| This is the fourth entry in a series examining actions during the first 100 days of the new Trump administration and their possible implications on the arms trade, security assistance and weapons use in the future. This entry is authored by a member of the Forum's emerging expert program, designed to give opportunities to individuals beginning their careers on these issues. |  Robert Watson |
President Trump has articulated few goals as thoroughly as his commitments to defense spending and job creation. His budget proposal would increase defense spending by $54 billion while cutting programs related to education, clean energy, and social welfare. And just last week he signed the “Buy American and Hire American” executive order, intended to protect the American manufacturing and defense industrial base. This order requires that federal procurement programs buy American made goods, and will restructure the H-1B visa program to make American workers more competitive. However, these policies may not be entirely compatible with respect to American security and employment. Defense spending is not nearly as effective at job creation as investment in the areas that Trump’s budget neglects, and labor restrictions may lessen the competitiveness of American defense equipment abroad.
Defense Employment
It should be noted that Trump’s defense budget is not simply for the purpose of job creation, but it is an important part of the rationale for defense spending. In 2014, the defense and aerospace industry provided direct and indirect employment to 4.4 million individuals, about 2.8% of the U.S. civilian labor force that year. From 2015 to 2016, jobs in the sector increased 3.2% after five years of decline due to the 2011 Budget Act and the military’s drawdown in the Middle East. Nevertheless, defense spending cannot and should not increase indefinitely to maintain the sector’s relatively small contribution to employment.
While defense spending does create jobs, it is not nearly as effective as investment in other sectors, particularly those that stand to lose under Trump’s new budget. It is calculated that for every $1bn spent on defense, 11,200 jobs are created. Compare this to the 16,800 jobs per $1bn spent on clean energy, 17,200 from healthcare, and 26,700 from education spending.[1] These areas also produce higher paying jobs than defense in that funding more often contributes to salaries, which are spent on domestic purchases and not in foreign economies, and does not pay for exorbitantly priced military hardware. Weapons manufacturing projects require less and less “touch labor,” which means that more money goes to research and development that does little to stimulate the civilian economy. It is also dangerous to increase the dependence of American labor on defense, particularly if defense spending continues to be prioritized over other domestic sectors. If he is sincere in his commitment to American jobs, Trump should devote state resources to sectors like education, healthcare, and clean energy, all of which create more jobs per dollar than defense.
Jobs & Security Cooperation
Another challenge for Trump’s commitment to employment is apparent in the defense industry itself, and will have an effect on U.S. security cooperation. During a visit to a Boeing factory in South Carolina, Trump praised the company’s employment of local workers and pledged to impose a “substantial penalty” on companies that move workers to other countries. These penalties would diminish American defense manufacturers’ significant advantage in international markets by preventing them from accepting the increasingly common co-production requirements of purchasing countries. This would ultimately lessen the United States’ ability to secure and maintain strategic bilateral security partnerships abroad. On the other hand, building up foreign defense industries through co-production would increase competition and likely take jobs away from Americans in the long term.
Co-production requirements are particularly common for countries attempting to improve domestic manufacturing and technological capabilities like Japan and India. The potential U.S. sale of F-16s to India is a prime example of this type of arrangement, as any purchase made by the Indian government will require co-production of the aircraft in India. Senators John Cornyn (R-Texas) and Mark Warner (D-Virginia), the co-chairs of the India Caucus, have pressed the State and Defense Departments to approve this deal, but it may run afoul of Trump’s “Hire American” policy. F-16 manufacturing was recently relocated to Greenville, South Carolina from Ft. Worth and, if Trump wants to secure this strategic sale to India, it is likely he will have to make a small concession to jobs at this facility.
This move, which received glowing praise from Sen. Lindsey Graham (R-South Carolina) and was widely covered by national and local media, will only provide an additional 250 jobs in Greenville. Nevertheless, a loss of any portion of these jobs to India would surely draw vitriol from Trump’s supporters there, and provide a high profile contradiction to his position on employment. The defense industry sources components from around the world, and any penalties would put these manufacturers in a difficult position. In the short term, refusing co-production arrangements would keep jobs in the U.S., but make it much more difficult to facilitate security partnerships with U.S. allies. However, in the long term, accepting them may result in a loss of American jobs to foreign competition. In the meantime, Trump will have to decide between sticking to his guns and policy promises, and sealing the deal with America’s only “Major Defense Partner,” India.
Trump’s labor policies face a number of contradictions and challenges that will test his commitment to domestic employment and the defense industry. His “Buy American and Hire American” executive order will be a stumbling block to achieving U.S. security cooperation objectives, and will likely make the international arms trade more competitive, for better or worse. Furthermore, if Trump is really as committed to jobs as he claims, it would be more productive to invest in areas that are not related to defense, sectors that his current budget will leave wanting.
[1] Paul Holden, et al. Indefensible, (London: Zed Books Ltd, 2016), p.92.
Robert Watson is a Middle East and North Africa intern with the Security Assistance Monitor and a participant in the Forum’s emerging expert program.
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