The Military-Industrial Jobs Scam | naked capitalism - 0 views
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despite defense contractor claims to the contrary, increased military spending has been accompanied by job losses in the US
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the contracting fraud results in US taxpayers paying way more than it would have cost for US personnel to do the work…with the added insult that the tasks were performed by locals for a pittance
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the Trump administration has stopped at nothing to push the argument that job creation is justification enough for supporting weapons manufacturers to the hilt. Even before Donald Trump was sworn in as president, he was already insisting that military spending was a great jobs creator. He’s only doubled down on this assertion during his presidency. Recently, overriding congressional objections, he even declared a national “emergency” to force through part of an arms sale to Saudi Arabia that he had once claimed would create more than a million jobs. While this claim has been thoroughly debunked, the most essential part of his argument — that more money flowing to defense contractors will create significant numbers of new jobs — is considered truth personified by many in the defense industry
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When contractors receive more taxpayer money, do they generally create more jobs? To answer it, we analyzed the reports of major defense contractors filed annually with the U.S. Securities and Exchange Commission (SEC). Among other things, these reveal the total number of people employed by a firm and the salary of its chief executive officer. We then compared those figures to the federal tax dollars each company received, according to the Federal Procurement Data System, which measures the “dollars obligated,” or funds, the government awards company by company
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In 2012, concerned that those caps on defense spending would cut into their bottom lines, the five top contractors went on the political offensive, making future jobs their weapon of choice. After the Budget Control Act passed, the Aerospace Industries Association — the leading trade group of the weapons-makers — warned that more than one million jobs would be at risk if Pentagon spending were cut significantly. To emphasize the point, Lockheed sent layoff notices to 123,000 employees just before the BCA was implemented and only days before the 2012 election. Those layoffs never actually happened, but the fear of lost jobs would prove real indeed and would last.
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From 2012 to 2018, overall employment at Lockheed actually fell from 120,000 to 105,000, according to the firm’s filings with the SEC and the company itself reported a slightly larger reduction of 16,350 jobs in the U.S. In other words, in the last six years Lockheed dramatically reduced its U.S. workforce, even as it hired more employees abroad and received more taxpayer dollars
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where is all that additional taxpayer money actually going, if not job creation? At least part of the answer is contractor profits and soaring CEO salaries. In those six years, Lockheed’s stock price rose from $82 at the beginning of 2012 to $305 at the end of 2018, a nearly four-fold increase. In 2018, the company also reported a 9% ($590 million) rise in its profits, the best in the industry. And in those same years, the salary of its CEO increased by $1.4 million
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From 2012 to 2018, the unemployment rate in the U.S. plummeted from roughly 8% to 4%, with more than 13 million new jobs added to the economy. Yet, in those same years, three of the five top defense contractors slashed jobs. In 2018, the Pentagon committed approximately $118 billion in federal money to those firms, including Lockheed — nearly half of all the money it spent on contractors. This was almost $12 billion more than they had received in 2012. Yet, cumulatively, those companies lost jobs and now employ a total of 6,900 fewer employees than they did in 2012, according to their SEC filings.
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In addition to the reductions at Lockheed, Boeing slashed 21,400 jobs and Raytheon cut 800 employees from its payroll. Only General Dynamics and Northrop Grumman added jobs — 13,400 and 16,900 employees, respectively — making that total figure look modestly better. However, even those “gains” can’t qualify as job creation in the normal sense, since they resulted almost entirely from the fact that each of those companies bought another Pentagon contractor and added its employees to its own payroll
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“the aerospace and defense (A&D) sector scored record revenues and profits in 2018” with an “operating profit of $81 billion, surpassing the previous record set in 2017.” According to the report, Pentagon contractors were at the forefront of these profit gains. For example, Lockheed’s profit improvement was $590 million, followed closely by General Dynamics at $562 million. As employment shrank, CEO salaries at some of these firms only grew. In addition to compensation for Lockheed’s CEO jumping from $4.2 million in 2012 to $5.6 million in 2018, compensation for the CEO of General Dynamics increased from $6.9 million in 2012 to a whopping $20.7 million in 2018.
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weapons-making outfits spend more than $100 million on lobbying yearly, donate tens of millions of dollars to the campaigns of members of Congress every election season, and give millions to think tanks annually
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research has repeatedly shown that, even with this supposed “multiplier effect,” defense spending produces fewer jobs than just about anything else the government puts our money into. In fact, it’s about 50% less effective at creating jobs than if taxpayers were simply allowed to keep their money and use it as they wished
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As Brown University’s Costs of War project has reported, “$1 billion in military spending creates approximately 11,200 jobs, compared with 26,700 in education, 16,800 in clean energy, and 17,200 in health care.”
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not only are the green energy and education areas vital to the future of the country, they are also genuine job-creating machines. Yet, the government gives more taxpayer dollars to the defense industry than all these other government functions combined.
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Reports from the industry’s own trade association show that it has been shedding jobs. According to an Aerospace Industries Association analysis, it supported approximately 300,000 fewer jobs in 2018 than it had reported supporting just three years earlier
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add to their army of lobbyists, their treasure trove of campaign contributions, and those think tanks on the take, the famed revolving door that sends retired government officials into the world of the weapons makers and those working for them to Washington
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since 2008, as the Project On Government Oversight’s Mandy Smithberger found, “at least 380 high-ranking Department of Defense officials and military officers shifted into the private sector to become lobbyists, board members, executives, or consultants for defense contractors.”