The Impact of Veterans’ Preference on the Composition and Quality of the Federal Civil Service

U.S. governments have long explicitly preferred military veterans in hiring, as a way of honoring them for their service and sacrifices. I examine the effect of this preference on the diversity and quality of the public service. Census data for 1990, 2000, and 2006-9 show that veterans are at least three times as likely to hold federal jobs as, but only 10% more likely to hold state and federal government jobs than, comparable individuals without military service. Preferential treatment of veterans has dramatically increased the percentage of federal employees who are men and has probably decreased the percentages who are Asians, gay men, and immigrants, but effects on the composition of state and local governments is small. Federal personnel data for the past decade show that veteran new hires are older and less educated than nonveteran new hires, and that they do not advance as far in the first fifteen years of their careers as nonveterans hired into the same grades at the same time, suggesting that veterans’ preference may be lowering the performance of the federal service. The Impact of Veterans' Preference on the Federal Civil Service Veterans’ preference ... severely limits job opportunities for people who are not veterans. It particularly diminishes the employment chances of women (GAO 1977, 1). Agencies prefer using noncompetitive hiring mechanisms where they do not have to apply veterans’ preference points and the Rule of Three (GAO 1995, 5-6) Commonly recognized goals of the federal personnel system include increasing the quality, equity, diversity, representativeness, responsiveness, and managerial effectiveness of the civil service. One-quarter of federal employees, however, are hired through a mechanism designed to fulfill a different goal: to recognize and reward veterans for their service to and sacrifices for the nation. Fulfilling this goal may require tradeoffs with other goals. By explicitly preferring a group that has traditionally been very disproportionately male, white, and heterosexual, veterans’ preference creates obstacles to the diversity and may decrease the representativeness of the federal service. By creating red tape to protect veterans’ rights, preference limits managerial discretion in hiring and may push managers toward alternative hiring mechanisms. By crediting military service in hiring, veterans’ preference challenges merit principles and may lower the quality of the civil service. Although veterans’ preference has attracted occasional scholarly attention and several government reports, we still know strikingly little about (1) how much it impacts who gets federal jobs, (2) how much it alters the composition of the federal workforce, and (3) how it affects the qualifications and quality of federal employees. After briefly recounting the history of veterans’ preference and reviewing the findings of a handful of federal and academic studies, this article provides a more systematic analysis of the effect of veterans’ preference on the federal service. Using Census data for 1990, 2000, and 2006-9, it first shows that veterans are three to four times as likely to hold federal jobs as comparable nonveterans. It then examines how this affects women’s, minorities’, gay people’s, and naturalized citizens’ chances of federal employment, finding that veterans’ preference has had a major impact on the gender composition of the federal service and smaller impacts on its representativeness in terms of race/ethnicity, sexual orientation, and country of origin. Using both Census data and federal personnel records for 1973 through 2009, it shows that veterans’ preference probably leads to a less educated but more experienced civil service, with its overall impact on the quality of the federal service unclear. How much does veterans’ preference affect who gets hired? The federal government has preferred disabled veterans in hiring at least since the Civil War. Congress expanded preference to cover honorably discharged veterans and their widows after World War I, and it strengthened preference again as World War II was winding down (Lewis and Emmert 1984, 330). Although at times only those who had served in combat qualified for preference, preference was gradually widened to cover those who were honorably discharged after at least 180 days of service in wartime, including the Cold War and the Global War on Terror. Under the Veterans’ Preference Act of 1944, disabled veterans get 10 points and other veterans get 5 points added to their civil service examination scores (or to their numerical score, “when agencies use a numerical rating or ranking system” (FedsHireVets 2011)). Under the rule of three, which has only recently been overturned (Obama 2010, overturning 5 CFR 302.401(a)), federal hiring officials could only consider the top three candidates for a job, typically ranked by the U.S. Office of Personnel Management (OPM), its predecessor (the U.S. Civil Service Commission), or the agency’s personnel/human resources office. For positions filled through a civil service examination, usually scored on a 100-point scale, disabled veterans with passing scores of 70 and above and other veterans with scores of 95 and above would rank higher than nonveterans with scores of 100. (Disabled veterans with passing scores “float” to the top of civil service registers, and other veterans are placed above nonveterans with the same final score (after adding the preference points).) At different times, hiring officials could not pass over a veteran to hire a lower-ranked nonveteran, except with a written explanation and OPM approval. The process is less formal in the absence of a civil service exam, especially since the abolition of the rule of three, but “when eligible candidates are referred without ranking, the agency shall note preference” (5 CFR 302.201) and veterans eligible for 10-point preference should be considered before those eligible for 5-point preference, who should be considered before those who do not qualify for preference (5 CFR 302.304(b)(5)(i)) . How much do these five or ten points matter? Some researchers have considered veterans’ preference merely a “limited preferential hiring program” (Berger and Hirsch 1983, 459), but others find a major impact. GAO (1977) indicated that 30% of the federal and only 15% of the nonfederal workforce were veterans. The veteran share of new hires has jumped after each expansion of veterans’ preference (largely because expansions occur at the ends of wars). Veterans made up 14% of new hires in 1920 and 29% in 1921. The veteran share of all federal employees rose from 14% in 1944 to 49% five years later, due both to the end of WWII and to passage of the Veterans Preference Act of 1944 (Lewis and Emmert 1984, 130). Blank (1985) finds that veterans are much more likely to work for government, especially the federal government, than nonveterans of the same sex, race, and experience and educational levels. Sanders (2007, 412) finds that veteran status raises the odds of a government job by about 40% for native-born citizens and nearly doubles them for immigrants, though Sanders does not examine federal employment separately from other public employment. Clearly, however, veterans are much more likely than nonveterans to be federal employees. Military service, even in the absence of preference, might increase the likelihood of federal employment. Among their motivational bases for public service, Perry and Wise (1990, 370) list loyalty to duty and patriotism, two qualities frequently associated with veterans, as well as “commitment to a public program,” due either to “personal identification” or “a genuine conviction about its social importance,” which may lead veterans to prefer work with the Department of Defense (DOD). Indeed, 42% of DOD employees (and only 18% of other federal employees) are veterans (U.S. Office of Personnel Management 2011, Table 1A), suggesting that DOD may both need skills developed in the military and have a culture that values military service. However, 89% of veterans employed both by DOD and by domestic agencies receive preference (U.S. Office of Personnel Management 2011, Table 1), suggesting no particular attraction of veterans to DOD. Preferential treatment will lead to over-representation of veterans, however, only if more people want federal jobs than can get them. State governments also offer veterans’ preference – their programs vary in their details but appear roughly comparable to the federal program (Davis 1985) – but preference should have less impact on the composition of their workforces if state government jobs are less desirable than federal jobs. Public administration scholars generally argue that federal workers are underpaid (the President’s Pay Agent (2011) indicates that the current pay disparity is at least 30%). Labor economists, however, tend to find that federal workers earn substantially more than comparable workers in the private sector, though state and local government pay tends to be indistinguishable from or lower than private-sector pay (Smith 1975; Smith 1976; Krueger 1988; Moulton 1990). Although opportunities to serve the public and job security also attract people to government jobs even in the absence of pay advantages, the clear evidence of higher pay in the federal than state sector suggests that veterans’ preference will disproportionately attract veterans to the federal service.