Is Military Disability Compensation Adequate to Offset Civilian Earnings Losses from Service-Connected Disabilities?

The Departments of Defense and Veterans' Affairs (DoD and VA) pay about $35 billion in disability compensation to about 3.2 million veterans each year. Their disabilities range from battlefield injuries to health conditions like diabetes and asthma. This research examines the adequacy of disability compensation to offset the reduction in civilian earnings opportunities that are associated with service-connected disabilities (SCDs). The authors focus on cohorts of veterans who left active military service between fiscal year (FY) 1993 and FY 2004. They track these veterans' civilian earnings and labor force participation for up to 12 years, from 1994 through 2005, compare the labor-market success of veterans with and without SCDs, and recommend changes to disability compensation.