Is the military recession proof?

[Texpat]

By Matt Millham
Stars and Stripes MidEast Bureau
Oct 30, 2008

As long as Americans like hot showers and flush toilets, Joe the Plumber will have a job.
It’s probably safe to say that no matter who wins the White House next week, Joe won’t have to worry about putting food on the table anytime soon.

Plumbers, as well as teachers, police officers and cable guys, offer Americans something they have decided they just can’t live without — things like education, public safety, and American Idol.

That dependence makes these jobs, in a sense, "recession-proof."

You can add the military to that list.

A slew of hard data and anecdotal evidence shows the military economy continues to hum along, even as the U.S. economy idles. While millions of Americans fret about losing their jobs, homes and retirement savings, military members have the luxury of fussing over less consequential matters, such as which game system to buy: Nintendo Wii or Playstation 3.
This isn’t a joke.

Military bank and credit card data, as well as sales at on-base exchange stores, all show that the military community is faring better than the U.S. in general.

While U.S. retail and food services sales fell 1.2 percent from August to September, Army and Air Force Exchange Service sales rose 21.7 percent, mostly on the strength of sales of home theater products, fast food and nondiscretionary items such as toiletries and house wares, according to Judd Anstey, a spokesman in the exchange’s Dallas headquarters.

Another way of putting it: The average American family has cut back on spending, and the average military family is spending more.

Over the Columbus Day weekend, the exchange’s store at Vogelweh, Germany, sold more than $220,000 in electronics — mostly video game systems and accessories — including an entire shipment of more than 300 Nintendo Wii consoles (sticker price $249), which got wiped out in a day.

By all appearances, troops — especially those deployed to war — appear entirely unaffected by the U.S. economic meltdown "because they’re still spending like mad men," said Beth Curran, the financial readiness program manager at Smith Barracks in Baumholder, Germany, which houses the largest concentration of American soldiers in Europe.

The base is not an anomaly.

"Some of the soldiers are living it up like it’s Vegas here," said Cpl. Stephen Boone, a member of the 2nd Infantry Division headquarters in South Korea.

While overall U.S. retail sales for September were 1 percent lower than a year ago, AAFES sales rose 6.1 percent. Navy Exchange Command also bucked the U.S. trend with an 18 percent sales jump from August to September, and a 2.1 percent growth in sales from a year ago.

How does that happen without military families breaking the bank?

Guaranteed employment

Living in the military is kind of like "living in a bubble," said Sgt. 1st Class David W. Bucklin, station commander for the U.S. Army recruiting station on Pulaski Barracks in Kaiserslautern, Germany.

Once you’re in, you are almost guaranteed to have a job to retirement — in a mere 20 years — as long as you want it. And all the while, the military picks up the tab for housing, medical and dental care, food and even clothing — not to mention free college and training in a profession of your choice and 30 days’ paid vacation.

Even when the economy’s humming along, most American corporations and small businesses offer at most only a fraction of these benefits.

With their basic needs covered, troops continue to spend nearly all they are making, and are going further into credit card debt.

Americans, on the other hand, recently started saving a lot more than they had in years. Between March 2007 and March this year, they saved less than one-half of 1 percent of what they had left after paying for housing, taxes, insurance and other major bills. But in the second quarter of this year, the savings rate jumped to 2.7 percent — 12.5 times greater than the previous quarter — according to the U.S. Bureau of Economic Analysis.

Meanwhile, the average Community Bank savings account balance has increased a little more than $200 in the past year — from $2,714 to $2,922 — according to the Defense Finance and Accounting Service. Military Star Card balances, at the same time, increased by more than $240 on average, according to data provided by AAFES, which runs the program.

The increased use of credit could be seen as a sign of economic hardship, but the number of delinquent Star Card accounts has actually fallen in the past year from 8 percent in September 2007 to 7.8 percent this year.

Meanwhile, stateside credit card use has slumped, and delinquencies have climbed. A swarm of regional U.S. banks last week reported worse-than-expected third-quarter earnings and announced they’d put aside billions of dollars to offset expected losses on unpaid credit card debt.

Even though the differences between the U.S. economy and the military economy are stark, military members aren’t wholly immune from the economic malaise. Those invested in the Thrift Savings Plan could have lost a lot of what they put in, and some have lost money on homes that depreciated in value.

But most people in the military — especially those overseas — don’t own homes.

A reason to stay
As a whole, however, the military may very well be recession proof, Curran said.
In the more than two decades that her husband has been in the military, there’s only been one time when he was concerned he might not get a paycheck — that was when the U.S. government shut down briefly in late 1995 and early 1996.

"But in 22 years that’s the first time it ever happened — it’s the only time it’s happened," she said.

For the most part, troops agree that the recent woes of the U.S. economy aren’t having much of an impact on them.

"We’re still going to go off base, eat at the local restaurants," said Senior Master Sgt. Jason Fiegl, a member of the 426th Network Warfare Squadron at Vogelweh, Germany. "So really it’s no impact."

Knowing what the average American is worried about is influencing troops to stay in uniform.
Sgt. Michael Timms, a member of Battery C, 5th Battalion, 7th Air Defense Artillery in Kaiserslautern, said he made the decision to stay in until retirement long ago, but other soldiers in his unit who might have left the Army in better economic times are staying green for now.
"I don’t know if I would say it’s (the economy) the primary reason, but it’s a big reason" why they’re not getting out, Timms said.

Faced with the choice of exiting the service to enter a dismal job market or staying in and getting a big re-enlistment bonus, it seems to be a no-brainer, he added.

Pfc. Rex Weller, a member of the 61st Maintenance Company at Camp Stanley, South Korea, is among those re-enlisting at least in part because of the economy. But even in the military he hasn’t felt entirely isolated from its woes. Though he hasn’t had to worry about a pay cut or getting laid off, he has been hit by the run-up in the cost of living.

"It’s definitely not easy being young, and having a child to take care of," Weller said. "Pricing is going up for baby formula, diapers, rent, medical bills."

But, he acknowledged, he still has it better than the rest of his family; both his father and father-in-law lost their jobs. That’s made planning for his future a simpler choice.

"Oh yes, definitely re-enlistment," Weller said. "This is a steady paycheck and you know it’s going to be coming in."

Some, though they feel protected from the financial maelstrom, are taking extra measures to protect their finances.

Pfc. Turner Stimson, a soldier with the 52nd Signal Battalion in Stuttgart, Germany, said he feels insulated from the U.S. economy’s upheaval, but is still troubled by it. So now he’s leaving more of his paycheck in the bank.

"I’m planning on getting out of the Army when my four years are done. So I’m trying to save up for that and not spend too much," Stimson said. "I don’t want to owe money when I get out."
However, if the economy hasn’t recovered by the time his enlistment is up in 2011, "it could impact my decision to get out," he said.

Recession Proof: Servicemembers are buying and charging more – defying the U.S. economy | Stars and Stripes

***

Recruiters are also on easy street as new recruits are put on MONTHS-LONG waiting lists to get in.

[barbaro]

Yes, a job in the military is recession proof. I don't recall the military laying people off.

This also goes for the the MIC (military-industrial complex) corporations.

And....we have our "international crises."

[Texpat]

I don't recall the military laying people off.

Historically, there have been huge RIFs.
There won't be one any time soon though.

I'd suspect if Obama is elected he cuts military spending at draconian levels. McCain won't be so foolish.

[barbaro]

I don't recall the military laying people off.

Historically, there have been huge RIFs.
There won't be one any time soon though.

Were this RIFs by cutting down on recruiting, and/or giving less incentive to re-enlist?

I'd suspect if Obama is elected he cuts military spending at draconian levels. McCain won't be so foolish.

There have been some interesting articles on McCain maintaining military spending as he's claimed, but also cutting unnecessary waster and fraud. Because McCain was in the Navy he knows more details and is more knowledgable that a life-long civilian President.

Honestly, I think the US spends too much on the military and MIC corporations. Eisenhower noted how top officials in the Pentagon ask for more and ask, like most bureaucratic agencies do.

But as for a job in the Military, I see a lot of security right now, as you also see it, Tex.

[Texpat]

RIF -- early retirements, slowing promotions, increasing advancement thresholds, slowing recruitment, zeroing all but most critical career incentive pay ... many options. To include administrative discharge of servicemen when all else fails. A frequent problem is having too many in one career field and too few in another -- so cross-training is required.

[Loy Toy]

I can't see any of the global waring factions cutting back in their military spending including Obama and if he wins the election.

They would be foolish to so as there is too much to gain and everything to lose.

Unfortunately!

[Texpat]

Yeah, wouldn't be immediately evident...

but things like satellites, O&M cutbacks, flagging pay increases ...

They're easy to cut away year by year without immediate outrage. It hits hard three or five years down the road.

[panama hat]

Interestingly (well, I think so) along with the discussion at work regarding the US economy sinking (for which Texpat even told me it was a good post!!!!) the discussion went along the lines of comparative historical perspectives . . .

The US is placing far too much money into its military exploits . . . the last country to do this to such an extent and form: The Spanish Empire. All-powerful, yet unable to pay its citizens . . . in other words, too much was spent on non-productive exploits.

I doubt this will happen to the US, but spending has to be curbed

[Spin]

Maybe they think the Fed will toss them a huge bail-out if they all get into loads of debt?

[Texpat]

Iraq is, for all intents and purposes, done.

Nobody thinks there will be US troops there beyond 2011. It might be a lot sooner if they can't hammer out a SOFA/VFA. The drawdown has already begun and there wasn't a single US death in Baghdad this month. Only a few coalition deaths in the entire country.

I don't think you'll see a major US operation, beyond what's happening in Afghanistan, for some time -- unless the shit really hits the fan. The problem is that while the military is spending a lot, its plowing the money directly into Iraq and Afghanistan, not recapitalizing equipment, providing training, and addressing long term sustainability issues. In a sense, it's not military spending at all -- maybe State Dept.

Nobody thought the kind of spending that went on in 2006/2007 would be endless.

As for the US economy -- it ain't much different than any other economy in the world. And most countries have essentially watched a few others wage war on terrorists -- so I'm not sure there's a strong correlation between Iraq/Afghanistan and the economy.

(Before you jump on that last statement, Iraq didn't start out as a fight against terrorists, but has, over the years, evolved into one.)

[panama hat]

Before you jump on that last statement

Damn . . .

You make valid points, but comparisons with other countries are not as clear cut as you make them out to be.

If you have a chance, read up on the rise and fall of the Spanish Empire, interesting stuff . . . and see if you can draw comparisons.

there's a reason for the old saying 'History repeats' . . . or something like that

[sabang]

The military is recession proof, once you are in. And if you stay the course for 20 years or more you have a life pension to look forward to- if you achieve a high rank, that will be no trifling matter. It's a damn good perq. Otoh, you've got to go where they send you and fight where they tell you, whatever your own feelings might be about the assignment or mission.

[Texpat]

Contrary to what many believe...

Only a small percentage of military members fight.

The US Army is currently fighting. But how many cooks, orderlies, intel, fuels, etc never go on patrol or into harm's way? Hollywood loves to perpetuate the myth that everyone in uniform fights. The truth is most never have and never will.

Other services don't fight much at all. There are 322,000 Airmen, the majority of whom will never go to Iraq or Afghanistan. Same for Navy.

Back to the money ...

O&M and procurement are far more expensive than personnel.

In the 2009 budget, $125.2 billion was requested for personnel, $179.8 billion for operations and maintenance, $104.2 billion for procurement, $79.6 billion for research and development, $21.2 billion for military construction, $2.9 billion for family housing and $2.7 billion for revolving funds, according to wiki.

The US military has 1.4 million active duty members from a population of 300 million+.
As comparison:

Germany -- 250,000 from 82 million
UK -- 196,000 from 60 million
Oz -- 53,000 from 20 million
NZ -- 9,278 from 4 million

[panama hat]

^ Germany has conscription . . .

NZ - Have to beat those pesky Tongans!

[Butterfly]

Iraq, like the US economy, will be once more at the burden of the International community,

how many times will we need to bail out the US ? put those 1944 rescue claims into perspective, doesn't it ?

[Norton]

Same for Navy

Except for the real "heavy lifting" guys. Think they call them Seals.

$104.2 billion for procurement, $79.6 billion for research and development,

These are the areas that are scrutinized first when it's time to cut military spending. Expect budget will be reduced for personnel as the need for national guard and reservists decreases when troop reductions in Iraq occur. Regular active duty military should be able to fulfill the extra troops needed in Afghanistan.

As many have pointed out, to a great degree, active duty military are immune to recession. Troop strengths are maintained unless there is a major restructure in DoD strategy re National Security. I believe this major restructure is called for and likely given the post cold war realities.

"Composed primarily of conventional forces, with nuclear deterrent capability, America's military is obsolete for post cold war realities. The United States is the world's only superpower. A credible peer competitor does not exist to challenge the U.S. nor is one expected through the year 2015. Instead, the world has changed to one fraught with asymmetric threats, which strike at the Achilles heel of U.S. conventional strategy and force structure. Force structure and strategy changes are inevitable as the military struggles with its identity crisis in a world that is changing at an ever-increasing rate. The opportunity now exists to dramatically reduce the size and cost of the armed forces by transferring the bulk of its conventional capability to the reserves, while maintaining lethal and highly mobile units in the active force to deal with asymmetric threats. A revolutionary restructuring of the military not only prepares it to fight the next war, but also recognizes budgetary realities of the years ahead."

Restructuring the Armed Forces to Meet U.S. National Security Interests Through 2015 - Storming Media

[raycarey]

conscription is the answer. if there's any chance that middle class white kids might end up on the front lines, they'll be fewer wars of choice started by politicians. and as far as, 'a volunteer army is better trained, better qualified, blah, blah, blah...' then why did the all volunteer US get its ass kicked in iraq? why can't it find OBL after 7 years? some might (lamely) argue that the US military was winning after the first couple of months, but they got their asses handed to them after that. i for one hope obama slashes the hell out of the defense budget.... even though i realize that is highly unlikely.

[barbaro]

Is the military recession proof?

Here's the Pentagon/military budget:

http://www.gpoaccess.gov/usbudget/fy...et/defense.pdf

[Mid]

Is the military recession proof?

hope NOT , smaller armies globally would be a good thing .

[blackgang]

Eisenhower noted how top officials in the Pentagon ask for more and ask, like most bureaucratic agencies do.

Yes, but that Repub prick damn near starved some of us working stiffs to death too, and I was just a newly married lad with a knocked up wife.

hope NOT , smaller armies globally would be a good thing .

I wouldn't worry about that if I was you, Burma will never short their military a dime.

[Jesus Jones]

This is the best time for recruiting. With limited jobs some folks are not going to have a great deal of choice. And with the US's and allies current form and future plans, the're going to need many bodies to replace.

[barbaro]

Eisenhower noted how top officials in the Pentagon ask for more and ask, like most bureaucratic agencies do.

Yes, but that Repub prick damn near starved some of us working stiffs to death too, and I was just a newly married lad with a knocked up wife.

Do you mean Reagan in 1984?

He screwed the guys in the military by changing the retirement deal in the middle - during their careers.

[panama hat]

Do you mean Reagan in 1984?

Blackgang clearly states that he was a 'newly married lad' . . . which would put him under the Lincoln administration at the time.

[Norton]

Do you mean Reagan in 1984?

I'm sure he means Eisenhower. He would have been the Prez about the time BG was newly married.

[attaboy]

"Composed primarily of conventional forces, with nuclear deterrent capability, America's military is obsolete for post cold war realities. The United States is the world's only superpower. A credible peer competitor does not exist to challenge the U.S. nor is one expected through the year 2015. Instead, the world has changed to one fraught with asymmetric threats, which strike at the Achilles heel of U.S. conventional strategy and force structure. Force structure and strategy changes are inevitable as the military struggles with its identity crisis in a world that is changing at an ever-increasing rate. The opportunity now exists to dramatically reduce the size and cost of the armed forces by transferring the bulk of its conventional capability to the reserves, while maintaining lethal and highly mobile units in the active force to deal with asymmetric threats. A revolutionary restructuring of the military not only prepares it to fight the next war, but also recognizes budgetary realities of the years ahead."

Restructuring the Armed Forces to Meet U.S. National Security Interests Through 2015 - Storming Media

This is the direction Rumsfeld was taking things, no, yes? I think the strategy was initiated or at least approved for implementation during Bush #41's administration.