By Mark Steffe, President/CEO of First Command Financial Services, Inc.
Raising a family is more expensive than ever. Between rising food prices, the cost of renting or buying a home, childcare costs and more, it’s not surprising U.S. families are choosing smaller families[1], if they opt to have children at all.
For more than 2 million U.S. service members and 2.6 million military family members, these cost increases are even more impactful, especially for those living on a single income. For the past decade, military spouses have experienced a consistent unemployment rate of 22%. This is astronomical when compared to the latest U.S. unemployment rate of 3.8%[2] and makes military spouses one of the highest unemployed demographics in the U.S.
This Military Family Appreciation Month, we want to support our Nation’s military families by shining a light on the pervasive issue of military spouse unemployment — what it is, what’s being done and how we can help give this group of deserving people the financial freedom they deserve.
The hidden financial costs of military spouse unemployment
While the short-term implications of military spouse unemployment are burdensome, what’s perhaps more troubling is the impact of military spouse unemployment on a family’s long-term financial goals.
According to a survey conducted by Hiring Our Heroes (HOH) in partnership with Syracuse University’s D’Aniello Institute for Veterans and Military Families (IVMF) and First Command Financial Services Inc., the lack of two incomes for military families creates considerable uncertainty related to retirement. For example, respondents who stopped working full-time are twice as likely to report not being confident in their ability to maintain their standard of living in retirement than those who never stopped working full-time. And while access to an employer-sponsored retirement plan improves a military spouse’s outlook on retirements, their benefits rarely vest due to frequent moves and not being with an employer long enough to qualify.
Another key survey finding was that 33% of military spouse respondents don’t understand their retirement savings plans at all or not very well, and 37% somewhat understand. Additionally, 40% of respondents with long-term investments are not at all or not very confident in managing it, showing a real need for financial coaching and education.
What’s being done to improve military spouse employment
In the same survey, 32% of active duty spouse respondents reported being unemployed despite 76% having a bachelor’s degree or higher. This variance shows that military spouse unemployment isn’t just an issue for military families, it’s an economic issue. Some organizations and political leaders recognize this and are making progress to change it.
Since professional license transferability can be a barrier to military spouse employment, in the first week of 2023, President Biden signed the Military Spouse Licensing Relief Act into law. This law is meant to ensure that servicemembers and military spouses have their out-of-state licenses recognized as valid in the state where they’re stationed, as long as they meet certain requirements.
In June, two U.S. senators introduced the Military Spouse Entrepreneurship Act of 2023. This legislation would direct the Small Business Administration (SBA) to develop a training program to help military spouses start, develop and operate their own small businesses.
The Military Spouse Hiring Act, introduced in 2022 to both the House and Senate, includes the hiring of a qualified military spouse as part of the Work Opportunity Tax Credit and permits employers who hire individuals who are members of a targeted group to claim a tax credit equal to a portion of the wages paid to those individuals. The hope is that this bill will pass in 2023.
With legislative support, we’re confident that military spouse unemployment will decrease, but there is tremendous room for progress.
What still needs to be done to help military families
While more people recognize the widespread issue of military spouse unemployment and actions are being taken to change it, there is still much to be done.
Partnerships between public and private organizations, like those made through the Military Spouse Employment Partnership (MSEP), make a meaningful difference in military families’ lives. This program, and others like it, create career pathways by connecting military spouses with hundreds of partner employers who have committed to recruit, hire, promote and retain military spouses to work in the civilian workforce.
Changing duty stations every couple of years can be a big obstacle for military spouses and employers. To benefit both, employers can look for ways to add flexibility, including remote and portable work opportunities.
Employers also can look for creative ways for military spouses to participate in employer-sponsored savings plans and explore ways to ensure military spouses aren’t penalized by vesting requirements when they quit a job as a result of a military-related move.
Lastly, it’s clear that military families could benefit from financial coaching services to better understand the importance of saving for retirement, creating a retirement savings plan and reaching their retirement goals. First Command offers complimentary financial planning services to active duty military personnel and their immediate families.
This Military Family Appreciation Month, let’s show our appreciation for military families by increasing awareness about military spouse unemployment and continuing the conversation about what we can do to serve the financial needs of those who serve our country.
©2023 First Command Financial Services, Inc. parent of First Command Brokerage Services, Inc (Member SIPC, FINRA), First Command Advisory Services, Inc., First Command Insurance Services, Inc. and First Command Bank. Securities products and brokerage services are provided by First Command Brokerage Services, Inc., a broker-dealer. Financial planning and investment advisory services are provided by First Command Advisory Services, Inc., an investment adviser. Insurance products and services are provided by First Command Insurance Services, Inc. Banking products and services are provided by First Command Bank (Member FDIC, Equal Housing Lender). Securities are not FDIC insured, have no bank guarantee and may lose value. A financial plan, by itself, cannot assure that retirement or other financial goals will be met.
First Command Financial Services, Inc. and its related entities are not affiliated with, authorized to sell or represent on behalf of or otherwise endorsed by any federal employee benefits programs referenced, by the U.S. government, or the U.S. Armed Forces.
