A Better Way to Help Veterans
Daniel M. Gade
I
n t he y e a r s si nce the United States was drawn into a global war
on terrorism by the attacks of September 11, 2001, Americans have
made significant commitments to support the men and women who
have served on the front lines of the conflict. Tens of thousands of charities have contributed billions of dollars — and millions of volunteers
have spent countless hours — assisting veterans and their families. The
federal government has made an even larger investment, providing a
host of services — including health care, education and job-training
programs, and home loans — to those returning from war. Of the 2.4
million troops who have deployed to Iraq and Afghanistan, an estimated 1.9 million are now eligible for benefits from the Department of
Veterans Affairs, including health care and disability compensation, on
which the agency spends billions of dollars every year.
Few Americans question the propriety of these efforts to aid our nation’s men and women in uniform. The desire to help veterans in need
reflects a fitting gratitude for service rendered and sacrifices shouldered.
But precisely because we know we owe our veterans a great debt, we
tend not to question the particular ways in which our government goes
about helping them. We therefore pay far too little attention to whether
these efforts might actually be doing more harm than good. And there
is reason to believe that, in many cases, well-intentioned programs to
support veterans are instead preventing them from enjoying healthy,
productive civilian lives after they return from war.
D a n i e l M . G a d e , a lieutenant colonel in the United States Army, teaches in the
Department of Social Sciences at the United States Military Academy. He served as a company commander in Iraq in 2004 and 2005. He was wounded in action twice and decorated
for valor. This essay is adapted from Serving Those Who Served, published in May by the
Philanthropy Roundtable. The views expressed in this article are solely those of the author,
and do not represent those of the Army or the Department of Defense.
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Nat iona l Affa ir s · Su m m e r 2013
This is particularly true of federal policies intended to help wounded
and disabled veterans. A shocking 45% of veterans from the wars in
Iraq and Afghanistan are currently seeking compensation for serviceconnected disabilities — more than twice the application rate of troops
who served in the Gulf War. There are many reasons for this increase,
but a major factor is surely the design of VA benefit policies, which distort incentives and encourage veterans to live off of government support
instead of working to their full capability. Adding to the problem is a
culture of low expectations, fostered by the misguided understanding
of “disability” upon which both federal policy and private philanthropy
are often based. The result is that, for many veterans, a state of dependency that should be temporary instead becomes permanent.
America’s veterans — particularly those with disabilities related to
their service — deserve better. Because of the debt the nation owes these
men and women, and because of the talent and experience they can
contribute to our economy and society, both lawmakers and citizens
should ensure that our efforts to support veterans do not undermine
their recovery. By looking at the experiences of today’s veterans, and
by examining the perverse incentives created by current policies
and charitable practices, we can develop a support system more helpful
to, and more worthy of, America’s defenders.
A New Gener at ion of V et er a ns
To better understand the choices facing today’s veterans, it makes sense
to look at just who these men and women are and what distinguishes
them from their predecessors. In the particular case of wounded veterans, it is worth examining what types of injuries and conditions they
are dealing with — and how prevalent those conditions truly are — to
gain a more complete understanding of the problem of “disability” that
government policies and private charity must address.
First, the modern military is composed entirely of volunteers, and,
as a self-selected group, they are not a representative cross-section of
society. As a statistical matter, they are more educated than the typical
American: With very few exceptions, they are high-school graduates
or have GEDs. Many even in the enlisted ranks have some college education. More than 80% of officers have bachelor’s degrees, and many
have graduate degrees. Moreover, because the military’s current medical and physical-fitness standards are relatively rigorous, veterans of
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Iraq and Afghanistan are both physically and mentally healthier than
the population at large. (For reference, consider that only 25% of the
civilian population of suitable age can clear the mental and physical
thresholds, as well as meet the requirement to be free of any serious
criminal record, demanded for service in the armed forces.) It is also
worth noting that the conflicts in Iraq and Afghanistan have involved
record levels of Reserve and National Guard forces, who are typically
somewhat older and even more educated than the active force. These
men and women are also more fully integrated into civilian life.
Second, the combat experience of today’s veterans is markedly
different from that of veterans of most previous wars. With a few exceptions — the initial invasion of Iraq, the first and second battles of
Fallujah, Baghdad during the “surge,” isolated pockets of the fighting in
Afghanistan, and a few other episodes — today’s veterans have faced conflicts characterized by chronic, low-to-moderate levels of violence rather
than by dramatic, high-intensity battles. At the same time, they have
operated chiefly in theaters with no front lines and where civilians
have been mixed in with combatants. This means today’s veterans have
often been more exposed to civilian suffering and less sure of their adversaries, which has produced distinctive psychological effects.
Third, the social environment that has awaited veterans after their
service is different today than it was for some previous generations of
veterans. By and large, the civilian population is now accepting of veterans and thankful for their service. This “Sea of Goodwill,” as former
chairman of the Joint Chiefs of Staff Michael Mullen labeled it, encompasses employers, community leaders, government officials at all levels,
academics, health-care professionals, and other grateful citizens. In contrast with the experience of Vietnam veterans, today’s returning soldiers
and recently discharged veterans have received a warm welcome home.
Fourth, although the number of veterans to be re-integrated is high,
it is still dramatically lower than in previous wars. As of last year, fewer
than 2.5 million troops had served in Iraq or Afghanistan since 9 / 11. This
figure is significantly smaller (especially as a percentage of the population) than the 3.4 million who served in the Vietnam theater, and is
only a fraction of the 16 million Americans who served in the military
during World War II.
Finally, returning troops also tend to be better off financially than
their civilian peers. Both the earnings and overall incomes of veterans
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are higher than those of non-veterans. Among men in 2009, for instance,
year-round workers averaged $51,230 in earnings if they were veterans
and $45,811 if they were non-veterans. Among women, the advantage
for veterans was even greater. When the measure is income — not only
earnings, but also pensions and entitlements — veterans fare comparatively better still.
Thus, contrary to some conventional wisdom, most veterans are
not “victims” or members of a problem class. Given their educational
and health advantages, those returning from the wars in Iraq and
Afghanistan are likely to be a particularly valuable asset to America’s
economy and society in the years ahead. It is therefore important, from
a purely economic point of view, to ensure that as many of them as
possible are working to their full capacity. This means targeting assistance to those veterans who are genuinely struggling with the transition
back to civilian life, while avoiding giving more capable veterans reason
to work below their potential (or to not work at all). And from a moral
point of view, the argument for veterans’ full re-integration through
employment is even stronger.
Yet evidence suggests that our aid to veterans is overly broad, creating
exactly the perverse incentives that encourage returning soldiers who
are capable of work to instead have themselves classified as “disabled.”
As noted above, 45% of Iraq and Afghanistan veterans are currently
seeking compensation for service-connected disabilities, and about
one-third of all new veterans are being granted some level of disability
benefits. The number of disabling medical conditions claimed by the average applicant has soared — from one or two among World War II and
Korean War veterans, to around three or four among Vietnam veterans,
to more than eight medical conditions per claimant among veterans
who served in Afghanistan and Iraq.
One reason for this dramatic increase is a happy one: Thanks to
improved trauma care, some servicemembers are collecting disability
benefits for injuries that in past wars would have killed them. It should
be noted, however, that this is a minor factor: Of the more than 2.4 million servicemembers who have served in Iraq and Afghanistan, fewer
than 15,000 were wounded in action seriously enough to merit evacuation from the theater.
A bigger reason for the increase is surely VA classification procedures. The definition of “disability” in the VA system is such that most of
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these veterans are not in fact “disabled” in the way that most Americans
understand the term. It would be far more accurate to describe these
veterans as simply “having a service-connected condition.”
What kinds of service-connected conditions are qualifying veterans
as “disabled”? The most common condition for which veterans receive
disability ratings is tinnitus, or ringing in the ears; the second most
prevalent is partial hearing loss; other common conditions include afflictions like arthritis and lower-back strain. It is worth noting that,
while all of these conditions can be associated with the rigors of military
service, most are also caused by the normal progression of time and age.
In any event, they are hardly the catastrophic injuries that capture the
public’s attention.
One service-related condition that captures an enormous amount
of public attention is post-traumatic stress disorder. PTSD encompasses
a very wide range of complaints, including intrusive memories of the
traumatic event (flashbacks and dreams), avoidance and emotional
numbing, and anxiety and depression. Typically, in order to receive
compensation for PTSD, a veteran must experience some level of social
or occupational impairment (the most serious disability rating, of 100%,
is reserved for total occupational and social impairment, persistent delusions, and symptoms of comparable severity).
Assessing the true prevalence of PTSD can be difficult, and the task
has been made even more complicated by two changes implemented
in 2010 to VA policies regarding diagnosis and treatment. First, the VA
no longer requires proof that the veteran actually experienced a specific
traumatic incident (because PTSD can arise from an accumulation of
stress, particularly the persistent fear of enemy or terrorist activity that
characterizes service in a combat zone). Second, rather than simply observing PTSD in patients who come to clinics seeking treatment, the
VA now actively pursues patients who might have the condition, using
public-awareness campaigns such as “PTSD Awareness Month” (June).
One result of this change is that more veterans with legitimate diagnoses
of PTSD are receiving the treatment they need; another is that the claims
for PTSD-related benefits, and the figures for veteran disability, have
skyrocketed. Among Iraq and Afghanistan veterans, the Department of
Veterans Affairs reported 261,998 cases of diagnosed PTSD as of the first
quarter of 2013 — a prevalence much greater than that among previous
generations of combat veterans.
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The Department of Veterans Affairs is also making it easier to qualify
for benefits on the basis of traumatic brain injury, or TBI. In December
2012, the agency unveiled new regulations that will allow thousands of
veterans to receive benefits for five diseases not previously covered by
the VA, basing the expansion on a 2008 Institute of Medicine study that
found “limited or suggestive” evidence that these diseases may sometimes be linked to TBI. Incidentally, only a small fraction of the 250,000
cases of TBI diagnosed among servicemembers since 2000 are combat
related: The vast majority stem from vehicle crashes, training accidents,
or sports injuries.
Thankfully, relatively few of the conditions for which veterans seek
compensation are caused by catastrophic injuries. Among post-9 / 11 veterans, fewer than 2,000 have undergone major amputations. Serious
burns, spinal-cord injuries, and cases of complete blindness number in
the hundreds.
Given the variety of service-connected conditions, there is a wide
range in the extent to which veterans claiming benefits are considered
“disabled.” The process of applying for disability is relatively straightforward: The veteran assembles, with the help of either the VA or a
veterans’ service organization, a packet of medical and service records
and a disability application. The claim is adjudicated by the claims staff
at a VA processing center, and benefits are awarded, typically within
nine months or so. Disabilities in the VA system are rated in increments
of 10%, from 0% to 100%. Of the nearly half-million post-9 / 11 veterans
receiving disability compensation in 2011, 28% had between 0% and
20% disability, 26% had between 30% and 40% disability, 21% had between 50% and 60% disability, 17% had between 70% and 80% disability,
and 8% had more than 80% disability (including 4% who were compensated for being 100% disabled).
It is thus crucial to recognize that many veterans classified as “disabled” are in fact largely capable of enjoying active lives and performing
some remunerative work. While those veterans whose injuries permanently preclude a return to the labor force deserve whatever support they
require, it is just as important to ensure that veterans who can provide for
themselves are not robbed of their independence by policies that incentivize unemployment. Unfortunately, however, the way our system currently
provides benefits is rooted in a flawed understanding of disability — one
that keeps veterans unfairly trapped in a state of needless victimhood.
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U nder sta ndi ng Disa bili t y
Broadly speaking, a returning soldier or recent veteran benefits from assistance in three major areas: medical care, education and job training,
and employment. Which services a returning soldier or veteran uses
depends largely on his circumstances — whether he is redeploying with
his unit, being re-integrated into civilian life, or undergoing rehabilitation for significant trauma.
For those soldiers who are returning with injuries, a rich network
of service providers exists to help with recovery and transition back to
civilian life — a network made up of federal programs, assistance from
state and local governments, non-profit groups, church congregants,
neighbors, friends, and family. Ideally, this network would treat acute
and chronic medical needs, then provide rehabilitation services, and
finally help veterans gain and maintain useful employment.
But many veterans never make it to the last step, in part because of
the dangers lurking in the good intentions of their support networks.
This is particularly true of federal programs to aid veterans, as these government benefits and support services play a dominant role in returning
troops’ rehabilitation. It is therefore worth examining the understanding of “disability” that drives federal policies governing benefits for
wounded soldiers in order to see how those policies end up undermining the recovery process for many veterans.
There are at least two major models of disability, the first of which
is the so-called “medical model.” The medical model attempts to classify an impairment as a disease and to control its effects as one would
treat an illness, taking a thoroughly clinical approach. The medical
model of disability says that an amputee is automatically “disabled” by
virtue of his limb loss — even if he is capable of leading a largely independent, normal life — and is devoted strictly to restoring, to the extent
possible, the lost functionality of the limb. Support under this model
focuses almost exclusively on the patient’s infirmity, and in some ways
defines the patient by his impairment; the disabled person is viewed as
a victim, and the purpose of the disability system is seen as providing
benefits, rather than encouraging a return to functionality.
A more modern approach is the broader “social model” of disability,
which assumes that a physical ailment is only one component of determining whether a person is truly “disabled.” The social model adds
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environmental and personal factors to the physical diagnosis. It takes
account of the fact that a wheelchair user, for example, is much more
“disabled” in an environment in which his movement is constrained
by obstacles — curbs, stairs, and so forth — than he is in an environment in which he can easily get around using lifts, elevators, and ramps.
Moreover, personal factors at the individual and family levels strongly
affect the degree of disablement that a person will experience at the
completion of his medical treatment. Many families are able to find a
“new normal” after a family member becomes disabled; some are not.
Some individuals are resilient in the face of daunting challenges; some
crumble. The social model acknowledges these differences.
As a society, the United States has begun to move beyond the medical model of disability, preferring the social model instead. The passage
of the Americans with Disabilities Act in 1990 eliminated many physical
barriers to wheelchair mobility and required reasonable accommodation
of disabilities in the workplace. And attitudes are changing: Because of
the revolutionary effects of new prosthetic, computer, and drug technologies, we’ve become accustomed to seeing amputees pass us on the
ski slopes. Children with disabilities are often put into “mainstream”
classrooms. Adults with disabilities flourish in many kinds of jobs. Even
people with serious intellectual disabilities and developmental delays can
be fully employed in creative ways, and they gain both financial and
social benefits from their work. Our views of what is possible for the
“disabled” have been altered dramatically over the past generation.
Some government programs acknowledge the social model of disability. For example, most state-level employment programs for persons
with disabilities require some version of an Individualized Education
Plan as part of the re-employment process. These plans take into account the particular strengths and weaknesses of the job candidate
before placing him into a tailored program of rehabilitation, education,
or training in independent living.
Unfortunately, several major federal-government programs rely on
the medical model rather than on the social model. The Department
of Veterans Affairs disability-compensation program is one. The VA’s
statutory requirement (found in Title 38 of the U.S. Code) is to compensate for disabilities based on “average loss of earnings” that would be
expected for a worker with a particular diagnosis. The VA’s compensatory scheme thus relies on two abstractions: a diagnosis, and an estimate
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of the average loss of earnings of a person with that diagnosis, based
on data from people in the system who have had the same diagnosis.
This assessment does not take account of circumstances unique to the
veteran in question — personal qualities, family support, educational
potential, or other factors affecting the degree to which his injury will
result in real disablement.
This means, in essence, that the VA doesn’t base its compensation on
“disability” — how incapacitated a veteran really is — at all. Rather, VA
disability benefits are based purely on a diagnosis, regardless of what
that diagnosis actually means for a particular veteran’s ability to resume
a normal life. By this definition, many of the athletes we see sprinting
and swimming at the Paralympics — and the wounded veterans now
working profitably in Wall Street banks — are “totally disabled.” Indeed,
some wounded troops who remain on active duty and return to the
roles they had before sustaining their injuries will be labeled “totally
disabled” once they leave the service.
Such a model of disability classification can have a harmful effect on
veterans seeking benefits. The process of applying and proving that one
is “disabled” can negatively influence the way the veteran, his family,
and his community view his own capabilities. Applicants for benefits
can start to rely routinely on others; personal aspiration can diminish;
passivity can become normal. Having been defined by his impairment,
he may no longer believe that he is responsible for his own outcomes
in life. Similarly, the community may — consciously or not — begin to
view the disabled person as an object of pity rather than as a citizen in
full standing. Government benefits and charitable giving — to the extent that they supplant income from work — can deny the veteran the
pride of self-provision and exacerbate the sense that the veteran’s life is
beyond his own control.
In designing government policies and private philanthropic initiatives to help veterans, then, it is crucial to keep in mind an important
distinction: the difference between capacity and performance. Capacity is
the best an individual can be expected to do in a particular aspect of his
life. Performance is what that individual actually does. The goal of any
policy intended to help ill or injured veterans should be to narrow the
capacity-performance gap.
The Department of Defense offers a useful example of how this goal
should be pursued. The Pentagon has its own separate disability-rating
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system, one based more on the “social model” of disability. The department rates disability based on whether the person in question can still
perform his assigned military duties or can be re-assigned to a role
better suited to his remaining capacity. By eliminating barriers and restructuring work requirements, the Department of Defense is bringing
disabled servicemembers’ performance more in line with their capacity.
Under this model, dozens of amputees have returned to service after
rehabilitation, and at least one completely blind soldier continued his
Army career after losing his sight in 2005.
Unfortunately, the VA does a poor job of assessing the capacity of
wounded soldiers and maximizing their performance. Private charity,
too, is often more focused on what an injured soldier is not able to do
than on increasing what he is able to do. These practices can seriously
hinder a disabled veteran’s re-entry into society — undermining the very
purpose of philanthropic and government aid to injured troops.
I ncen t i v e s a nd T r a deoffs
To see how this flawed understanding of disability — and the policies
that flow from it — can sabotage veterans’ long-term success, it is useful to consider the experiences of three different hypothetical soldiers
returning from war.
Soldier A was a sergeant in the infantry serving proudly in
Afghanistan when he was hit by an improvised explosive device. He
suffered penetrating trauma to his head, leaving him severely disabled.
He has crippling headaches, poor mobility, and poor cognition. He
depends on others to carry out daily activities like cooking, transportation, and many elements of self-care. He needs all the government and
charitable assistance he can get to support extensive ongoing treatment,
and indisputably requires life-long disability payments.
Soldier B is a member of the U.S. Army Special Forces. When he
was hurt by small-arms fire in Iraq in 2006, his injuries were serious,
and his leg was amputated below the knee. But Soldier B has many
advantages. He is happily married with children; he had completed a
bachelor’s degree before entering the military; and he has an ambitious,
resilient personality. Soldier B is thus able to put his injury behind him
and remain on active duty; he even returns to combat. While this soldier
will need some assistance from his friends, family, and community, he
should not be perceived or treated as “disabled.”
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Soldier C is a college drop-out from a small town. He still has nightmares from his first tour of duty, reliving the danger of fighting the
insurgency in Iraq. Four months into his second tour, in Afghanistan,
an improvised explosive device killed two other soldiers and seriously
injured him. He woke up at Walter Reed after two weeks of unconsciousness to find that he had suffered a mild traumatic brain injury, the
amputation of his lower right leg, and minor shrapnel wounds to his
arms, face, and remaining leg.
This soldier benefits from superb medical treatment and the care of
his girlfriend and mother, who help nurse him back to health. He initially suffers from headaches because of the brain injury, and the shrapnel
wounds take some time to heal, but after six months he can run again
on his new prosthetic leg. A year after his injury, Soldier C starts his
medical-board process so that he can separate from military service.
Eight months later, he is a civilian. He goes to an advocacy group for
disabled veterans to seek help filing his disability claim; they push him
to apply for disability not only for the amputation of his lower leg but
also for the shrapnel wounds, for the mild TBI, and for his nightmares,
which they say is PTSD. Fortunately, the soldier’s claim is handled quickly,
and the government gives him a disability rating of 40% for the leg, an
additional 10% for the shrapnel scarring, and 30% for the PTSD.
Soldier C has the opportunity to pursue vocational rehabilitation or
to go back to college on the greatly expanded G.I. Bill and complete his
degree. But his counselor from the Department of Veterans Affairs tells
him that he qualifies for something called “Individual Unemployability”
(IU). Through this program, a soldier whose impairments don’t add up
to 100% disability can receive compensation at the 100% rate, as long
as he doesn’t work. This soldier feels like he could work, but the difference between VA compensation at the 80% rate and at the 100% rate is
significant — well over $1,000 a month. By taking IU payments, he also
avoids having to make the adjustments to his life that going to work
every day would entail. So he applies for, and receives, the IU benefits.
While there are some stories of wounded troops like A and B — extreme cases of need or independence — their outcomes are, by and large,
exceptions. Public policy and private charity should instead be built
around the far more common case: that of Soldier C, who faces real decisions and tradeoffs, which are influenced by the design of both public
and private benefits.
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And what incentives do today’s policies provide someone like Soldier
C? Consider what he gains by being dubbed “disabled.” Because of his
injury, this soldier receives $50,000 from the Servicemembers’ Group
Life Insurance Traumatic Injury Protection Program, which is intended
to serve as a bridge to rehabilitation. During his recovery, this veteran
enjoys free lodging; he can eat for free at the hospital or any other Army
dining facility. He receives his full military salary and other benefits.
Upon leaving the Army, this soldier will receive a portion of his military retirement pay and all of his disability benefits from the Department
of Veterans Affairs. Because he chose to apply for IU, he will receive compensation from the VA at the 100% disability rate — around $2,800 per
month. Depending on where and when he applies, he may also qualify
for Social Security Disability Insurance (SSDI) — which, for someone in
his situation, is worth around $800 a month. All told, his benefits package from the government may easily exceed $4,000 per month, most
of it tax free. Given that the national median monthly earnings figure
for 20- to 24-year-old males who work full time is $1,976 (before taxes),
Soldier C has a good reason to accept the “disability” label. Because he
loses his IU benefit and his SSDI if he begins to earn above a minimal
amount, he faces a stiff financial penalty for taking a job. And since he
lacks a college degree, it will be very difficult for him to replace that lost
income — let alone exceed it — through wages for full-time work.
Once a veteran like Soldier C chooses disability over work, he faces
further harmful consequences. From a psychological standpoint, this
soldier should be confident: Despite having lost a leg, he walks with
only a slight limp; he has only occasional headaches or sleepless nights
because of the TBI and the PTSD. But he has just spent more than two
years proving to the federal government that he is “disabled,” and two
different federal programs have classified him as “disabled.” It is easy to
see how a veteran who might otherwise have a relatively bright outlook
on his future could come to see himself as “disabled” as well. Moreover,
a person’s work is a key part of how he relates to society and is crucial
to his identity. When a veteran like Soldier C chooses not to work, he
is isolated at home, meets fewer people, and has a much smaller social
network than does someone who goes to work every day. He is likely to
be involved in fewer social activities and thus more likely to become depressed and experience other social dysfunction. More fundamentally,
he lacks the meaning and sense of purpose that come from work.
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Regrettably, there has not been a concerted, empirical study of the
precise effects that the incentives created by these VA benefits and
policies have had on this generation of veterans’ work choices and rehabilitation. Most of the indicators we have are anecdotal, or inferred from
other data. The fact that the VA has not undertaken a rigorous evaluation of the degree to which its policies discourage returning soldiers
from working to their full capacity is itself revealing. Given what is at
stake, it is a subject that cries out for further study.
In the meantime, however, there is other evidence to support the
argument that someone like Soldier C is undermined by the way our
government treats disabled veterans. In particular, other federal disability
programs offer valuable lessons in how such efforts can be counterproductive. For example, in their recent book, The Declining Work and Welfare of
People with Disabilities, economists Richard Burkhauser and Mary Daly
study two massive federal programs, Social Security Disability Insurance
and Supplemental Security Income (SSI). The authors find that, despite
the many new legal protections and forms of assistance for the disabled
that have arisen over the past generation, employment rates among disabled Americans are at an all-time low, and household incomes have been
stagnant. The design of these disability programs, Burkhauser and Daly
find, makes work both “less attractive and less profitable” than passively
receiving benefits. The positive effects of the Americans with Disabilities
Act and other efforts to mainstream people with disabilities have thus
been considerably undermined by carelessly designed entitlements.
This trend is visible in the dramatic growth of disability programs of
all types over the past several decades. Through our Social Security system alone, cash payments to individuals classified as “disabled” totaled
$135 billion in the latest fiscal year. After reviewing the 19-fold increase in
federal disability claimants since 1960, Washington Post columnist George
Will warned that “gaming . . . of disability entitlements” has made work
“neither a duty nor a necessity” — which is one major reason why the
male labor-force participation rate has plummeted from 89% in 1948 to
73% today. As the American Enterprise Institute’s Nicholas Eberstadt
has noted, there are now more Americans of working age receiving
government disability checks (more than 12 million) than there are paid
workers in our entire manufacturing sector.
Disability programs for returning soldiers are no exception to
this problem. Indeed, some of the best evidence to suggest that our
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assistance to disabled soldiers may hinder their re-entry into the labor
force comes from a study of a past generation of veterans: those who
served in Vietnam. In a 2007 paper, economists David Autor and Mark
Duggan looked at the question of why, precisely, disability-compensation programs discourage work. Part of the reason why programs like
SSDI and SSI suppress employment among recipients is a “substitution
effect”: As the authors explain, “because a return to work ultimately
means sacrificing benefits,” recipients of these disability benefits “face a
financial incentive to remain non-employed.” This amounts to an “implicit tax” on work. But the authors were particularly interested in the
question of “income effects” — of the choices the disabled make when
working carries no financial penalty in terms of reduced benefits, and
when the tradeoff is between simply having more money from work
and having more leisure time.
To study these effects, Autor and Duggan looked at a 2001 change
in eligibility policies for veterans’ disability compensation. Because an
Institute of Medicine study linked exposure to Agent Orange to diabetes,
the authors explained, the VA added diabetes to the list of conditions for
which a Vietnam veteran would be eligible to receive disability benefits.
A large number of veterans nearing retirement age suddenly had access
to greater cash benefits and improved medical care. Crucially, however,
they did not need to be unemployed to receive these benefits. Nor were
the benefits means-tested. This disability compensation thus imposed
no “implicit tax” on work. To the extent the Vietnam veterans with
diabetes reduced their work in response to the new eligibility policy,
the authors explained, it would be “plausibly attributable to the pure
‘income effect’ of receiving an unconditional, lifetime grant of monthly
income and healthcare.” Such a policy change, Autor and Duggan observed, provided “an opportunity to study the income effect of receipt
of disability benefits on the labor supply and retirement decisions of a
relevant population of near-elderly individuals, the majority of whom
were work-capable at the time of benefit receipt though not necessarily
in good health.”
And what did the study reveal? While the authors noted that their
conclusions were preliminary, they found that the increase in unearned
income resulting from the VA’s 2001 policy change “substantially lowered labor supply among Vietnam era veterans.” The mere availability of
extra income as a result of being disabled — even when unemployment
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was not a condition of receiving those benefits — was enough to encourage work-capable veterans to claim disability and drop out of the
labor force.
If such behavior exists among Vietnam veterans, with their long
history of attachment to the labor force, it stands to reason that it is
affecting the decisions of post-9 / 11 veterans, too, especially those whose
only job has been their military service. To a large degree, this is common sense: Compensating individuals for their disabilities will result in
more people lining up to be declared disabled, just as unemployment
programs invariably increase the time that people receiving unemployment benefits remain jobless.
To be sure, this danger is not limited to government entitlements.
Some charitable programs designed to honor veterans can also have
negative effects. One troubling trend in charitable giving has been
the growth of programs offering large gifts to veterans based on
service-connected disabilities. Several programs, for example, offer
free homes to veterans who have been identified as “disabled” by the
government — providing extra reason for veterans to seek a disability
classification, even if they might be better off thinking of themselves
as able-bodied and working a full- or part-time job. Though such charitable programs have heart-warming stories to tell, they may ultimately
decrease a veteran’s desire to participate in the labor force and fully
re-integrate into civilian society. It isn’t particularly difficult to balance
out the harmful incentives in such gifts — through sweat-equity requirements like those used by Habitat for Humanity, or through financial
co-pays or concrete expectations that the veteran will be employed after he and his family move into their donated home. Unfortunately,
however, these important details are overlooked in the design of most
charitable programs.
Ultimately, volunteers, donors, policymakers, and taxpayers don’t
like to think that programs designed to aid veterans can instead harm
them if incentives are misaligned. But a great deal of evidence indicates that poorly designed government compensation programs and
charitable services are creating major hurdles for recovering veterans.
Towa r d Self- Sufficienc y
Obviously not every veteran responds to these incentives in the
same way. Some people will take their disability payments and
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job-retraining opportunities and make dramatic successes of themselves. Congresswoman Tammy Duckworth, Wounded Warrior Project
board president Dawn Halfaker, Senator John McCain, and many other
former soldiers have done just that. It is important to realize, though,
that the men and women who are able to resist the siren song of gifts,
charity, and disability payments are the exceptions. The system should
be designed around the vast majority likely to make the very understandable choice to forgo a fully independent lifestyle in exchange for
the generous benefits that come with being “disabled.”
It is also important to note that neither today’s federal programs for
veterans nor their charitable counterparts are intended to harm veterans. The negative effects of these programs are certainly unintended
consequences. The question, then, is how best to mitigate these effects.
Policymakers and donors would be wise to keep a few helpful principles
in mind when designing benefits and services.
First, they should always take incentives into account — even negative ones. Veterans are simply people, and they respond as rationally as
anyone else to the incentives they are offered. The old lesson about giving a man a fish versus teaching him to fish applies to wounded soldiers.
Policymakers and charities should ask whether their benefits and services provide for veterans directly, or instead help veterans integrate into
society and provide for themselves. Under this principle, it may make
more sense to offer benefits to work-capable veterans only when they
take jobs instead of subsidizing them in unemployment. Even though
an unemployed veteran is more financially vulnerable in the immediate
term, his long-term interests may best be served by policies that encourage him to find employment as quickly as possible.
Second, veterans should be viewed as resources, not as damaged
goods. The percentage of veterans who leave military service totally and
permanently disabled is tiny. The percentage who need or could use
some help is moderate. The majority of veterans need no special help
at all. Efforts to help veterans should begin by recognizing their abilities, rather than focusing exclusively on their disabilities, and should
serve the ultimate aim of moving wounded soldiers from the category
of “needing some help” to real self-sufficiency.
Third, lawmakers, philanthropists, the press, and the general public should be more willing to have an open, honest discussion about
this question. The warnings issued here are rarely articulated, in part
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because they can so easily be exploited for demagogic purposes. But
these are hard realities, and it does our veterans no good to deny them.
Many of these observations and conclusions come from my years of academic specialization in this area. Most come from personal experience.
I was wounded twice in Iraq; the second time I nearly lost my life, and
did lose my entire right leg. I needed more than 40 operations before I
could return to self-supporting work and family life.
During my year at Walter Reed Army Medical Center, I saw a great
many servicemembers like Soldier C get sidetracked on the road to
recovery by overly generous or poorly targeted assistance programs. I
myself was offered forms of help that could have hindered my quest to
regain independence. Fortunately, I was blessed with wiser offers from
generous helpers at hundreds of points along the way, and with a supportive and loving family. Many veterans, however, are not as lucky.
A great deal of government and charitable activity surrounding veterans does wonderful things for men and women who deserve the utmost
support. The challenge is to improve our distribution of benefits and
services by designing policies that are smart and honest about the degree
to which they discourage veterans from living the active, productive
lives of which they are capable. To the extent that we can eliminate
these pitfalls from our current support system, we will dramatically increase the opportunities for today’s veterans to participate fully in the
American Dream.
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