Study - A Million Jobs At Risk
By Daniel Baxter
October 26, 2011 - An economic impact analysis projects
more than one million American jobs could be lost as a
result of defense budget cuts if the deficit reduction
select committee fails to reach agreement on alternative
balanced budget solutions and total cuts to defense
reach $1 trillion.
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,? said Dr. Fuller.
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.
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
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.
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.
Also, given the
relatively high wages earned by U.S. aerospace and defense workers,
consumer spending in communities in every state would decline
significantly. ?The multiplied
impact of aerospace and defense workers losing their job is very simple
purchase of consumer goods goes down overnight, homes become
unaffordable and the housing crisis is compounded, and so forth,? said
Dr. Fuller. ?The ten year defense
budget cut will be felt in terms of layoffs starting in 2012, escalate
and conclude by 2014,? he added.
In summary, the key findings of Dr. Fuller and EMSI?s analysis based on the $1 trillion defense budget cut were as follows:
? Total potential job losses (direct,
indirect, community) 1,006,315
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