Although returns to military service may have been positive prior to Vietnam, since Vietnam the average veteran has neither benefited nor suffered economically from military service. Educational attainment is the primary reason veterans have earned more than nonveterans. Because the population as a whole has become more educated, military service does not seem to carry much of an economic advantage for the average veteran. This generalization must be tempered for three groups of veterans. The military functions as a highly effective jobs and scholarship program for minorities. Evidence consistently shows veterans with less than a high school degree do better than dropouts who do not enlist. Veterans trained in technical specialties comprise a third group that benefits from military service because their skills transfer readily to the civilian economy. Military reductions may exacerbate shortages of trained technicians and craftspersons. Policy makers should consider placing the burden of reductions in force on nontechnical occupational specialties. Since the military functions effectively as a jobs and scholarship program for minorities and the poor, another policy issue is how to ensure educational benefits to those who would be unable to acquire further education with military service. In addition, policies ought to be fashioned to create alternative forms of employment. (Appendixes include 4 endnotes and 32 references.) (YLB)