Analysis Projects One Million Jobs at Risk from Defense Cuts

Posted by- Neelam Mathews

Oct 26, 2011

One can expect US to get more aggressive in countries with potential for large procurement like India even as an economic impact analysis projects more than one million American jobs could be lost as a result of defense budget cuts.

This will follow if the deficit reduction select committee fails to reach agreement on alternative balanced budget solutions and total cuts to defense reach $1 trillion. Cuts would lower projected GDP growth by 25%

Dr. Stephen S. Fuller, Dwight Schar Faculty Chair, University Professor and Director, Center for Regional Analysis at George Mason University and Economic Modeling Specialists Inc. (EMSI) conducted the analysis on behalf of the Aerospace Industries Association.  “Our analysis reveals bleak outcomes for both the defense industry and the economy as a whole if the budget sequestration trigger is pulled and $1 trillion is cut from defense.” 

“Dr. Fuller and EMSI’s study shows the dramatic and devastating impact these cuts would have, not only on our industry but on the economy at large,” said AIA President and CEO Marion C. Blakey. “Congress must find budget deficit solutions that don’t sacrifice the jobs of those who supply the American warfighter.”  “We cannot add .6 percent to the current 9.1 percent rate of unemployment, it would devastate the economy and the defense industrial base and undermine the national security of our country,” she added.

Commenting on the findings, Tom Buffenbarger, President of the International Association of Machinists and Aerospace Workers said “the spending cuts of the Budget Control Act enacted last summer place at risk the jobs of highly skilled, highly motivated workers.” “We can ill afford to idle these men and women and the machines they operate indefinitely,” Buffenbarger added.

Dr. Fuller and EMSI concluded that under the scenario of a $1 trillion cut to defense spending, an option under consideration by the budget deficit “Super Committee,” the flow down effect from the aerospace and defense industry to its supply chain and communities is significant, particularly given two factors.  The defense industry has a notably high rate of subcontracted work flow and systems with high component volumes, driving job loss directly to program partners and the supply chain. 

Dr. Fuller’s analysis was based on an annual reduction of $45.01 billion to the military modernization accounts from which the aerospace and defense industry derives its revenues.  “The total impact each year of a $45 billion cut would be to reduce GDP by $86.456 billion.  This is equivalent to 25 percent of the projected annual increase in GDP for 2013 and its loss would reduce currently projected growth for 2013 from 2.3 percent to 1.7 percent,” Fuller said.

The analysis by Dr. Fuller and EMSI also provided a hypothetical job loss projection for the states with the largest current base of aerospace and defense workers.   If the $1 trillion in defense budget cuts resulted in job losses proportional by state to the location of jobs today, the following states would be most heavily affected:

		Projected Job Losses						Projected Job Losses
California		125,800				Maryland		36,200
Virginia		122,800				Pennsylvania		36,200
Texas		91,600				Connecticut		34,200
Florida		39,200				Arizona		33,200
Massachusetts		38,200				Missouri		31,200