Defense cuts imperil 2.5 million jobs Md. seems to be positioned to minimize pain, study says

February 22, 1992|By Richard H.P. Sia | Richard H.P. Sia,Washington Bureau

WASHINGTON -- As many as 2.5 million defense-related jobs might be lost across the country by 2001, but Maryland appears to be in a better position than many states to weather the cuts, the Office of Technology Assessment reported yesterday.

The agency, a non-partisan analytical arm of Congress, said the overall impact of military spending cuts on people, defense companies and communities will be eased considerably if a strong economic recovery begins soon.

It also said that public investment in new technologies, businesses and jobs would contribute to such a recovery -- a view already held by key Democrats in Congress who want larger defense cuts to cover pressing domestic needs.

In Maryland, which ranks fifth in the country in the percentage of its work force holding defense-related jobs, spending cuts and job losses might slow economic growth, especially if other segments of the state economy are weak, the agency said in its 237-page report.

But unemployment rates for Maryland and six other defense-dependent states were below the national average last year, even after feeling the sting of recent defense cuts, the OTA noted.

In addition, Maryland's employment growth has also kept up with the national average since 1986, it said, citing U.S. Labor Department figures.

"Not all defense-dependent communities will suffer economic distress, because they possess other sources of economic strength," the agency said. "However, even as defense spending declines, the fate of all communities that lean on defense for their economic vitality will depend to a large degree upon how well the U.S. economy as a whole performs in this decade."

The agency's report, "After the Cold War: Living With Lower Defense Spending," examines the consequences of defense budget cuts and the choices Congress must confront if it wants to help displaced workers, contractors and communities adjust to a civilian economy.

Considering the range of proposed defense spending cuts now before Congress, the OTA report estimated that 2.3 million to 2.5 million jobs could disappear by 2001, including 1 million to 1.4 million by 1995. The jobs include those in the defense industry, and civilian and uniformed positions in the armed forces.

The jobs that would be lost in the next decade, although numerous, account for only about 2 percent of the 119 million jobs in the U.S. economy in 1991, the agency said. It also said the number of people actually thrown out of work should be lower thanks to attrition and the fact that the defense industry's high proportion of professional and skilled employees are likely to find other jobs.

Areas that profited enormously from the military buildup of the 1980s clearly have the most to lose, the agency said. "For example, up to one in five workers in the Norwich-New London labor market of southeastern Connecticut hold defense-related jobs, and many more are in service, transportation and commercial jobs that serve the needs of these workers," it said.

"Obviously, defense spending should not be either a jobs program or an economic development program, but there is justified public concern about the aftermath of gov

ernment decisions that deprive people of their livelihood," the agency said.

The agency could not pinpoint all the areas that would be most hurt by cuts, but it calculated that roughly 160 of the nation's 3,137 counties were at serious risk of economic disruption.

Sen. Edward M. Kennedy, D-Mass., who joined Sen. Claiborne Pell, D-R.I., in requesting the report, challenged fellow lawmakers to take advantage of "an opportunity for revitalizing the civilian economy and investing in America." Mr. Kennedy has called for $210 billion in defense cuts over the next seven years.

"The real question is how do you lessen the impact [of cuts] and how do you end up with a stronger economy?" Mr. Kennedy asked. "Do you put your head in the sand and pretend the challenge doesn't exist or do you begin to follow the recommendations" in the report?"

Although the agency did not endorse specific proposals, it said Congress should consider ways to "invest" the peace dividend to promote economic growth. For example, Congress could expand programs that provide technical assistance to small- and medium-sized manufacturers; increase funds for job training and deliver those services faster at the state level; and improve economic development aid programs for communities.

The agency also suggested underwriting efforts to convert military technology to commercial uses and giving tax breaks to defense companies for development of commercial products.

In recent weeks, corporate executives and Democratic lawmakers have criticized the Bush administration, and Pentagon officials in particular, for a virtual "hands-off" approach to the defense industry's transition to a post-Cold War economy.

Defense Secretary Dick Cheney has said he expects the "marketplace" to pick winners and losers, leaving behind a "leaner and meaner" defense industry.

"Our fear is we can't develop commercial business fast enough to make up for the losses in defense," John J. Stocker, president of the Shipbuilders Council of America, said Wednesday. He said Washington should get more involved in helping companies diversify into commercial markets, especially in foreign trade.

States depending most on defense

.$State .. % of jobs .. .. Total jobs

.. .. .. in defense .. ..in defense

Alaska .. ..13.1 .. .. .. 34,000

Hawaii .. ..12.1 .. .. .. 68,000

Virginia .. 10.4 .. .. ..328,000

Conn. .. .. 6.5 .. .. .. 110,000

Maryland .. 6.2 .. .. .. 152,000

Utah .. .. 5.9 .. .. .. 45,000

.. .. 5.9 .. .. .. 40,000

California .5.9 .. .. .. 829,000

Wash. .. .. 5.7 .. .. .. 137,000

Colorado .. 5.6 .. .. .. 96,000

Mass. .. .. 5.3 .. .. .. 157,000

Arizona .. 5.2 .. .. .. 86,000

Miss. .. .. 5.1 .. .. .. 56,000

Oklahoma .. 4.9 .. .. .. 73,000

Missouri .. 4.8 .. .. .. 121,000

National .. 4.2 .. .. 5,016,000

So: Office of Technology Assessment; Bureau of Labor Statistics, June 1991

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