Defense-related employment and spending, 1996-2006

Monthly Labor Review,  July, 1998  by Allison Thomson

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A "total requirements" table is derived from the make and use tables to convert the production concepts in the input-output table to employment. The total requirements table indicates the total production required to support $1 of final demand. It includes both the direct and indirect input requirements to production. The total requirements table is scaled to the employment-output ratio for each industry, thus converting the production required per dollar of demand to the employment required per dollar of demand. The end result is the employment requirements table. The employment requirements table shows how the interrelationships between various industries affect employment. For example, defense spending generates employment in the aerospace industry, which generates employment in the electronic components and accessories industry and the communication equipment industry. Employment is indirectly affected in the retail trade industry, and the hotels and other lodging industry, because communities develop around manufacturing sites and travelers seek overnight accommodations to conduct business. This analysis does not examine job creation or reduction associated with the income multiplier effect of defense spending.

Industry employment is translated to occupational employment, using the industry-occupation matrix. The matrix details the occupational content of each industry and is projected to 2006 as part of the BLS ongoing projections program. Defense-related industry employment is multiplied by these staffing patterns to generate the occupational employment statistics related to defense spending.

Allison Thomson is an economist in the Office of Employment Projections, Bureau of Labor Statistics.

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