Donald Trump’s cryptic comment about “the calm before the storm” while in the presence of top-ranking military officials and his ongoing Twitter feed reminding North Korea and Iran of their place in the global village have made a paper by economist Heidi Garrett-Peltier more pertinent, given the importance of military spending to the U.S. economy.
Let’s start by looking at a summary of U.S. military spending by year (in billions of dollars) since fiscal 2003:
Here is a graph showing U.S. annual military spending as a percentage of GDP going back to 1960:
First, the author estimates the employment multipliers for defense spending as well as other types of federal spending to provide an accurate comparison; this provides us with an assessment of the direct, indirect and total jobs created by spending on defense in comparison to other non-defense alternatives. Here is a graphic showing the employment multipliers expressed as jobs created per $1 million in spending in several key economic sectors:
Each million dollars in spending creates the following direct and indirect jobs:
1.) Defense – 6.9 jobs
2.) Clean Energy – 9.8 jobs
3.) Elementary and Secondary Education – 19.2 jobs
4.) Higher Education – 11.2 jobs
5.) Infrastructure – 9.8 jobs
6.) Healthcare – 14.3 jobs
Based on an estimated cost of the War on Terror over the period from 2001 to 2016 of $3.69 trillion, the average cost per year for strictly war-related spending (above the Pentagon’s peace-time base budget) works out to $230 billion per year. This annual spending supported about 1.552 million defence-related jobs. According to the author’s calculations, this level of spending would have supported an additional:
1.) 2.829 million jobs in elementary and secondary education
2.) 1.702 million jobs in healthcare
3.) 989,000 jobs in higher education
4.) 667,000 jobs in infrastructure
5. ) 661,250 in clean energy
…above and beyond the 1.5 million jobs that would have been created by the defense spending.
Here is a table showing total job creation in just four sectors of the economy from $230 billion spending per year:
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