House Panel Told Defense Cuts Put 880K ‘Main St.’ Jobs At Risk

One million U.S. jobs could be lost if the congressional supercommittee fails to agree on a deficit reduction proposal and automatic defense budget cuts are imposed, according to the Aerospace Industries Association, a major trade group representing many defense contracting firms.

The figure comes from an economic impact analysis prepared by Dr. Stephen Fuller, director of the Center for Regional Analysis at George Mason University in Fairfax, Va., and Economic Modeling Specialists Inc., a data analysis firm based in Moscow, Idaho.

Fuller testified at a House Armed Services Committee hearing Wednesday to discuss the economic impact of defense cuts on and beyond the contracting industry.

Of the 1,006,315 jobs he estimates would be lost, only 124,428 of these jobs come directly or indirectly from prime Defense Department contractors for equipment and their suppliers.

About 87.6 percent of the losses, 881,887 in total, would come from “Main Street,” Fuller said, as changes in defense industry spending is felt across all economic sectors, mainly from changes in payroll spending.

The job losses would add 0.6 percent to the nation’s current 9.1 percent unemployment rate, Fuller said.

“Spending reductions have consequences and these consequences disproportionally impact workers and businesses that appear to have little connection to the target of the spending reduction,” Fuller said in prepared remarks. “The breadth and reach of this collateral economic damage should be fully measured and assessed as decisions to reduce DOD spending are debated.”

Fuller projected one-third of the job losses would occur in California (125,800), Virginia (122,800) and Texas (91,600).

“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,” AIA President and CEO Marion C. Blakey said in a statement. “Congress must find budget deficit solutions that don’t sacrifice the jobs of those who supply the American warfighter. We cannot add 0.6 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.”