As part of its campaign to
secure additional funding for the F-22 Raptor combat aircraft, the Lockheed
Martin Corporation has asserted that 95,000 jobs are at stake if the program is
terminated after the Pentagon's preferred production run of 183 planes.
Using two different
estimating techniques (elaborated below), F-22 expenditures generate jobs in
the range of 35,000 to 37,000 per year-- less than 40% of the levels claimed by
In addition, Lockheed
Martin's advertisements and fact sheets on this issue fail to stress the fact
that any job losses that do occur as a result of ending the F-22 program will
be stretched out over two and half years or more, suggesting that many of them
may occur after the end of the current recession.
Finally, to the extent that additional funding for the F-22 program comes
at the expense of public investments in areas such as education,
infrastructure, and building weatherization, extending the F-22 program could
result in a net job loss in the range
of 9,300 to 47,000 jobs per year.
One commonly accepted method
for gauging the job impacts of a particular expenditure is input/output
analysis. Created by Nobel Prize-winning
economist Wassily Leontief in the 1960s and refined since that time,
input/output analysis tracks the distribution of a given form of spending as it
makes its way through different sectors of the economy. Input/output analysis
estimates the job impacts of three different levels of spending: direct,
indirect, and induced jobs. Each of
these terms is defined below:
Direct employment: Jobs associated with the primary
production and assembly of the product;
Indirect employment: Jobs associated with industries that supply "intermediate goods" such
as metal, glass and rubber that are used to produce components of a given
Induced employment: Jobs created when people involved in production of the production of
the product spend their paychecks on food, shelter, and other goods and
According to a November 2007
report by two economists at the University
military spending creates 8,555 jobs per $1 billion spent.[i] Figures from the most recent Pentagon
document on program acquisition costs by weapons systems indicate that average
expenditures for the F-22 over the past three years have averaged $4.2 billion
per year.[ii] At that expenditure level, the total jobs sustained by the program
would be 37,317 - including direct production work, work at subcontractors, and
employment impacts of wages spent by F-22 workers. That is a far cry from the
95,000 figure that Lockheed Martin is using in its lobbying campaign for the
F-22 Production as Percentage of Total Lockheed
Employment, plus a "Multiplier Effect"
A second, somewhat rougher
way to estimate the employment impacts of the F-22 is to look at its proportion
of Lockheed Martin's total revenue, and assign it a similar proportion of the
company's total employment. This direct
employment is then multiplied by a multiplier of 2.5, consistent with the U.S.
Department of Labor's estimate of the ripple effect of direct employment in
supporting other jobs throughout the economy.
Using this approach, the $4.2
billion in average annual revenues generated by the F-22 accounts for 10% of
the company's $41.9 billion in total revenues for 2007, the most recent year
for which full statistics are available.
If this proportion holds true for employment as well, that would put the
number of direct jobs attributable to the F-22 is 14,000 (ten per cent of the
company's total employment of 140,000).[iii] Increasing this 14,000 via the Labor
Department's "multiplier effect" of 2.5 results in a total jobs estimate of 35,000, a figure similar to the estimate
derived from the input/output estimate cited above.
Where Does Lockheed Martin's Estimate of 95,000 Jobs
The origin of Lockheed
Martin's estimate of 95,000 total jobs related to the F-22 program can
ultimately only be explained by the company itself. But one possible explanation is that the
company has counted both direct jobs (at the prime contractor level) and
indirect jobs (at the subcontractor level) as if they were the same in terms of
their employment "ripple effect." In
fact, only direct jobs should be counted before applying the multiplier of 2.5
to come up with a final employment estimate.
Employment Impacts Will Be Phased in Over Time
Even if the Pentagon doesn't
spend another dime on F-22 production, the assembly line is expected to stay
open for more than two and one-half years, until December 2011. This means that a significant part of any
employment impact will not occur immediately, as some observers may have
assumed. Rather there will be a sort of
"rolling impact," as suppliers of long-lead time items like titanium, rubber,
and glass feel the pinch first, followed by producers of more sophisticated
components, and then finally by those working on the final assembly of the
aircraft. Hopefully by December 2011 the
current economic downturn will have reversed itself, and the economy will be
better equipped to absorb what in the larger employment picture is a fairly
small effect (e.g., 10,000 jobs represents less
than one one-hundredth of one percent of the total U.S. labor force of over
While it is hard to make
comparisons in a turbulent budget environment marked by sharp increases in
spending in some areas (via the stimulus package) and potential cuts in others
(in keeping with President Obama's pledge to get the budget deficit under
control within the next four years), it is interesting to note that military
spending creates far fewer jobs (8,555 per $1 billion) than any other form of
public investment, be it health care (12,883), education (17,687), mass transit
(19,795) or infrastructure/home weatherization (12,804).
Similarly, a tax cut devoted
to personal consumption would generate 10,779 jobs-- over 25% per billion more
than would be created by military spending.
Assuming that the $4.2 billion currently spent on the F-22 were devoted
to other purposes, there could be a net job increase
of 9,340 (from tax cuts) to 47,208 (for mass transit).[v]
For a description of input/output analysis, plus comparative numbers on the
number of jobs per billion dollars generated by different activities, see
Robert Pollin and Heidi Garrett-Peltier, "The U.S. Employment Effects of
Military and Domestic Spending Priorities," University of Massachusetts and the
Institute for Policy Studies, October 2007 at
U.S. Department of Defense, "Program Acquisition Costs by Weapons System," FY
2008 edition, at http://www.defenselink.mil/comptroller/Docs/fy2008_weabook.pdf.
For the most recent available figures on revenues and employment for Lockheed
Martin, see the company's 2007 annual report, at http://www.lockheedmartin.com/data/assets/corporate/documents/ir/2007-An....
On the size of the U.S.
labor force, "Employment Situation Summary," January 2009, at http://www.bls.gov/news.release/empsit.nr0.htm.
job comparisons, see Pollin and Garrett-Peltier, op. cit., note 1