Using a national sample of veterans, we examined the relationship between disability income and employment, adjusting for health status and other factors. Veterans Affairs disability income payments had no globally detrimental effect on labor force participation, in that the likelihood of employment was reduced only at payment levels of more than $800 per month. Although unearned income from other sources also did not have a substantial negative effect on labor force participation, veterans who received benefits from the Social Security Administration or welfare payments were less likely to be employed, mostly likely because employment earnings above a certain level in some programs may result in the loss of monetary benefits and health insurance.