Jobs vs. War

The UMass Amherst Research

The foundational research comes from economists at the Political Economy Research Institute (PERI) at UMass Amherst, led by Robert Pollin and Heidi Garrett-Peltier. Their work has been published in peer-reviewed journals and cited by the Congressional Budget Office, the Government Accountability Office, and numerous policy organizations. The methodology is rigorous and reproducible:

• They use Bureau of Economic Analysis (BEA) input-output models to calculate employment effects across three categories
• Direct jobs: People employed directly by the spending (soldiers, teachers, nurses)
• Indirect jobs: Supply chain employment (parts manufacturers, food suppliers, logistics)
• Induced jobs: Jobs created when workers spend their wages in the local economy (restaurants, retail, housing)

The finding is consistent across multiple studies spanning 2007 to 2024: military spending is the least efficient job creator of any major government spending category. This isn't about waste or fraud — it's about the fundamental structure of the spending.

Their 2011 paper “The U.S. Employment Effects of Military and Domestic Spending Priorities” found that $1 billion in military spending creates approximately 11,200 jobs, while the same $1 billion in education creates approximately 26,700 jobs. The 2017 update, accounting for changes in military technology and procurement, found the gap had widened — modern weapons systems are even more capital-intensive and less labor-intensive than their predecessors.

Why Military Spending Creates Fewer Jobs

The structural reasons are straightforward and well-documented:

1. Capital Intensity

Military spending is overwhelmingly capital-intensive, not labor-intensive. An F-35 Lightning II costs $80 million. A Virginia-class submarine costs $3.4 billion. A Gerald R. Ford-class aircraft carrier costs $13.3 billion. These are among the most expensive individual objects ever constructed by human beings. The money goes to advanced materials, precision manufacturing, and highly specialized engineering — not to large numbers of workers.

Compare this to education: $80 million in education spending pays the salaries of approximately1,270 public school teachers for a year. Each of those teachers educates 25-30 students, buys supplies, eats at local restaurants, shops at local stores, and pays local property taxes. The money circulates through the community.

2. Profit Concentration

Defense contractors have profit margins of 10-15% — significantly higher than most industries. Executive compensation at the top five defense contractors averages $20-30 million per year. These profits and executive payouts represent dollars that could otherwise employ workers.

3. Leakage to Overhead and R&D

A significant portion of defense spending goes to research and development, testing, and administrative overhead — not to production or employment. The Pentagon spent $140 billion on R&D in FY2024 alone, much of it on programs that employ relatively few people per dollar (classified research, computer modeling, laboratory work).

By contrast, education spending is almost entirely labor costs. Approximately 80% of K-12 education budgets go directly to salaries and benefits — meaning the money immediately becomes income for workers who spend it in their communities.

4. Geographic Concentration

While defense contractors deliberately spread subcontracts widely for political protection, the actual high-value work is concentrated in a handful of metropolitan areas: the D.C. suburbs (Northern Virginia, Maryland), Dallas-Fort Worth, Los Angeles, San Diego, and a few others. Communities outside these hubs see relatively little economic benefit from defense spending.

Education and healthcare spending, by contrast, is distributed wherever people live. Every community has schools and hospitals. Shifting $100 billion from defense to education would create jobs in every congressional district in America — not just the ones with Lockheed Martin facilities.

The Opportunity Cost: What $886 Billion Could Buy

The FY2024 defense budget was $886 billion. At 5 jobs per million dollars, that creates approximately 4.43 million jobs. If the same $886 billion were spent on education, it would create approximately 11.5 million jobs — a net gain of over 7 million jobs. Here's what specific shifts would mean:

The Political Economy of Base Closures

If military spending is such a poor job creator, why does it persist? The answer isn't economic — it's political. The defense industry has built the most sophisticated political protection system in American history, centered on two mechanisms: subcontract distribution and base closure politics (BRAC).

The F-35 Strategy: Jobs in Every District

The F-35 Joint Strike Fighter is the most expensive weapons program in history — projected to cost $1.7 trillion over its lifetime. It has been plagued by cost overruns, schedule delays, and persistent technical problems. The Pentagon's own testing office has documented over 800 unresolved deficiencies. Yet Congress continues to fund it enthusiastically, often adding planes the Pentagon didn't ask for.

Why? Because Lockheed Martin has strategically placed F-35 suppliers in 45 states and 375 of 435 congressional districts. An estimated 155,000 jobs are linked to the program:

BRAC: The Third Rail of Defense Politics

The Base Realignment and Closure (BRAC) process was created in 1988 to depoliticize base closures. An independent commission identifies bases for closure, and Congress votes on the entire package — no amendments, no cherry-picking. The idea was to prevent individual members from protecting their own bases while voting to close others.

It worked — sort of. Five rounds of BRAC between 1988 and 2005 closed or realigned 350+ installations, saving an estimated $12+ billion per year. But Congress has blocked every Pentagon request for a new BRAC round since 2005 — for 20 years and counting.

Historical Precedent: Post-WWII Conversion

The most powerful argument against military spending as a jobs program comes from history. After World War II, the United States demobilized the largest military in history — and the economy boomed.

The numbers are staggering:

• Active military personnel: 12 million → 1.5 million (88% reduction in 2 years)
• Military spending as % of GDP: 41.9% → 4.7%
• Defense industry employment: ~17 million → ~3 million
• The result: not depression, but the greatest sustained economic boom in American history

How did this work? The government invested aggressively in conversion:

• The GI Bill (1944): Sent 7.8 million veterans to college or vocational training. Created an educated workforce that drove innovation for decades. The VA estimates every dollar spent on the GI Bill generated $7 in economic output.
• FHA Housing: Low-interest mortgages helped 5 million veterans buy homes, creating the suburban housing boom and all the jobs that came with it — construction, appliances, furniture, roads, schools.
• Industrial conversion: Factories that built tanks started building cars. Shipyards that built destroyers built commercial vessels. Aircraft manufacturers pivoted to civilian aviation. Ford's Willow Run plant, which built B-24 bombers, became a General Motors auto plant.
• Interstate Highway System (1956): Eisenhower's $25 billion investment ($300 billion in 2025 dollars) created millions of jobs and transformed the economy.

The post-WWII conversion proves a fundamental point: economic prosperity doesn't require military spending. In fact, the greatest period of American economic growth occurred precisely when military spending was being slashed. The “jobs” argument for defense spending is not just economically wrong — it's historically backwards.

Base Closure Case Studies: What Actually Happens

The fear that base closures devastate communities is understandable but often overstated. Research by the Department of Defense Office of Economic Adjustment shows that most communities that lost bases ultimately recovered and often exceeded their previous employment levels. The transition period is painful — typically 5-15 years — but the long-term outcomes are frequently positive.

The Cold War Drawdown: Another Success Story

After the Cold War ended in 1991, the US reduced military spending from 5.2% of GDP to 3.0% of GDP by 2000 — a “peace dividend” worth roughly $100-150 billion per year in reduced spending. Active duty military fell from 2.07 million to 1.38 million. Hundreds of bases closed.

The result? The 1990s saw the longest peacetime economic expansion in American history. Unemployment fell from 7.5% to 4.0%. The federal budget went from a $290 billion deficit to a $236 billion surplus. The tech boom, fueled partly by defense engineers moving to Silicon Valley, created millions of high-paying jobs.

Again, the empirical evidence is clear: reducing military spending correlates with stronger economic performance, not weaker. The “jobs” argument for military spending isn't supported by any period of American economic history.

The Multiplier Effect

Economists measure the “multiplier effect” of government spending — how many times each dollar circulates through the economy before being saved or taxed. Military spending has a relatively low multiplier (approximately 1.0-1.2) because so much of it goes to specialized equipment and concentrated corporate profits that don't circulate widely.

By comparison:

• Education spending: Multiplier of 1.5-2.0. Teacher salaries are spent almost entirely in local communities — rent, groceries, restaurants, childcare.
• Infrastructure spending: Multiplier of 1.5-1.7. Construction workers spend locally, and the completed infrastructure (roads, bridges, broadband) enables further economic activity.
• Healthcare spending: Multiplier of 1.3-1.7. Health workers are employed in every community, and healthier populations are more productive.
• SNAP/food assistance: Multiplier of 1.7-1.8. Low-income recipients spend virtually every dollar immediately, circulating it through grocery stores and local businesses.

A dollar spent on military hardware that sits in a warehouse has a multiplier near zero. A dollar spent on a teacher's salary multiplies through the local economy 1.5-2.0 times. The difference, scaled to $886 billion, represents hundreds of billions of dollars in lost economic activity.

Defense Industry Lobbying: Protecting the Status Quo

The defense industry spent $144 million on lobbying in 2023 alone — more than any other sector except pharmaceuticals and technology. Over the past decade, defense lobbying has totaled over $1.3 billion. The industry also contributed $51 million to congressional campaigns in the 2024 election cycle.

This spending is extraordinarily effective. Every year, Congress adds billions to the defense budget that the Pentagon didn't request — planes, ships, and vehicles the military says it doesn't need. In FY2024, Congress added approximately $28 billion above the Pentagon's request. The additions correlate precisely with lobbying spending and campaign contributions.

The return on investment for defense lobbying is remarkable: the industry spends roughly $150 million per year on lobbying and campaign contributions, and receives roughly $886 billion in contracts. That's a return of approximately 5,900:1. No other investment in America offers that kind of return.

The International Comparison

The United States spends more on defense than the next 10 countries combined. America's defense budget ($886 billion) exceeds the combined total of China ($292 billion), Russia ($109 billion), India ($83 billion), Saudi Arabia ($75 billion), the UK ($75 billion), Germany ($68 billion), France ($61 billion), South Korea ($47 billion), Japan ($50 billion), and Australia ($32 billion).

Countries that spend less on defense relative to GDP — like Germany, Japan, and the Nordic nations — consistently outperform the US on virtually every measure of social well-being: life expectancy, infant mortality, educational achievement, income equality, infrastructure quality, and healthcare access. They invest in their people. We invest in weapons.

The Libertarian Case: Free Markets Don't Need Military Keynesianism

There is a deep irony in conservative politicians defending military spending as a jobs program. The same lawmakers who oppose government spending on education, healthcare, and infrastructure — arguing that the free market creates jobs more efficiently — turn around and defend the most inefficient form of government spending imaginable as an employment program.

This is military Keynesianism — the use of defense spending as economic stimulus — and it contradicts every principle of limited government and fiscal conservatism. As libertarian economists from Murray Rothbard to Robert Higgs have argued, military spending represents the most distortionary form of government intervention in the economy:

• It diverts resources from productive private-sector uses to destructive public-sector uses
• It creates artificial demand that distorts labor markets and suppresses wages in civilian sectors
• It concentrates wealth in politically connected firms rather than market-competitive ones
• It requires taxation or borrowing that crowds out private investment
• The products it creates (weapons, munitions) have no civilian economic value and are often literally consumed in destruction

As Frédéric Bastiat observed in 1850 with his “broken window fallacy,” the jobs created by military spending are visible, but the jobs destroyed — by the taxation, borrowing, and resource diversion required to fund it — are invisible. Military spending doesn't create wealth. It redistributes it — from taxpayers to defense contractors, from communities to corporate headquarters, from productive investment to weapons that will either sit in warehouses or be used to destroy other people's wealth.

The Transition Plan: How to Do It

Economic conversion from military to civilian spending is not a fantasy — it has been done repeatedly and successfully. The key principles, based on historical experience and economic research:

1. Gradual Phase-Down (5-10 Years)

Shift spending gradually — not overnight. A reduction of $20-40 billion per year over a decade would bring the defense budget to approximately $500-600 billion — still the world's largest by far — while freeing $200-400 billion for reinvestment.

2. Worker Transition Programs

Fund robust retraining for defense industry workers. Many defense skills transfer directly to civilian sectors: aerospace engineers can design commercial aircraft or spacecraft. Cybersecurity specialists are in massive demand in the private sector. Electronics technicians, logistics managers, and project managers are needed everywhere. The GI Bill model — education and training funded by the savings — is the proven template.

3. Community Investment

Direct economic development funds to defense-dependent communities, modeled on the Office of Economic Adjustment's successful BRAC support programs. The key is investing beforecuts take effect — not waiting for communities to struggle.

4. Targeted Reinvestment

Reinvest savings in the same regions affected by cuts. If a military base closes in a rural area, that area should be first in line for infrastructure investment, broadband expansion, renewable energy projects, or federal research facilities. The savings from defense cuts should create more jobs in the same communities — not fewer.

5. Industrial Diversification Requirements

Require defense contractors to develop civilian product lines as a condition of major contracts. Companies that receive hundreds of billions in taxpayer money should be required to maintain the capability to pivot to civilian production — as they did successfully after WWII.

The Net Effect

The economics are unambiguous. Shifting $200 billion from defense to a mix of education, healthcare, clean energy, and infrastructure would:

• Create approximately 800,000 to 1.6 million net new jobs
• Distribute employment more broadly across all 50 states (not concentrated in defense hubs)
• Produce higher-multiplier economic activity that benefits more communities
• Invest in human capital (education, health) that generates returns for decades
• Reduce the federal deficit or fund other priorities
• Still leave the US with the world's largest military by a wide margin

The only losers are defense contractor shareholders and executives — the people who have spent $1.3 billion on lobbying over the past decade to ensure this conversation never happens.