Wage Growth in the Civilian Careers of Military Retirees

Abstract : More than 20,000 individuals retire each year from the U.S. military who are eligible to receive a guaranteed annuity amounting to half or more of their basic military pay. Separating from the military at an average age of 43, the overwhelming majority of these retirees enter second careers in the civilian sector. For a variety of reasons, one might expect military retirees to enter the civilian labor force earning wages lower than what comparable civilians earn. The most frequently cited reason for this is that military training does not transfer perfectly to civilian occupations and therefore retirees must enter a period of training upon separation before their wages can be expected to catch up with those of their civilian peers. Whereas the post-service earnings of veterans in general have received a great deal of attention in the economics literature, much of this literature focuses on veterans serving for one or two terms of enlistment only. Comparatively little research, prior to this study, has examined the civilian labor market experience of military retirees who, by definition, have completed a minimum of 20 years of service.