More on Sequestration’s Effects on the Private Sector

Back in June I wrote about the private industries whose employment was most dependent on defense funds, and which were therefore most likely to suffer from sequestration.

Over at the Oregon Office of Economic Analysis blog, Josh Lehner has taken this analysis further. He calculated the share of the work force in each state that is employed in five defense-sensitive industries.

Chart courtesy of Josh Lehner, Oregon Office of Economic Analysis. “Military dependent” employment refers to employment in top five private industries whose employment is sensitive to changes in defense spending (facilities support services; ship and boat building; aerospace product nd parts manufacturing; scientific research and development services; and navigational, measuring, electromedical and control instruments manufacturing).

He found that Washington State is ranked first in terms of share of employment reliant on military-dependent industries, followed by New Mexico. (In sheer numbers of military-reliant employees, California and Washington State are the top two.)

He also charted the changes in the private sector over all versus those in just the defense-sensitive industries:

Chart courtesy of Josh Lehner, Oregon Office of Economic Analysis. “Military dependent” employment refers to employment in top five private industries whose employment is sensitive to changes in defense spending (facilities support services; ship and boat building; aerospace poduct and parts manufacturing; scientific research and development services; and navigational, measuring, electromedical and control instruments manufacturing).

Of course, these numbers alone will not capture the full extent of the employment consequences of the sequestration.

First, there are layoffs and furloughs within the federal government itself, which has ripple effects on the spending done by those affected workers.

Second, the nondefense portion of Congress’s budget cuts will also affect employment at private companies, although the effects are probably not concentrated in as few industries as the defense-side spending cuts are, and so will be harder to isolate in the data. For example, cutbacks in federal employee travel would affect the hotel industry, but a vast majority of hotel guests are not government employees, so the overall effect on that particular industry would be small.