Military Recruitment, Unemployment, And War

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According to the NBER, the recession began in December of 2007. In February of 2008, Ben Bernarnke and Hank Paulson went before the Senate banking committee and said that although the US economy had problems, they believed the nation would avoid a recession. Due to the 170 billion dollar George Bush stimulus and rate slashing by the Fed, they predicted 1.8% growth in 2008. Whoops!

When the recession began in December of 2007, the official unemployment rate was 5.0%, but by the end of 2008 the official unemployment rate soared 48% to 7,4% In 2009 the unemployment rate jumped to 10%, which was another 35% increase. A lot of people feel like the BLS's "unemployment rate" doesn't accurately represent the sad state of affairs. For example, in January 2010 we lost jobs from December 2009, yet the unemployment rate went down? In February 2010 we lost jobs again yet the unemployment rate stayed flat? It's because of the funny ways the BLS counts the unemployed. So what about the MBA that's waiting tables, or the part time worker, the guy working at Wal-Mart (NYSE:WMT), or the person who quit their job search? You don't think underemployment matters?

To top it off, we've had 6.1 million people out of work for 6 months or longer, which would be about 4 out of 10 of the official unemployed.

It has been estimated that the BLS has undercounted unemployment by 930,000 jobs. It angers people because they know the number is much worse than that 9.7% number the government keeps pushing.

One less talked about aspect that props up unemployment is the military. Military recruitment is up. Call that a stimulus of sorts.

Even in the beginning of the recession in 2008, army recruitment was up. 2007 was the deadliest year in Iraq with 961 casualties yet the Army beat all of its goals in 2008.
- Active Army beat its goal of 80,000
- Army Reserves beat its goal of 26,500
- National Guard beat its goal of 60,600

"When you look at all the variables together, this is the strongest recruiting year we've had since 2002," Under Secretary of Defense for Personnel and Readiness David S. C. Chu said during a Pentagon press conference.

It's not just about bringing in new recruits; the Active Army retained 73,913 Soldiers in fiscal year 2008, finishing the year at 114% of that mission and the Army Reserve finished the year achieving 111% of its retention mission. More people joined, less people quit, the state of employment in America wasn't good.

Navy blows it out of the water
The army wasn't the only branch of our military doing well.

"I am proud to report that we have just completed the most successful year ever in Navy Recruiting history", said Capt. Teriann Sammis, NRC's Director of Operations. "The Navy recruiting team has not met the mission, they have blown it out of the water. A clean sweep for the month, the quarter, and the year", she said.

Navy recruiting achieves highest quality englisted force in navy history.

"In FY07 (fiscal year 2007), 92.9 percent of Navy recruits held high school diplomas," Ferguson wrote. "That metric improved to 95 percent by FY09 and is currently at 97.2 percent."

They test a number of different metrics, but they were confident to say that the most current batch was the highest quality in Navy history. I wonder if any of the 6.1 million Americans out of work 6 months or more had anything to do with it, or any of the college degrees and MBAs who couldn't find work had anything to do with the Navy's highest quality enlisted force?

Every branch is doing well
No matter which way you slice it and dice it, every branch of the military & their reserves met or beat their goals for fiscal year 2009.
Army - 108% of goal
Navy - 100% of goal
Marines - 100% of goal
Air Force - 100% of goal
Army National guard - 100% of goal
Army Reserve - 105% of goal
Navy Reserves - 101% of goal
Marine Reserves - 122% of goal
Air National Guard - 106% of goal
Air Force Reserves - 109% of goal

Keep in mind that this is during war time too. After years of relative peace in the 80s and 90s, we now have two wars going on and these soldiers are ever reminded that their lives are in danger. All four branches hit their targets, and the reserves were extra popular, doing better than 100% of their goal. Iraq hasn't been a very popular war now with over 4500 casualties but it hasn't slowed down recruitment.

The government recognizes this. If it wasn't for the recession, I doubt the military would be recruiting this well, especially during war time. The Unemployment rate is officially 9.7%, but we have about 2.3 million in the military, and lots of civillian/defense/manufacturing jobs supporting them.

David Chu, who served as Defense Secretary Robert Gates’ senior policy adviser for recruiting during the Bush administration, said the military does benefit “when things look less positive in civil society.”

Recruiters report that they are seeing older walk-ins as a result of a battered economy. Changes in recruitment rules — the Army, for example, in 2006 raised its enlistment age limit from 35 to 42 — are also behind interest from older candidates. ...

International Armies
The US Army isn't the only one getting a recruitment surge, the telegraph reports that Britain is receiving a recruitment surge as well.

1930s comparison
It has to remind you of the 1930s. It wasn't just one big recession, the Depression was marked by ups and downs, and had recessions within the Depression.

It wasn't just an American or European thing, but a global thing marked by Central Bank printing, over building, over consumption, too much money, leverage and too much debt.

So what happens when government spending is increasing, militaries are increasing, politicians from one country are blaming the citizens of one country and the politicians from another country are blaming the citizens from another country? Or in Germany's case in the 30s when their leader was blaming a domestic small ethnic group? War.

The oversupply, over consumption, over leverage of the roaring 20s gave the world a "New Normal" in the 1930s that they then tried to prop up but that ended in the ultimate destruction of lives, wealth, resources and nearly a group of people. They tried countless government programs to add demand, like the New Deal, but none of it stopped the deflationary Depression. Many of their government programs just made it worse. For example they tried having the government pay farmers to burn crops and kill livestock while people were starving to death. The Depression of the 30s didn't really end until the citizens of the developed world got out of breadlines and picked up military uniforms.

I hope it doesn't happen again.

As much as I can picture a chain of events that lead to violent world war in the not too distant future, I do think America's best days are ahead. The same people that were getting wildly drunk in the 1920s, blowing all their money, over consuming, and were crushed in the stock market, lived through the Great Depression, defeated the Germans & Japanese in WW2, and became, "America's Greatest Generation".

Disclosure: Author is not long any positions mentioned.

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