US military-industrial jobs scam (2)

The American administration is corrupt as is evident by scandals slowly emerging of the widespread manipulation by the Pentagon and the country’s industrial sector to divert huge sums towards militarization projects on the pretext of creating employment that does not exist, but actually to fuel unending wars abroad by fooling the public at home.

The following is the second and last part of an article that appeared in this regard on the ‘TomDispatch’ site, titled: “US Military-Industrial Jobs Scam”.

It was jointly written by Nia Harris and Cassandra Stimpson, Research Associates at the Center for International Policy, in collaboration with Ben Freeman, Director of the Foreign Influence Transparency Initiative at the Center for International Policy.

Despite being the US’ and the world’s top weapons maker, Lockheed isn’t the exception but the norm. From 2012 to 2018, the unemployment rate in the US 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.

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. CSRA, which General Dynamics acquired in 2018, had 18,500 employees before the merger, while Orbital ATK, which General Dynamics acquired last year, had 13,900 employees. Subtract these 32,400 jobs from the corporate totals and job losses at the firms become staggering.

In addition, those employment figures include all company employees, even those now working outside the US Lockheed is the only top five Pentagon contractor that provides information on the percentage of its employees in the US, so if the other firms are shipping jobs overseas, as Lockheed has done and as Raytheon is planning to do, far more than 6,900 full-time jobs in the US have been lost in the last six years.

Where then, did all that job-creation money really go? Just as at Lockheed, at least part of the answer is that the money went to the bottom-line and to top executives. According to a report from ‘PricewaterhouseCoopers’, a consulting firm that provides annual analyses of the defense industry, "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.

This is hardly the first time that these companies have extolled their ability to create jobs while cutting them. As Ben Freeman previously documented for the Project On Government Oversight, these very same firms cut almost 10% of their workforce in the six years before the BCA came into effect, even as taxpayer dollars heading their way annually jumped by nearly 25% from $91 billion to $113 billion.

Just as then, the contractors and their advocates – and there are many of them, given that the 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 – will rush to defend such job losses. They will, for instance, note that defense spending leads to job growth among the subcontractors used by the major weapons firms. Yet research has repeatedly shown that, even with this supposed "multiplier effect," defense spending produces fewer jobs than just about anything else the US government puts the tax payers’ 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.

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." Military spending actually proved to be the worst job creator of any federal government spending option those researchers analyzed. Similarly, according to a report by Heidi Garrett-Peltier of the Political Economy Research Institute at the University of Massachusetts, Amherst, for every $1 million of spending on defense, 6.9 jobs are created both directly in defense industries and in the supply chain. Spending the same amount in the fields of wind or solar energy, she notes, leads to 8.4 or 9.5 jobs, respectively. As for the education sector, the same amount of money produced 19.2 jobs in primary and secondary education and 11.2 jobs in higher education. In other words, 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.

You don’t, however, have to turn to critics of defense spending to make the case. 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.

If the US’s top defense contractor and the industry as a whole have been shedding jobs, how have they been able to consistently and effectively perpetuate the myth that they are engines of job creation? To explain this, 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.

While there has always been a cozy relationship between the Pentagon and the defense industry, the lines between contractors and the government have blurred far more radically in the Trump years. Mark Esper, the newly minted secretary of defense, for example, previously worked as Raytheon’s top lobbyist in Washington. Spinning the other way, the present head of the Aerospace Industries Association, Eric Fanning, had been both secretary of the Army and acting secretary of the Air Force. In fact, 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."

Whatever the spin, whether of that revolving door or of the defense industry’s publicists, the bottom line couldn’t be clearer: if job creation is your metric of choice, Pentagon contractors are a bad taxpayer investment. So whenever Marillyn Hewson or any other CEO in the military-industrial complex claims that spending yet more taxpayer dollars on defense contractors will give a jobs break to Americans, just remember their track record so far: ever more dollars invested means ever fewer Americans employed.

AS/MG