American Service Members Are Taking Pay Cuts to Leave Military

While many American military members look for a way out of active duty, financial barriers might be keeping them from leaving.

In a McKinsey survey of 150,000 service members who transitioned out, 90,000 said they earn less than they did while on active duty.

"Many service members leave the military for various reasons, from personal and family, to health and wellness, to civilian career opportunities," retired 12th SMA Jack L. Tilley, co-founder of American Freedom Foundation, a non-profit dedicated to helping veterans and families transition from military to civilian life, told Newsweek. "Oftentimes, many people choose to leave simply because they have fulfilled their commitment."

In 2023, active-duty troops scored the biggest pay raise in decades as part of an annual defense authorization bill. All active-duty troops, drilling guard and reserve members saw their paychecks rise by 4.6 percent, the biggest increase in two decades.

But when it comes to facing the reality of life on the outside, those who enlisted and do not have a college degree were disproportionately affected, McKinsey said, as they tend to occupy lower-paying and more physically demanding roles than those with a bachelor's degree.

Mike Millerson, a former U.S. Army sergeant, said this is because of a gap between the skills learned inside and outside of military service.

"The skill sets they have honed during their service may not directly translate into traditional civilian jobs, causing them to start at lower pay levels," Millerson told Newsweek.

The military also offers comprehensive benefits like housing, medical care and retirement, making the switch to civilian life often even more financially challenging, Millerson said. And because of a lack of companies actively recruiting for the skill sets veterans often hold, they will likely continue to face lower wages after serving their country.

"Companies should be incentivized to hire veterans and recognize the invaluable skills they bring, such as leadership, discipline, resilience and problem-solving," Millerson said.

The situation is even more precarious for veterans working in industries that have a high risk of displacement in the next few years. This includes sales people, which are in an industry expected to decrease by 23 percent in labor demand, along with administrative support and customer service workers, which are expected to see a 20 percent and 14 percent decline, respectively, the survey said.

"Transitioning veterans can consider avoiding these roles, and veterans already in these occupations can continue to focus on upskilling while taking advantage of reskilling opportunities to move into more secure occupations," the survey said.

"Veterans looking to move into more senior positions can also use generative AI tools to their own advantage to help boost their capabilities and output."