For the past decade, veterans in the United States workforce have struggled with issues of underemployment and their ability to effectively utilize their training. However, one area in which they have been able to reliably count on is their experience in finding jobs, even if not the ones that best suit their career goals. Veterans’ unemployment has consistently come in below the national average for the workforce as a whole. However, this trend changed dramatically at the start of 2025. Veterans’ unemployment jumped a full point—from 2.8 percent to 3.8 percent in January. In February 2025, the unemployment rate of veterans matched that of the unemployment rate for the US workforce as a whole, at 4.0 percent. At the heart of this rise is the sudden and clear disruption of the transition pathway chosen by a significant number of veterans and military spouses engaging in continued service within the United States government.
Systematic overhauls of government employment and budgetary challenges are not new to Washington, and each occasion has resulted in the need to address disproportionate impacts on service members, veterans, and families. In the 1990s, the Base Realignment and Closure process had a very real impact on service members and families, forcing the sale of homes, moving to new locations, as well as removing families from support services and established infrastructure. It also affected numerous veterans who had chosen to work as contractors in affected locations.
This pattern was repeated again with further cutbacks, and in particular, the advent of sequestration during the budget battles of 2012–2013. While cuts to the Department of Veterans Affairs were largely avoided, the budgetary restrictions had clear effects both on active-duty military employment and on job opportunities for veterans seeking work in the federal workforce.
The sudden and rapid cutbacks and hiring freezes announced in January and February of this year look likely to have an even stronger effect on veterans’ employment, and that of military spouses. Estimates largely project veterans to make up nearly 30 percent of the federal workforce, with as many as half of those workers being disabled, and even higher proportions of veterans working at the Department of Veterans Affairs.
For veterans and military spouses, working in the federal government has been a way not only to find economic stability but also to continue service with an employer who is familiar with their history, culture, and, in particular, skills. While government service does not provide as many benefits and potential opportunities in terms of salaries, it has provided a safe and stable alternative for numerous veterans and spouses looking for roles either during or after military service. Regardless of any position on the size and role of the government, the effect of these cutbacks on veterans is clear and likely to grow.
At the annual Milken Institute Finance Forum earlier this month, we held a private roundtable to tackle not only the current issue now facing veterans but also the profound instability being created by and for military service members looking to transition to the private sector. For those concerned with the economic opportunity for veterans, including all of us involved with the Milken Institute Veterans’ Economic Mobility Initiative, these developments highlight significant challenges we had already seen facing the veterans’ workforce, as well as emphasizing the significant role the private sector should play in addressing the economic needs of veterans, military spouses, and the very issues of the military transition itself. The United States armed forces have considered their role in employment to be focused on retention of servicemembers, rather than placing them (and spouses) into positions in the private sector.
In many ways, the preferential hiring practices for veterans among government agencies alleviated the pressure on military officials to worry about effective placement services, as it helped to ensure that veterans’ unemployment remained low. But the problem for the past decade or more—at least until now—has not been one of veteran unemployment but one of lack of successful economic outcomes for veterans looking for better-paying jobs and for stable employment for military spouses, whose 25 percent unemployment rate has a material and profound effect on the economic well-being of transitioning service members, and their ability to take the time and have the resources to find a fulfilling career.
The Veterans' Economic Mobility Initiative's full and clear intent is to address the challenges of veteran underemployment and military spouse unemployment. The current issue of government cutbacks only makes the need for collaborative solutions more urgent, involving private-sector employers and veterans’ organizations providing effective aid in transitions and job seeking for both service members and spouses and making the connections to relevant new skills and viable careers.
It is also essential to recognize that the key to military recruitment and retention is to actively develop clear pathways for job training, skill translation, and job placement for servicemembers at the end of their enlistment and military spouses during the time of service. This includes concerted efforts to create partnerships at the national and local levels, not only with those who are pursuing key best practices in this area but also to provide the platforms needed for both information and engagement. The need for these efforts has never been more clear and more immediate than now.
