By Chuck Crumbo
ccrumbo@scbiznews.com
Published Feb. 2, 2012

COLUMBIA -- The potential of nearly $1 trillion worth of cuts in the Pentagon budget could impact more than 416,000 people out of work who are employed by defense and aerospace industries in the Southeast and mid-Atlantic.

Overall, the Pentagon faces budget cuts total $489 billion over the next 10 years, with another $500 billion to be axed beginning in 2013. The $500 billion cut resulted from a congressional panel’s failure to agree on how to whack $1.5 trillion from the federal budget last October. Congress might reverse the cuts if political winds blow in the right direction.

“The impacts of these losses will extend across the full breadth of the U.S. economy, as this decreased spending will result in reduced spending for consumer goods and services,” said Stephen S. Fuller and Dwight Schar, of the Center for Regional Analysis at George Mason University.

Each job lost by a prime defense contractor and direct or indirect suppliers results in three additional job losses in other sectors of the economy, the researchers said.

Explaining further, the researchers said each $1 reduction in defense spending results in $2.64 in sales losses by other businesses “with 71% of these lost sales occurring as a result of consumer spending by workers” both directly and indirectly affected by the cut.

Across the country, about 1 million full-time jobs would be lost because of defense cuts, the researchers said.

In 14 Southeastern and mid-Atlantic states, the job-loss figure could reach 416,936, according to figures compiled by the George Mason researchers. The layoffs would result in $24.6 billion in lost wages and a $35.9 billion hit to the gross domestic product.

Southeastern states most affected by the cuts would be Virginia, Texas, Florida and Maryland. Nearly 300,000 people in those states could be out of work if the $1 trillion in cuts goes through, the researchers said.

Nationally, California would be the hardest hit state, losing 125,800 jobs, followed by Virginia, 122,800 jobs; Texas, 91,600 jobs; and Florida, 39,200 jobs.

For South Carolina, the researchers calculated that the state would lose 13,666 full-time jobs, resulting in $806.6 million in lost earnings and nearly a $1.2 billion reduction in gross state product.

Potential impact of Defense cuts

With a possible $1 trillion worth of Pentagon cuts on the horizon, here’s a look of how defense and aerospace industries in the Southeast might be affected.

State	Jobs lost	Wages lost	State domestic product
Alabama	24,614	$1.458 billion	$2.123 billion
Arkansas	3,452	$203.7 million	$296 million
Florida	39,246	$2.298 billion	$3.345 billion
Georgia	25,450	$1.502 billion	$2.186 billion
Kentucky	15,739	$929 million	$1.352 billion
Louisiana	17,751	$1.049 billion	$1.525 billion
Maryland	36,227	$2.155 billion	$3.137 billion
Miss.	4,961	$292.8 million	$426 million
N.C.	11,019	$650.4 million	$947 million
S.C.	13,666	$806.6 million	$1.174 billion
Tenn.	9,419	$556 million	$809 million
Texas	91,575	$5.439 billion	$7.917 billion
Va.	122,770	$7.241 billion	$10.539 billion
W. Va.	1,047	$61.8 million	$90 million
Totals	416,936	$24.643 billion	$35.866 billion