2006 September 26 Tuesday
Most Military Reservists Make More When Called Up

Most US reservists make more in the military than they do in the private sector.

Most U.S. military reservists see their earnings increase when they are called to active duty, contrary to the common belief that the earnings of reservists fall when they are activated, according to a RAND Corporation study issued today.

The study by the nonprofit research organization, titled “Activation and the Earnings of Reservists,” examined reservists who served less than 30 days on active duty in 2000 and more than 30 days in 2002 and 2003. It found that:

  • 83 percent of reservists did not lose earnings when activated. Only 17 percent experienced a drop in earnings.
  • The average earnings of the activated reservists increased by 32 percent – amounting to $13,539.
  • 6 percent of activated reservists had an earnings loss of more than $10,000. A total of 11 percent had an earnings loss of more than 10 percent of their previous year's earnings.

“Typically, these reservists are people in their mid 20s to mid 30s, with some college but not necessarily a bachelor's degree,” said David Loughran, a RAND economist and lead author of the study. “Generally, military pay is quite good for this group. Moreover, reservists receive additional special pay when activated and their earnings are not subject to federal taxes.”

The study also finds that 40 percent of reservists who were not activated in the period studied experienced an earnings loss as civilians. Since only 17 percent of activated reservists experienced an earnings loss during the study period, this finding suggests that being activated actually reduces the likelihood a reservist will experience an earnings loss.

“We tend to think of the civilian labor market as relatively static, but it's incredibly dynamic,” said Jacob Klerman, a RAND senior economist and co-author of the study. “Sometimes people earn more from one year to the next, but sometimes people see their earnings drop from one year to another.”

The preliminary version of this study does not accout for higher costs due to being sent abroad. A woman whose husband gets sent to Iraq can't use him to babysit the kids while she works or to get him to fix things around the house. So his absence creates additional costs. Still, I find these results surprising. Does the average reservist make more or less than the average non-military person of the same age in the private sector?

Share |      By Randall Parker at 2006 September 26 10:31 PM  Military War Costs


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