With the withdrawal of American combat troops from Iraq in December and an exit from Afghanistan planned for 2013, many Americans are hoping that President Obama’s State of the Union promise of a large “peace dividend” will help lift the country out of the Great Recession. U.S. military spending rose dramatically after 2001, beginning even before September 11. After controlling for inflation, military spending rose at an average rate of 5.3% per year from 2001 to 2010, while the U.S. economy grew at an average annual rate of only 1.6%. The U.S. spent $689 billion on the military in 2010, almost six times more than the next biggest spender, China ($119 billion), and more than eleven times more than Russia ($59 billion). In fact, the U.S. spent more on the military than the next seventeen nations combined.

 

A recent study by two economists at the University of Massachusetts, Amherst explains why a peace dividend would benefit the economy. The study compares the impact on job creation of military spending versus spending on green economy incentives, health care, education, and tax cuts. The economists, Robert Pollin and Heidi Garrett-Peltier, concluded that spending on the military is a relatively poor way to create jobs. In fact, the study estimates that $1 billion in spending on the military generates about 11,200 jobs, while the same amount in tax cuts creates 15,100 jobs; green economy spending yields 16,800 jobs; health care 17,200; and education creates 26,700 jobs.

 

The average annual compensation (wages plus benefits) for a military job is $90,776, while that of a job in education is $72,246 and in health care $68,978.

-Matt Bewig

 

The U.S. Employment Effects of Military Domestic Spending Priorities: 2011 Update (by Robert Pollin and Heidi Garrett-Peltier, Political Economy Research Institute) (pdf)