350K Aerospace, Defense Jobs at Risk in Budget Standoff
The U.S. aerospace and defense industries will lose more than 350,000 jobs, $79 billion in sales and $28 billion in wages and salaries in 2013 if Congress is unable to agree on a deficit reduction plan, thereby triggering automatic cuts across all U.S. discretionary spending activities, according to a new study.
Of the job losses, 164,000 would occur among the prime contractors, with subcontractors and suppliers accounting for the rest, said the study, conducted jointly by the George Mason University Center for Regional Analysis and Economic Modeling Specialists Inc. Of the 10 most affected states, California would be hardest hit, with 126,000 jobs lost, followed by Virginia, at 123,000, Texas and Florida.
“We’re talking about high-wage, high-salaried jobs,” Marion C. Blakey, president and chief executive of the Aerospace Industries Association, which commissioned the study, said during a press conference Oct. 24. “We have a lot of subcontracting that gets down to mom-and-pops. But you lose very unusual skills that go away when those jobs are gone.”
Under a budget agreement reached by Congress and the White House in August, a congressional “super committee” has been tasked with drafting a legislative proposal to cut $1.5 trillion in federal spending over the next decade. A failure by Congress to pass such legislation by Dec. 23 would trigger automatic cuts of $1.2 trillion, to be divided evenly between defense and non-defense discretionary spending.
If the automatic reductions are triggered, prime contractors would take $45 billion sales hit in 2013, the year the cuts would begin to take effect, the study said.
According to the study, regional economies would be affected as there would be fewer people with money to spend in the hospitality and leisure industries. Counting this ripple effect, the total number of jobs lost is more than 1 million, representing $60 million in wages and salaries and $164 million in total economic activity.
Tom Buffenbarger, president of the International Association of Machinists and Aerospace Workers, said during the press conference that keeping military spending levels afloat was important because while commercial projects are a solid source of business for the aerospace industry, military contracts tend to be long-term and pump more money for longer periods of time.
“For these kinds of cuts, I don’t know if I can put enough passion into how devastating it would be for the U.S. if we give up,” Buffenbarger said.