Loss of Defense Jobs Not Seen as Devastating

IT'S a great thing for the world that the cold war is over. But peace can be devastating if your job depends on the United States defense industry.

How hard-hitting will Pentagon cutbacks be? One new congressional report says it is possible that almost half of the current 6 million US defense jobs will disappear by the end of the decade.

An annual average loss of 250,000 defense jobs could occur through 2001, estimates the congressional Office of Technology Assessment (OTA) in a report titled "After the Cold War: Living with Lower Defense Spending." Defense industry jobs could drop to about 3.5 million.

But the report notes that many of the job cuts - particularly in the military itself - can be absorbed through attrition, and that in the context of the whole US economy the potential displacement of the defense build-down is not large.

"The numbers of defense positions at risk appear rather moderate on a national scale," says the study. The pain of defense cuts will thus be concentrated in areas highly dependent on military jobs.

Half the defense jobs in America are located in only eight states, notes the OTA: California, Texas, Virginia, New York, Florida, Pennsylvania, Ohio, and Massachusetts.

At the local level, defense dependence can be even higher. Wurtsmith Air Force Base in Oscoda, Mich., already targeted for closure, accounts for 21 percent of the jobs in its surrounding county.

A second report, by the Congressional Budget Office (CBO) estimates that Fort Ord, near Monterey, Calif., another post already chosen to be closed, generates 31 percent of personal earnings in its county.

If Bath Iron Works in southern Maine were to lose its naval shipbuilding contracts and be forced to close, the personal income level of the whole state could be reduced by 2 percent, estimates CBO. Currently, the only substantial work at Bath is construction of Arleigh Burke-class destroyers, which could be targeted in future defense budget reductions.

One problem is that today's defense restructuring is taking place when the economy is not as strong as it was during earlier draw-downs, such as in the wake of the Vietnam War.

Another is that defense employment is concentrated in an area, manufacturing, that is experiencing particularly hard times. Some 57 percent of defense employment is in manufacturing, estimates the OTA, as opposed to 17 percent of jobs in the economy as a whole.

If defense spending does indeed fall to $169 billion in today's dollars by 2001, a level the OTA judges conceivable, the job loss could be stressful on a national scale. But the OTA also notes that direct defense employment accounts for only about 4.2 percent of US jobs, and that even in the boom years of the late 1980s around 1.8 million workers a year lost jobs due to factory closing and relocation, lack of orders, or corporate restructure.

The senators who requested the OTA report said it showed the US must overhaul the federal assistance programs already in place that help defense workers who lose their jobs. The largest such program, Economic Dislocation and Worker Adjustment Assistance, has had a steadily increasing budget in recent years, reaching $577 million in fiscal 1992. But the OTA found that administration of the program at the state level is snarled.

"The real question is, how do you lessen the impact and how do you end up with a stronger economy?" asked Sen. Edward Kennedy (D) of Massachusetts, a sponsor of the OTA study.