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Supporting Disabled Veterans Is As Important as Ever

As the nation celebrated July 4th this week, it seemed an appropriate time to recognize the sacrifices of our nation’s armed service members. These individuals not only risk their physical lives in combat and in performing support tasks, but also their economic lives should they return home. Disability from service is common, and disabled veterans are less likely to be able to find gainful employment.

Indeed, I wrote about this topic for The Monthly Labor Review several years ago. The lessons learned from that paper say a lot about how raw data can be misleading. The paper also points to some reasons why support for disabled veterans will only be more important in the future.

A Troubling Trend

Like disabled civilians, disabled veterans are less likely to work than those that are not disabled. This fact is hardly surprising. But, from the mid-1990s to the mid-2010s, disabled veterans likelihood of working dropped considerably. In 1995, 62 percent of veterans with a service-connected disability were working. In 2014, the share of disabled veterans working had dropped to 49 percent.

This trend got some people concerned that the Veteran Administration’s (VA) Disability Benefit system was increasingly discouraging work. Indeed, VA disability compensation expenditures grew 158 percent from 2000 to 2013 (adjusting for inflation), compared with 91 percent for the more civilian-oriented Social Security Disability Insurance program. But, trends can be deceiving, and lead to concerns hardly justified by the data. So, our paper sought to answer an important question. Are recent disabled veterans really less likely to work than disabled veterans of the past?

A Changing Population: Age

If a population is working less, it could be because of some change in the underlying propensity to work. In other words, if the same person were transported from 1994 to 2014, they could find themselves less likely to work. This decrease in working could occur for any number of reasons, perhaps because the disability system became more generous. But, another explanation for the decline is possible too. It could just be that the population of people changed. One obvious reason: the population could age.

And, that’s one of the things that the paper found. In 1994, 77 percent of veterans with a service-connected disability were ages 18-61, i.e., “pre-retirement age.” By 2014, that number had dropped to 62 percent, with a corresponding increase in those ages 62+. The reason for this aging is pretty simple. In 1994, the Vietnam-Era veterans — people in their early 20s during the war, were mainly in their late-40s and early-50s. But, by 2014, the majority of these individuals were age 62+.

Once the paper compared workers of similar ages, the drop in employment was just 7 percentage points, about half as big as the observed trend. In other words, half of the drop in employment among disabled veterans had a really simple explanation — they got older. What about the other half?

A Changing Population: Disability Rating

To determine someone’s disability payment, the VA uses the Schedule for Rating Disabilities (VASRD). The VASRD assigns veterans a rating between 0 and 100 percent (in increments of 10) on the basis of the nature and severity of injuries or illnesses suffered as a result of military service. For example, a condition involving hearing impairment with frequent vertigo is assigned a disability rating of 100 percent. But, hearing impairment with infrequent vertigo is assigned a rating of just 30 percent. The end purpose of these rules is to capture the damage done to a veteran’s ability to work that is due to a service-connected disability. The higher the rating, the less likely someone is to be able to work and the higher their VA payment.

It turns out, the population of disabled veterans has been becoming more disabled over time. The figure below shows that the share of individuals with the highest rating — between 50 and 100 percent — increased dramatically over this time period.

Figure. Share of Disabled Veterans by Disability Rating

Source: Calculations from Current Population Survey, Veterans Supplement, 1995-2014, adapted from Rutledge, Sanzenbacher, and Crawford (2016).

This increase likely stems from two forces, one mundane and one important. The mundane force you already know: the group of disabled veterans is aging. VA disability beneficiaries can apply for reevaluation to earn greater benefits at a higher rating level. And, many injuries become more debilitating with age.

The other force is a bit of good news — battlefield trauma care has gotten a lot better. From WWII to Vietnam to the War on Terror, the share of individuals wounded on the battlefield that die from their injuries has dropped. In WWII, nearly 20 percent of those wounded died of their wounds. The number was 16 percent in Vietnam. And, in the War on Terror Afghanistan and Iraqi Theatres, it was 9.4 percent. However, its not that the wounds have gotten any less grievous. Instead, people can survive far worse. Thus, higher disability ratings for more recent returning veterans.

Once one compares disabled veterans with similar age and disability ratings, the decline in employment looks similar to non-veterans. In other words, the falling employment is hardly a major policy failing. Instead, the decline simply reflects a changing composition of veterans.

Going Forward

As I said, I think a few lessons from this work are important. The first is that simple trends can obscure more complex issues. The decline in employment among disabled veterans was interpreted as a failure of policy that could be rectified — presumably — by cutting benefits for some. But, that trend was more the result of natural forces. The aging of the veteran population and the increase in severe disability seem to be the culprits. These forces would not be affected by policy change.

The other lesson is that we need to continue to robustly support the VA’s disability program. In future conflicts, it seems likely that improvements in trauma treatment will continue to return soldiers home who may not have made it in past conflicts. Supporting those soldiers monetarily will help lessen the economic damage done by their wounds and ensure our society at least partially pays the debt owed to those individuals for their service.

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