Industry accused of exaggerating job losses from sequestration

A think tank analyst says sequestration may not result in as many defense-related job cuts as industry officials claim.
Peter Singer, director of the 21st Century Defense Initiative at the Brookings Institution,  argued Tuesday that a report on projected job losses that the Aerospace Industries Association released in mid-July was based on flawed economic assumptions. Furthermore, he wrote, it was unlikely AIA had the data or the means to predict possible job losses at the level of detail in the report.

“The notion of projecting specifically what would happen all the way down to the exact job numbers lost and in the exact location is deeply flawed, all the more so when based on uncertain or even erroneous assumptions,” Singer wrote.

The AIA report
projected that the defense portion of sequestration would lead to the loss of 1.09 million jobs through fiscal 2013, Singer said. The analysis was conducted by economist Stephen Fuller, director of the Center of Regional Analysis at George Mason University, in conjunction with Chmura Economics and Analytics.

According to Singer, only 1 in 70 workers in the United States is involved in defense and aerospace. A recent study by Deloitte, also commissioned by AIA, found that 3.53 million jobs -- direct, indirect or induced -- were sustained by those industries, he noted. This includes jobs unrelated to the Pentagon, such as manufacturing passenger jets, he said. “So if 1.09 million direct, indirect and induced jobs were lost from the 10 percent cut of sequestration, that would mean nearly a third of the overall jobs sustained by the industry would evaporate, an extreme projection to say the least,” Singer wrote.  

“These kinds of projections grow equally questionable when you look at them from the bottom up, rather than top down,” he added.

Singer argued that when faced with cuts, the Pentagon could opt for delaying or canceling purchases of, say, new fighter jets. While this would be bad news for states where the new jets would have been produced, it could be good news for existing production lines, he said. The unpredictability of the cuts makes impossible any specific projections, like those AIA released, he said.

“Top experts in the field don’t, for example, yet know whether the cuts would or wouldn’t fall on the personnel side, whether Pentagon civilians and or those uniform, which could have a hugely variable impact,” Singer said. “In a post-sequestration political environment, there might be changes in anything from personnel costs structures to TRICARE and other benefits systems, as all sorts of things not on the table might be pushed into play.”

The possibility of sequestration has defense industry officials concerned. Top officials at the Defense Department have met with industryrepresentatives recently to discuss the possible scenarios that the Pentagon is preparing for.

AIA Vice President Cord Sterling disagreed with Singer’s analysis. He emphasized that AIA’s study is an extension of previous research and is in line with the recent National Association of Manufacturers report on the impact of defense cuts, as well as the “fiscal cliff” report the Congressional Budget Office released in May, which also included the impact of tax cut expirations. 

“The study done by Dr. Fuller and Dr. Chmura, the study by the National Association of Manufacturers, and the CBO report are coming to the same conclusion: massive job losses directly from the cuts, from the loss in consumption” Sterling said. “In addition, just today, [the Office of Management and Budget] said it’s absolutely the case that sequestration would destroy many American jobs, and [the Defense Department] and Democrats and Republicans in Congress agree.”
Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security


When you download a report, your information may be shared with the underwriters of that document.