Military Cuts Shouldn't Impact Unemployment

Budget-slicing will result in military job cuts, but the effect on unemployment should be negligible.

In these times of economic unease, any news of large-scale layoffs risks increasing our state of anxiety. It probably says something about the current tentative recovery - in both jobs and the broader economy - that the government's announcement of the budget cuts the military will have to make was greeted largely without surprise or anger. This, in an election year where jobs are one of the main topics of conversation.

This is partially due to the government's smart and careful preparation for the announcement, which started in mid-2011 with the news that some level of cutting had to be enacted. Now the specifics are starting to be nailed down and the government has put some numbers on the board - approximately $487 billion in cuts over the next ten years, with the dismissal of at least 80,000 active duty troops.

Another reason the public reaction wasn't stronger was that those numbers, while they sound high alone, are actually fairly small compared to the wider pool they swim in. Sure, 80,000 work-hungry people fresh on the job market will have some negative impact on unemployment but they will be only a drop in a very large pool - at the moment there are over 13 million out-of-work Americans according to the Bureau of Labor Statistics. That drop won't make much of a difference to the job market one way or another.

Additionally, at the end of 2011 Congress passed a law strengthening the safety net for veterans returning to the workforce. Once they leave their service, the vets can benefit from the provisions of the "(VOW) to Hire Heroes Act", which include free vocational training programs and tax credit incentives for the employers that hire them.

Of course, military jobs aren't strictly limited to the army, navy, marines and air force. Many contractors throughout the country depend on the armed forces as a customer, and staff their factories and offices for the work. However, research generally indicates that the military is actually a comparatively poor secondary job creator. Robert Pollin and Heidi Garrett-Peltier of the University of Massachusetts's Political Economy Research Institute, for example, argue convincingly that budget money targeted to certain strategic economic areas like green energy or education has the potential to create significantly more jobs than does military contracting. Meanwhile, American University professor Gordon Adams, quoted by Reuters, said that "a down-slope in one set of jobs and an up-slope in another set of jobs says the end employment effect might be zero or even positive".

Of course, news of yet another huge chunk of layoffs is never particularly welcome. But in the case of the military, it's been expected for quite a while and the timing, on the back of an employment upswing, is good. And ultimately, luckily for everyone including the veterans themselves, the pain will be comparatively mild and not widespread.