Tuesday, January 13, 2009

Enlistment bonuses: buyer beware

High school students often are lured by the enlistment bonuses promised by military recruiters. But, these signing bonuses rarely are as large as promised, and there are always strings attached. As Rick Jahnkow, longtime staff with the Project on Youth and Nonmilitary Opportunities in San Diego writes, in answer to a question about these bonus promises:

"The whole bonus hype is really a marketing ploy. There are a lot of conditions that will determine, first, whether a person will even get a bonus, and if so, how much it will be, when the money will be received, and whether or not it will be taxed.

I believe that with the exception of reenlistment bonuses given to deployed personnel, any bonus awarded will be taxed and paid out over time. It's not really a signing bonus as the term is normally understood in business. In private business, the signing bonus is yours to keep just for taking the job. In the military, it's more like an advance on total job compensation that you have to pay back if you don't complete your term or fail to fulfill some other job requirement. The threat of an early discharge (honorable or otherwise) can then be used to manipulate personnel who are afraid of having to pay back their "bonus" money.

Furthermore, the bonus is not guaranteed to everyone. A NY Times article explains how uneven the awarding of enlistment bonuses has been. Some people in a particular job may get a bonus, while others in the same job might not, or they'll get a smaller amount."

Here is a quote from the NY Times article (from August 15, 2005 by Damien Cave) that Rick is referring to:

"An analysis of Army data - of every enlistment package given out between October and June - reveals wide chasms between what recruits receive. It shows that the top bonus of $20,000 was given to only 6 percent of the 47,727 people who signed up for active duty. In 31 out of 33 job categories, including officers, recruits were more likely to receive nothing than the top $20,000 payout."

And, as the article also points out, promises made ahead of time by recruiters don't usually carry through to the final contract:

"Recruits lock in an actual amount only at the end of the process, when they are sitting alone with a job counselor at a local processing station, just before they sign their final contract. They must first pass a battery of tests, and their qualifications and the Army's needs affect the size of the offer."

The bottom line: Buyer Beware. This is your life you're trading with here.

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