A story on Yahoo Finance (http://yhoo.it/MUQWWR) attributes a National Association of Manufacturers study as finding that as many as 1 million private-sector jobs could be lost by 2014 due to $1.2 trillion in federal budget cuts that would go into effect if Congress fails to come up with a solution to the ever-widening federal deficit — nearly $16 trillion and counting — by year’s end.
The cuts would likely increase the national unemployment rate (currently 8.2 percent) by 0.7 percentage points and decrease Gross Domestic Product (currently about 2 percent) by nearly a full percentage point, NAM concluded.
But aside from the national impact, consider the potential impact on Massachusetts, especially now when from many corners, you may hear crowing about how things are “not as bad.”
Consider that roughly half of aforementioned federal budget cuts would involve the defense industry, with about $55 billion of that expected to take place next year.
Consider that global defense contractor Lockheed Martin is on record as saying that a majority of its 100,000 global positions is at risk, although it added that it ultimately would trim just a small percentage. But that would presumably be also the case with rivals Raytheon and BAE Systems, both of which employ several thousand people within 20 miles of Lowell.
Consider also that a new report from the University of Massachusetts’ Donahue Institute on Massachusetts’ military installations has found that the bases support more than 45,000 jobs and add about $13.7 billion to the state’s economy each year.
Consider that Hanscom Air Force Base, the headquarters of the U.S. Air Force Electronic Systems Center, had the largest economic impact of all state bases, contributing more than $8.4 billion in fiscal year 2011 through operational and procurement activities.
Consider that while the defense industry has been so good to Massachusetts in the past decade, that very same Donahue Institute’s director of economic and pubic research, Marty Romitti, told the Boston Globe that “up to 30,000” defense-related jobs in Massachusetts could be at risk.
Consider the above statement’s impact, regardless of whether you believe the state added 40,000 jobs last year or 9,000 — because either way, it’s a pretty big hit.
Consider another tidbit from the Donahue report — namely, that Massachusetts received nearly $13.9 billion in contracts from the U.S. departments of Defense and Homeland Security in fiscal 2011 — up 83 percent from 2003. Much of these expenditures are related to the wars in Iraq and Afghanistan, wars that are either completed or winding down.
Consider that while many people are under the expectation that medical devices are the key to Massachusetts job growth, according to yet another study (from the Battelle/BIO State Biosciences Industry Development), the state had 20,182 medical-device employees, down 19 percent from 2001. And don’t look for that to improve anytime soon. Medical-device manufacturing has its own job-creation obstacles (r.e., 2.3 percent tax on revenues as part of the Patient Protection and affordable Care Act, aka ObamaCare).
Now you know why government officials and civilians alike are worried about protecting the kind of high-end jobs that have allowed the U.S. to maintain its military might — and allowed Massachusetts to boast of its relative economic strength in the environment of a punk national recovery.
They should be worried.
They don’t call it a “fiscal cliff” for nothing.