Hiring Pitfall: The Salary Gap

Time and time again, we hear from employers who want to hire veterans, but the hiring process fizzles around the time that salary discussions start.

Or, we hear from veterans who really, really love the job they’ve interviewed for, but can’t take it because it doesn’t pay enough to meet their personal needs or lifestyles.

The “Salary Gap” is real, and without shining a light on the subject, it can mean the difference between a truly frustrating interview and hiring experience, and one that goes smoothly due to better managed expectations.

The good news is that military salaries are public and clearly defined, in contrast to a corporate culture that does not talk about paychecks or money. This means that if you can find out the veteran candidate’s last rank, you can make some targeted estimates on how much they were paid in the military, and what type of salary they might be accustomed to.

Let’s take an example: John Smith, who recently exited the Army. He’s applied for a supervisory position that you know will be a salary of around $60,000 per year.  On his resume, you might see the reference of “O-3”. But what does that mean? If you’re not abreast of military acronyms and references, you might skip over it. But if you know what you’re looking for, it could tell you a lot.

That O-3 means that John exited as an officer—a Captain, to be precise. He’s probably spent over a decade in the military, so he’s pretty engrained there. At the lowest pay scale, John was making around $5,600 per month*, or over $80 thousand per year. If John had Housing allowances or other allowances, you could probably add another $22,000 on top of that salary. And the other kicker? Only the pay—not the allowances—are taxable.

So from John’s perspective, that $60,000 paycheck may not be the draw that you think it is, as you look at it from a higher level. But there’s another thing to keep in mind: none of this includes stipends or disability compensation, which may tip scales in your favor; if a candidate has an extra stream of income coming in, they may be willing to take a job that is a perfect fit, even if it doesn’t quite match what they made in service.

 Now, while all this information doesn’t solve the actual pay gap itself, it is important to know that there is a world of information available to you simply by a minimal understanding of military rank.  And, in order to make this easier on you, dear employer, we’ve cultivated a Ranks & Pay spreadsheet that should help you navigate some of the salary questions you might have, to get you off on the right foot with that veteran candidate.

Additionally, check out MilitaryBenefits.info for up-to-date information on all this and more, including housing stipends, and Defense Finance and Accounting Service for an up-to-date pay chart.

This blog is part of a series for employers. Check out our next post next week: “Not All Vets are Entry Level.”

*These numbers were based on 2019 reported pay and have not been updated for 2020.