Pre- and Post-Release Income: Life After Service Studies (July 2014)

Objective

This study of Veterans income is part of the Life After Service Studies program of research aimed at understanding the transition from military to civilian life. This report describes income trends pre- and post-release, for both Regular and Reserve Force Veterans.

Methods

Statistics Canada produced aggregate tables from a linkage of records on military releases, Veterans Affairs Canada client status and tax files for three groups: 51,990 Regular Force Veterans (released 1998 to 2011) and 15,596 Class A/B Reserves and 3,185 Class C Reserves (both released 2003 to 2011).

Results

Regular Force Veterans

Average income in the year prior to release was $70,900 (in 2011 constant dollars), increasing in the release year then declining the year after to $65,000. Post-release income reached pre-release income eight years post release.

The largest source of income was earnings, followed by pensions and government transfers. While government transfers (employment insurance, social assistance, guaranteed income supplement) increased post release, receipt of such was temporary. Thirty-eight (38%) received EI and 4% received SA or GIS at least one year post release, and only 2% received EI and none received SA or GIS in every year post release.

Average decline in income for the Regular Force cohort (compares, for the same Veterans, the pre-release year and all the first three years post release) was 2%. The majority of this cohort (64%) were not VAC clients. Clients experienced an 11% decline in income post release compared to an increase of 4% for non-clients. More than one-quarter (27%) of the cohort were aged 29 and under at release and clients were older than non-clients.

Declines in income, which can significantly impact the transition experience, differed considerably between sub-populations. For example, medical releases had one of the greatest declines in income (20%). Compared to the overall average of 36%, 80% of medical releases were clients, indicating that the Department is reaching many of those who medically released.

The rate of low income, which can also impact transition success, peaked in the first year post release at 7% before gradually leveling off at 4% by the six-year mark. Of the 16% that experienced low income at least one year post release, the majority were not VAC clients. Veterans who released involuntarily (38%), had served for less than two years (37%) or released as privates (35%) experienced low income the most.

Primary Reserve Force Veterans

Average income did not decline post release for Reserve Force Veterans. Pre-release income for Class A/B Reserves was $35,300, increased to $39,400 in the release year and then continued to increase to $60,300 eight years post-release. Class C Reserves experienced an initial increase in the release year, from $66,300 to $71,500, and then remained fairly stable.

Earnings were the biggest source of income post release, followed by government transfers and pensions. Government transfers were quite temporary, with few Veterans in receipt every year post release. While 39% of the combined Reserve groups received EI and 5% received SA or GIS at least one year post release, 4% received EI and 1% received SA or GIS every year post release.

When considering the Reserve Force cohort (compares, for the same Veterans, the pre-release year and all the first three years post release), Class A/B Reserves experienced a 43% increase in income, from $32,700 to $46,600, while Class C Reserves experienced a 14% increase, from $60,500 to $69,100. Class C Reserves were older than Class A/B Reserves. Only 5% of the Reserve Force cohort were clients, therefore the two classes were combined for client/non-client comparisons. Clients experienced a 9% decline in income post release while non-clients saw a 39% increase. Three-quarters (73%) of the Reserve cohort were aged 29 and under at release and clients were older than non-clients.

Although the Reserve Force cohort saw income increases post release, some small groups (< 5% of the cohort) experienced declines. Veterans aged 55 plus at release (18%), those who released at retirement age (17%) and those released from the Navy (11%) experienced the largest declines, compared to an overall increase of 35%. All three of these groups were more likely to be clients than the average of 5%.

The rate of low income for Reserve Force Veterans peaked at 14% in the release year then gradually declined to 8% by the eight-year mark. Overall, 23% of Reserves experienced low income at least one year post release, of which 5% were clients. The breakdown by class was 25% (Class A/B) and 13% (Class C). Veterans who had the highest rates of ever experiencing low income post release had served for less than two years (35%), involuntarily released (35%) or released as recruits (33%).

Regular Force and Primary Reserve Force Veterans Compared

At release, Regular Force Veterans were the oldest and Class A/B Reserves were the youngest. The level of pre-release income followed this age difference: Regular Force ($69,300), Reserve Class C ($60,500) and Reserve Class A/B ($32,700). The age trend at least partially explains the differences in income changes: a 2% decline for Regular Force with increases of 14% and 43% respectively for Class C and Class A/B Reserves. For both the Regular and Reserve Force, younger Veterans experienced increases in income post-release while older Veterans experienced declines in income.

The younger age of Class A/B Reserves also explains their higher rate (25%) of experiencing low income at least one year post release, compared to the rates for Regular Force (16%) and Class C Reserves (13%) which were quite similar, considering the shorter post-release study period for Reserves. Rates of low income were higher among younger Regular and Reserve Force Veterans.

Conclusion

Class A/B Reserves had much lower incomes than Regular Force and Class C Reserves. However, income increased for both Reserve Class A/B and Reserve Class C Veterans comparing the pre-release year and all three years post release but decreased for Regular Force Veterans. Low income rates were higher for Reserve Class A/B Veterans than for both Regular Force and Reserve Class C Veterans.

In general, younger Veterans experienced both the greatest increases in income and the highest rates of low income. VAC programs are reaching some segments of the cohort with the largest declines in income post release.

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