends in areas like earnings and employment across different subsets of the population.

Raji Chakrabarti 00:27
I'm Raji Chakrabarti, the head of Equitable Growth Studies and the New York Fed. We seek to understand differences in economic outcomes across different demographic, socioeconomic and geographic groups. We want to ensure equitable growth, not just overall.

Nathaniel Kressen 00:44
Not just overall growth in the economy, but equitable growth. Understanding how the economy is functioning, not just for the average of all households, but across different segments of society. One of the ways that Raj and her team look at this data is by veteran status. Here she is describing her team's findings from May 2023.

Raji Chakrabarti 01:05
75% of veterans were employed, compared to 79% of comparable non-veterans. Our relevant question here is, do veterans have lower employment rates because they're looking for jobs, but can't find them: that is, they're unemployed? Or because they aren't even looking for jobs: that is, not participating in the labor force? We find that overwhelmingly, the answer is the latter. Relative to a comparable non-veteran, a veteran is about 22% more likely to be out of the labor force.

Nathaniel Kressen 01:45
A veteran is about 22% more likely to be out of the labor force. Which begs the question, why? We spoke to those who live and breathe veterans issues to try and figure out why this is, and uncovered a picture that is more nuanced and complex than we anticipated. I'm your host, Nathaniel Kressen. And this is Bank Notes: Veterans in the Labor Force. The views expressed here do not necessarily represent those of the New York Fed or the Federal Reserve System. To begin with, the Fed research itself offers two explanations.

Raji Chakrabarti 02:30
Interestingly, we found that the differences in education and disability status largely explained these labor market differences. We found that veterans are seven percentage points less likely to have a college degree and are over 50% more likely to experience a disability.

Nathaniel Kressen 02:50
So, to summarize what Raji is saying, veterans are less likely to obtain an advanced degree beyond high school and are more likely to experience a disability. Put together, these two factors pretty much account for veterans' lower labor force participation. One of these two factors is, unfortunately, a bit easier to understand: disabilities. This same Fed research shows that veterans are 50% more likely than comparable non-veterans to suffer from a disability. And, because every active service member is required to pass a physical exam, that greater share can more or less be attributed to their time in the service. As for how disabilities impact veterans' participation in the workforce, simply put, it varies. Veterans receive a disability rating when they transition out of military ranging from zero to 100%. That rating not only determines the benefits they receive, it also places restrictions on whether or how much they're allowed to work and still receive those benefits. The fact that veterans are less likely to pursue higher education is a bit less straightforward. Research from the Institute for Veterans and Military Families consistently points to education benefits as one of the top motivations for service.

Rosie Vasquez Maury 04:08
Education benefits: it could be for themselves, it could be for their spouse, it could be for their kids.

Nathaniel Kressen 04:14
This is Rosie Maury, Director of Applied Research and Analytics at the Institute for Veterans and Military Families.

Rosie Vasquez Maury 04:21
I've seen a number of veterans that, you know, pass that on to their kids and are like, "I'm good, but I want to make sure that my kids can go to school as well."

Nathaniel Kressen 04:29
So, it may not be a matter of whether or not education benefits are being used. Some veterans may be gifting them to another member of the family.

Jonathan McLeman 04:38
So, there are a couple of factors of reasons why veterans don't pursue higher education.

Nathaniel Kressen 04:44
This is Jonathan McLeman. He is a cyber risk specialist at the New York Fed, as well as president of our Veterans Resource Network.

Jonathan McLeman 04:51
One of it is, they feel like they already have it. They've been trained. They've done courses within the military that they think are pertinent, but they don't necessarily apply one to one to what employers want. So from that, you also have a sense of, now I'm in a situation in which I have to restart everything. I have to restart learning the LSAT, if you want to be a lawyer, or the MCAT, if you want to be a doctor. And those are difficult, who has, like, if you don't have the opportunity, when you get out, and essentially the resources to be able to do it, it's very hard to transition to a school that you want. It also leads to a lot of predatory practices, unfortunately. One of the things that has happened for a number of years is for-profit colleges preying on veterans and being able to have an incentive to enroll veterans, but then not giving good outcomes. And that has been proven in Congress, and they've passed legislation, and you can maybe potentially go back and get your GI Bill if there was fraud and things like that. But it leads to a distrust in the system, which leads to veterans, oh, no, I'm not going to do that. I need to get a job right away. I need to go do this. And then they take whatever it is that's available to them, right? So, in terms of the amount of obstacles? Do you necessarily know how to read a contract? Do you necessarily know what all of these provisions are, on how to get what you need? How to get the health care you need, how to get all of those different benefits, as soon as you get out? No, not necessarily. And that's a difficult situation for someone who's just out of high school, who has been earning a paycheck, who has had all of their meals associated with the military, had all of their housing associated with the military. You now have to do all of those things yourself, and figuring that out is it's a huge challenge.

Nathaniel Kressen 06:53
Now, there's a lot that Jonathan covered right there, so we're going to start with the first one he mentions: skills translation. Veterans get considerable training while they're in the military, and it goes beyond specific tasks to include qualities like leadership, teamwork, accountability, and a mission-driven mindset. But those may or may not be readily apparent to prospective employers.

Chris Hale 07:16
My name is Chris Hale, I'm the CEO of Viqtory. And we are a company, a marketing company that matches the military community with civilian opportunity.

Nathaniel Kressen 07:25
That's Viqtory spelled V-I-Q-T-O-R-Y, and they assemble a number of resources for the military-connected population, through online publications like GI Jobs and Military Spouse Magazine.

Chris Hale 07:37
When I got out of the military, I felt like, you know, I was pretty well-trained. I felt like most of my peers were, you know, personally, people that did well in high school. We went to good schools, service academies difficult to get into, and served in the military and had great experiences, leadership opportunities that, you know, most people don't get opportunities to have until much later in life. I was 25 years old, and I was put in charge of a squadron aircraft division with about 50 or 60 sailors in it. And that's common, right? For, for very young people to have that level of leadership and people responsibility. And when we got out, we found out that the private sector just didn't really understand what we were all about. And, you know, and I felt like, well, if that's the case for me and my peer set, what's that like for, you know, the vast majority of veterans who didn't have some of the educational opportunities that I had? And we went out to change that broken veteran narrative.

Nathaniel Kressen 08:36
The so called "broken veteran narrative" that Chris mentions here refers to the perception that most, if not all, veterans are mentally, physically, or otherwise negatively impacted by their military service. It's not something that we anticipated coming into the conversation surrounding veteran employment. But it was echoed time and again as a crucial factor. Here's Jonathan once more on how this perception plays into finding a job.

Jonathan McLeman 09:07
There have been decades of perception of what military service is like, and what military, what are military outcomes, and the mental health of veterans. And I know we talked about, very specifically, in the economic reports about disabled veterans. So how does that include mental health awareness? How does that include the PTSD numbers? How does that include the depression numbers? How does that include this? And the more worrying part, not just to the individual, the outcome of the individual veteran, is how does the employer view a veteran's mental health? Can you go into an interview saying that you were in Fallujah, can you go into an interview saying you are in Helmand Province in Afghanistan, and you are part of convoys that hit IEDs every other day. Sorry, IEDs: improvised explosive devices, and have them not think that you're mentally affected? Now, do they want that in their company? Hopefully, the answer is yes. But a lot of times people just default to the thing that's easy. You know, it's interesting, because not everybody understands the veterans as a community.

Nathaniel Kressen 10:26
This is Matthew Pavelek, president of the National Veteran-Owned Business Association.

Matthew Pavelek 10:31
Or as we call it, NaVOBA. Frequently, our perception is curated by the media we consume, and the stories that we hear, especially on a community at large. We know individual vets, many of us. We don't know the veteran experience. So, one of the things that I was looking at, when I was at the University of Kentucky in the PhD program in communications, was media coverage of vets. What I, what I found when I was researching this phenomenon is, this was right about the time that Afghanistan officially became America's longest war. So that would had to have been somewhere around 2014 timeframe, I was looking at the negative outcomes of service, what I call the broken hero or damaged goods syndrome. And so at the time, there were 0.0015% of people that had served in theater were actual deaths on the battlefield. 0.052% of folks were battlefield casualties. And as much as 12 to 13% of folks had diagnoseable PTSD and other mental health issues. But at the same time, so you're seeing something that's happening in about 15% of all cases, right. So 85% of the folks were not, they did not die, they were not wounded, they were not casualties, they did not have any mental health issues or anything else. Because of what I said before, just the sheer volume of people that are there. Not every one of them is a door-kicking Marine, a lot of them are doing, so many more of them are doing other things. And what we saw is in 85% of cases, when media was telling the story of the veteran experience, it was homelessness, unemployment, traumatic brain injury, PTSD, substance abuse, domestic abuse, all of these negative outcomes of service. So what I knew to be true anecdotally, I was able to validate statistically: that the mirror opposite of reality was being reflected in what our media was telling our folks about. And I don't fault journalists. It's, you know, the, the deviance criteria, which makes something newsworthy is partly why the "Dog Bites Man" phenomenon, right? If it bleeds, it leads. And so journalists trying to tell the true cost of sending our young men and women to war and what that human cost is like... But, there's a negative aspect of that when that's all you focus on, because then people tend to get this perception that that is everybody's experience.

Nathaniel Kressen 12:55
So, there's a disproportionate narrative that emphasizes the negative and follows veterans into the civilian workforce. But to what extent does it affect their economic opportunities? We turned to two experts in this space, who have been studying the economic realities of veterans for decades.

Misty Stutsman Fox 13:12
So, Misty Stutsman Fox, Director of Entrepreneurship and Small Business at the D'aniello Institute for Veterans and Military Families.

Nathaniel Kressen 13:19
That's the Institute for Veterans and Military Families at Syracuse University, which brings us back to Rosie.

Rosie Vasquez Maury 13:25
Yeah, Rosalinda Vasquez-Maury. Rosie. I never go by Rosalinda. A day, a week, a year, doesn't look the same. So, I oversee the research portfolio and any given year, honestly, we're working on a number of different research projects. So it's whether it's the impacts of military lifestyle, veteran entrepreneurship, transition, employment opportunities, it's a whole host...

Nathaniel Kressen 13:51
To give a very top-level snapshot because, truly, there is no shortage to the work they do, the focus of the IVMF falls more or less into two categories: training programs for the military-connected population in subjects like small business entrepreneurship, and research that informs that programming, the programming from other organizations, and policymaking for the veteran space at large.

Misty Stutsman Fox 14:13
Because I think there is a lot of myth-busting that needs to be done in this space. I think that there's a lot of work that can still be done.

Nathaniel Kressen 14:23
We asked about the myths that Misty and Rosie find themselves busting as part of their work, and the answer did not surprise us.

Rosie Vasquez Maury 14:31
So, there's definitely a lot out there. Number one -

Misty Stutsman Fox 14:34
The broken veteran.

Rosie Vasquez Maury 14:35
The broken veteran. I would say what you did in the military is what you want to do post-military life.

Nathaniel Kressen 14:42
This second myth, it turns out, has just as much of an impact on veterans' economic opportunities in the workforce. The idea that what they chose to do in the military is what they are most well-suited for, or even want to continue doing. Which is a limiting view, and not only because people's interests tend to evolve and change past the age they were when they first enlisted. One common misperception is that most jobs in the military are even combat-related.

Rosie Vasquez Maury 15:10
I mean, I guess this is part of the misconception about the military: not everybody is in combat, and not everybody was an infantry. And certainly even the military have a number of jobs that we won't even, that we don't even think about.

Misty Stutsman Fox 15:23
I've seen ranges, and I think it just depends on what's going on at the time, but the infantry is only about 15% to 20% of the Army, if you think about it. So, just at any given time. I do think there's a lot of people that think, "Well, if I go in, I'm gonna have to be in the infantry," or, "If I go in, like, I'm a frontline person." In reality, most people are not that person.

Rosie Vasquez Maury 15:46
Yeah, but I will also add a caveat to it, as well, is that I think it also depends on when you served, as well as, as the service experience is different. I mean, certainly it's important that there's this general misconception, and we certainly don't want to pinpoint or stereotype any one individual, but also acknowledge that for some, and certainly, they might be in a different, they might have had a different experience, in general, certainly, if they were in heavy combat.

Nathaniel Kressen 16:20
There is yet another myth out there, that colors veterans' entry into the workforce, and it has to do with who's enlisting in the first place.

Matthew Pavelek 16:28
One of the other things that people don't necessarily take into consideration is, 75% of the population can't serve in the first place.

Nathaniel Kressen 16:34
Once again, Matthew Pavelek.

Matthew Pavelek 16:36
Whether it's the criminal background history, the drug screening, the physical limitations, and then the ASVAB test, that's the Armed Services Vocational Aptitude Battery. So everybody has to have a certain level of aptitude to be able to to go there. So, for all those factors combined, only 25% of people can actually serve, that aren't going to be, you know, eliminated during that process. And out of that 75%, that 25%, these are the folks who, for the last 47 and a half years, that have chosen to do it voluntarily knowing they're going to put themselves in a position that could potentially be hazardous to their life. And so that volunteer aspect of wanting to serve something greater, coupled with all of the things that eliminate people that couldn't be eligible in the first place, then you put training and everything else on top of it, I think a lot of people really understand the value of working with veterans.

Nathaniel Kressen 17:23
With Viqtory's publication of GI Jobs magazine, Chris Hale disseminates career and industry insights, mentorship opportunities, and stories of resilience and success from across the veteran population. We asked him what stands in the way of veterans in the labor force.

Chris Hale 17:40
I'd say the two things that are really still existing out there that are impediments, are skills translation and cultural differences.

Nathaniel Kressen 17:49
Skills translation, as in what Jonathan touched on earlier.

Jonathan McLeman 17:52
You need to be able to take all of the specific activities you did and translate it into what the employer wants.

Nathaniel Kressen 18:00
Misty shared a story about one veteran whose effective skills translation not only landed him a job, but a boss firmly in his corner.

Misty Stutsman Fox 18:07
I think a lot of folks will sit there and say, "Well, I drove a tank, and so how's that going to help me at a bank, maybe, or something like that?" And, you know, I actually heard a story once of a, of a HR person at Bank of America, sitting down and he was on fire, because he had just been able to recruit someone that he was super excited about who literally was a tank driver. And he was like, you know, at first, there was this entire idea that he might have to convince a higher-up around, like, "Look at all these skills." And, he was like, in reality, it didn't take convincing, because it was so easy to say, "Here are all the skills that he had to do in order to read the instruments and do exactly what he needed to do, to get this thing from point A to point B. And this is why a person that was successful at that is going to just kill it in this role. Because if he can do all of this, this is a walk in the park."

Nathaniel Kressen 18:59
So, skills translation is really a skill in and of itself that veterans can learn to employ, positioning the strengths that they already have in the best possible light and furthering their opportunities in the workforce. Cultural differences present a bit of different challenge. Veterans leave behind a way of life that's built around structure and mission and community to enter a civilian world where those central tenets they're used to may prove much harder to find.

Chris Hale 19:26
On the veteran side, you know, you're tip of the spear, you're operating 24/7, you're always on call. You're often in in very arduous circumstances. You know, but you're with your team, right? And it's all about the team and there's just a high level of esprit de corps and camaraderie and love of your teammates. Conversely, when you get out of the military and you go into the private sector, people are there for the job for the most part. High-performing civilian cultures, I would argue, are really, you know, when if you were to compare them to a military unit, they're, they just don't stand up to the same level of passion, and "We're fighting for something bigger than all of us," right? So, it's just really difficult for civilian employers to recreate that sense of purpose and passion, despite trying to do so. And so, I think veterans feel that, and they feel there's an emptiness that's involved in that culture, on the other side of it. And I think that it's difficult to bridge that gap. And frankly, it just takes time. It really just takes time.

Misty Stutsman Fox 20:37
The folks that do well with transition are the folks that treat it like a new mission, in that they come out with a plan, they sort of know what resources they're going to go to first. Folks that flounder a bit, right, is... there is a sense of purpose. And there's a sense of "This is why you're getting up every day." And there's a sense of "Here's what your eight to five looks like" every day, and it's not as grey. There's not, you know, there's no one out there, someone telling you kind of exactly what you should be doing. And there's a very kind of ranking order and an organized chaos, if you will, and then you get out into the civilian world. And it's not organized chaos, it's just pure chaos.

Nathaniel Kressen 21:17
The challenges facing veterans in the labor force are significant. There are also opportunities.

Matthew Pavelek 21:24
One program that nobody seems to know anything about, but is a tremendous opportunity, is called the SkillBridge Program. So, the Department of Defense will keep an active service member on for the last six months of their service and pay for their salary, their benefits and everything else. But they get to go and work essentially as an intern for a for-profit, or for any enterprise, in the private sector. So the companies that hire these folks essentially get a full-time employee at zero cost to them. There's no cost to anybody but the taxpayer. So there's really no loser there because that person has already decided they're not going to reenlist. Or they're coming to the end of their service anyway, and looking to retirement. This program allows them to use that last six months of active duty time to their advantage. And it's such a financial advantage to the employer, especially because you're getting some healthy, strong, dependable drug-free fit leader that's coming out of the military to come and work for your company. So that's something that I could not more strongly encourage folks to look into if they're eligible for that, to get some of that real world experience before they even officially leave the military.

Mark Scott 22:30
What DoD, Department of Defense, has, is a fantastic Transition Assistance Program. That's something that has become robust over the years. And so, when somebody goes to transition now, they can start anywhere from 24 to 18 months out with different webinars, different counseling sessions, and some might raise their hand say, "Hey, I don't want to work for somebody else. I want to start my own business, be self-employed, or they can use the big term: I want to be an 'entrepreneur.'"

Nathaniel Kressen 23:00
This is Mark Scott, speaking to us from Mississippi State University where he heads up one of the roughly 30 Veteran Business Outreach Centers located around the country.

Mark Scott 23:09
Veteran Business Outreach Center. We commonly is, you know, anything with the government you have to have an acronym so we commonly go as a VBOC, okay? And this year, we expanded from 22 to 28. We're sort of regionally based. We have some structure, but we each have our own personality, because we're in different regions of the country. Different needs, if you will.

Amy Amoroso 23:31
You know, what's fascinating about that, is that individuals can come to us at zero cost. We don't charge a thing.

Nathaniel Kressen 23:38
And this is Amy Amoroso, who heads up another VBOC in New York State.

Amy Amoroso 23:42
We are grant-based program. Right now our full funding comes from the U.S. Small Business Administration. So we are funded fully by the U.S. government to provide this program on the entrepreneurial side to our veterans and their families looking to start or scale, grow any type of business, any industry.

Nathaniel Kressen 23:57
To drive that home, this is mentorship and training at no cost for small business owners at any stage of their development. And anyone from active service members to veterans to military spouses and families are welcome to take advantage. There are, in fact, a number of resources out there for veterans looking to start or scale their own small business. And we've included a link in the episode description that will take you to a list of some of the recommendations from our guests, as well as other information like the Fed research at the center of this podcast. There are two programs that we want to highlight here: APEX Accelerators and the Veteran Institute for Procurement. Both of these programs specialize in training veterans on how to win and manage government contracts as suppliers, knowledge that can be leveraged for potentially greater returns in the private sector.

Matthew Pavelek 24:46
So to date, everything that the government has invested in training vets about entrepreneurship has told them to sell to the government. So, vets are aware of those opportunities, but what they don't understand is the opportunities in the private sector radically dwarf the federal opportunities, just because of the sheer volume of potential customers. The federal government, there are 23 federal agencies with procurement budgets that exceed half a billion dollars annually. The Fortune 1000 alone lets you know that there are more opportunities in the private sector. There are 39 corporations on this thing called the Billion Dollar Roundtable. They spend more than a billion dollars a year with diverse companies, not just in procurement, with diverse businesses.

Nathaniel Kressen 25:27
Running a small business, of course, comes with its own set of challenges. The Federal Reserve Small Business Credit Survey looks at exactly that, tracking economic conditions, financing needs, and access to credit for small businesses across industries and demographics. In 2018, the Small Business Credit Survey looked at veteran-owned businesses in particular. Here's Claire Kramer-Mills from the New York Fed.

Claire Kramer-Mills 25:53
In some ways veterans are, are not atypical, right? They're experiencing challenges that many small business owners experience. One thing, though, that I will say, that I think is really important to note about, about veteran-owned small businesses. The data that I've seen, regarding kind of reentry, and you know, from vets, is that only about 50% returned to the community that they were part of before, before their service. And I think an underappreciated aspect of small business ownership and success is the social ecosystem. And having connections within your community, the tacit knowledge that you can get from other businesses that you're familiar with. The coaching, informal and formal. It could be formal mentoring, but it's also just, "Hey, I've got a problem. I'm encountering this issue, what did you do about it?"

Amy Amoroso 26:52
The resources that are there, to me, it's more of a trusted value. You know, who can we trust when we get out? Who can we trust when we're in? What's our brothers and sisters looking at? And where's that camaraderie? So what we do and kind of going back to one of the first things that we talked about, and touched on, is providing that ecosystem for them. So we try to pull them into our network. Just at the end of this month, actually, I'm providing an open forum for individuals to come in and talk about whatever they want, you know. I'm not plugging anything to them. I just want them to tell me what their issue is. And I'm going to give them direction that they need to go in.

Nathaniel Kressen 27:26
The Fed report from 2018 also showed that veteran businesses have a harder time accessing financing.

Claire Kramer-Mills 27:32
What we learned was that, you know, vets have significant challenges. Some, some big challenges are weak credit history, lower credit scores than might qualify for good terms and conditions. And by that, I really mean just affordable credit. Your credit score, and the number of years that you have, you know, credit, a credit relationship, matters when you need financing for a business, to either start it or to grow it. And that can be problematic if you're sort of not in the prime credit zone, because that means that essentially, you're going to pay a higher cost to borrow the dollars that you need.

Nathaniel Kressen 28:20
At the start of this episode, we looked at veterans' labor force participation rate, and dared to ask why it lagged that of non-veterans. We spoke with those who've made it their life's work to champion, educate, and empower veterans, and heard back that it is just as frequently the intangible factors as the tangible ones that shape their outcomes. One year after that initial release, Raji and her team continue to watch the data, and while the participation gap did narrow in February of 2024, it widened again in March and April. The takeaway? As with everything we heard with this podcast, veterans' experiences in the labor market are mixed, and there remains work to be done.

Raji Chakrabarti 29:07
Veterans form an important part of the fabric of our society. Understanding the differences is critically important to start thinking about solutions.

Nathaniel Kressen 29:28
Special thanks to all of our guests for their time, their passion, and their expertise. All of the data and resources we covered can be found using the link in the episode description, and we'd ask that you consider sharing this episode with anyone you know who might benefit from listening.