Goal: Creating 20 Million Jobs By 2020

Jobenomics - Goal: Creating 20 Million Jobs By 2020

Jobenomics Employment Report: October 2014

Jobenomics Employment Report: October 2014

By: Chuck Vollmer

9 October 2014

Jobenomics tracks both unemployment (see: Jobenomics Employment Scoreboard: October 2014) and employment (this posting).   Download PDF versions: Jobenomics Employment Report - October 2014 and Jobenomics Unemployment Report - October 2014 . 

Executive Summary.  According to the October 2014 Bureau of Labor Statistics (BLS) Employment Situation Summary[1], the unemployment rate dropped to 5.9%, total nonfarm payroll employment rose by 248,000, and the “Not-in-Labor-Force” category increased by 315,000 citizens who quit looking for work, for a net loss of 67,000 people in the US labor force.

Jobenomics rates the October BLS Employment Situation Summary as a weak report since the US economy cannot be sustained if able-bodied citizens voluntarily leave the US labor force at a greater rate than those who enter the work force.  Today the labor force participation rate is now at a 37 year low.  As shown above, almost three times as many people departed than entered the labor force since year 2000—many to a netherworld of perpetual unemployment and welfare.  In addition to the 18 million unemployed (those looking for work), 93 million able-bodied Americans who can work are no longer looking with 94% reporting that they have no near-term plans to seek a job. 

Today, out of a total population of 319 million Americans, the US has 108 million working in the private sector,  32 million government workers, 18 million unemployed, 93 million able-bodied people who can work but are not looking, and 69 million (mainly children, retired and disabled) who cannot work.   The US economy cannot be sustained by 34% supporting an overhead of 66%.   More people must be productively engaged in the private sector labor force for the US economy to flourish.

For six decades, the US produced tens of millions new jobs per decade.   Then the bottom fell out in the decade of the ‘00s with a loss of 1.2 million jobs.  It is critical that significant numbers of jobs are created this decade (’10s) for the US economy to recover.  20 million new jobs by year 2020 is a reasonable goal that is supported by the Jobenomics National Grassroots Movement.  Not only has 20 million been historically achieved, but is the number needed to accommodate 16 million new labor force entrants per decade and to reduce unemployment in order to achieve the so-called “full employment” rate of 5%.  Based on this Jobenomics goal, the US should have produced 14.25 million jobs by 1 October 2014.  We have only produced 9.7 million—a 32% shortfall.

Jobenomics measures economic progress from the start of decade (1 January 2010), which is roughly a year after the Great Recession.  From the beginning of this decade, the US private sector created 10,319,000 jobs and the public sector lost 571,000 jobs for a net gain of 9,748,000 jobs.  Today, service-providing industries employ 70.5% of all Americans, the goods-producing industries employ 13.7% and government (federal, state and local) employs 15.7%.   82.5 of all new jobs this decade were produced by four service-providing industries: professional and business services; trade, transportation, utilities; education and health services; and leisure and hospitality.

The solution to growing the tax-base involves business creation with emphasis on small business that has created 73% of all new jobs this decade.  Small businesses employ 77.4% of all private sector Americans with a total of 90.9 million employees—almost 5 times the amount of large corporations (1000+).  Very small businesses with less than 19 employees employ 64% more than all large corporations combined (30.6M versus 18.6M).    Contrary to popular opinion, 50% of all small business startups last five years and 30% remain in business over ten years.  In addition, small business growth has outperformed medium and large businesses during the recovery from the Great Recession.

US Employment.   Today, 139 million Americans are employed in government and the private sector.

70.5% work in seven private sector service-providing industries.  The seven service industries are: Professional and Business services, Education and Health services, Financial Activities, Trade/Transport/Utilities, Leisure and Hospitality, Financial Activities, Information, and Other services.   13.7% are employed in private sector goods-producing industries that include Manufacturing, Construction and Mining/Logging that includes oil and gas extraction.  15.7% Americans work for government at the federal, state and local levels.

While the US has enjoyed some employment growth since the beginning of this decade, America is only producing 68% (32% shortfall) as many jobs as needed.  This shortfall is exacerbated by the fact that the US government and Federal Reserve have injected approximately $17 trillion into the US economy since the Great Recession with limited results.

The US produced only 9,748,000 jobs compared to the 14,250,000 jobs needed as measured against the traditional benchmark of 250,000 jobs per month (250,000 x 57 months = 14.25 million).   Of the three employment sectors reported by the Bureau of Labor Statistics, the private sector’s service-providing industries created 8,952,000 jobs, the private sector’s goods-producing industries created 1,367,000 jobs, and the government sector lost 571,000 jobs—with 65.3% (373,000) of all government jobs lost at the local level.

The 30-year trend in US employment has overwhelmingly been in the service-providing industries with a 30-year growth rate of 77%.  Government has also grown significantly at a rate of 37%.  However, as discussed in this posting, government employment has decreased in the last several years and is likely to continue to do so.  US goods-producing industries have declined 17% during the last thirty years.

82.5% of all net new jobs this decade were produced by four industries (Professional and Business Services, Trade/Transportation/Utilities, Education and Health Services, and Leisure and Hospitality) in the service-providing sector.  Manufacturing and Construction only contributed 6.7% and 4.2% to US employment growth, respectively.  The non-internet information industries (such as publishing and news print) and government lost jobs this decade.

According to the most recent BLS Job Openings and Labor Survey[2], there were 4,986,000 job openings. This survey includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by geographic region.   As shown above, the four occupations that had the largest number of openings are: Professional & Business Services (881,000), Healthcare (824,000), Retail & Wholesale Trade (742,000) and Accommodation & Food Services (644,000). The primary reason for the large number of job openings is due to the lack of job skills.

Private Sector Businesses by Company Size.  The following charts examine private sector businesses by size.  As reported by the ADP National Employment Report (published monthly by the ADP Research Institute in close collaboration with Moody’s Analytics), data indicates that small business is the dominant economic force in terms of employment and job creation.

Today, small businesses (those companies with less than 500 employees as defined by the US Small Business Association) employ 77.4% of all private sector Americans with a total of 90,852,000 million employees—almost 5 times the amount of large corporations (1000+).  Very small businesses with less than 19 employees employ 64% more than all large corporations combined (30.6M versus 18.6M).

Since the beginning of this decade, small business produced 72.9% of all new American jobs.  This is an amazing statistic considering the adverse lending environment by financial institutions, mounting government regulation, and the pittance of federal government spending on small business creation.

Very small and startup businesses have traditionally been the primary source of employment for entry-level workers and the long-term unemployed.  Had the US government paid more attention to this category of employers during its generous handouts of $17 trillion worth of federal government stimuli, bailouts and buyouts since the Great Recession, as many as five million more Americans would be employed today as estimated by Jobenomics.

According the US Small Business Association[3], startups, minus closures, create about 67% of American net new jobs.  Also according the SBA, about half of all new small businesses survive five years or more, and about one-third of these start-ups survive 10 years or more.

It is a common misperception that small businesses, especially very small (1-19 employees), are the most fragile.  The chart (above) indicates that very small businesses have been the most resilient of the five business categories following the Great Recession of 2008.  This fact cannot be understated in an environment where small businesses have been starved for investment capital unlike large businesses.  Fortunately, large business (1000+) now employ more people (see red line on the above chart) than prior to the Great Recession.

It is also a common misperception that small businesses are only involved service-providing industries whereas large major corporations dominate goods-producing industries.  The above chart indicates that small businesses play a major role in both goods-producing (manufacturing, construction, and mining) as well as the service-providing industries.

Thomson Reuters/PayNet Indices provide valuable insight into the health of small business.  The Thomson Reuters/PayNet Small Business Lending Index (SBLI)[4] measures the volume of new commercial loans and leases to small businesses.  To create the SBLI, PayNet tracks the new borrowing activity by millions of US businesses as reported by the largest lenders.  The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI)[5] measures small business financial stress and provides early warning of future insolvency.  The most recent SBLI and SBDI are shown.

The SBLI (lending) indicates that new loan originations to small businesses have increased slowly since the end of the recession and may now be at the point of significant small business expansion.  The SBDI (delinquencies) shows that loan delinquencies (31 to 90 days past due) are at their lowest point since 2005.  This is very good news for future economic growth.  Small business creditworthiness is critical to business expansion and jobs creation.

Jobenomics asserts that the solution to growing America’s economy involves putting our small business economic engine into over-drive.  Energizing existing small businesses and creating new small and self-employed businesses could create millions of new jobs within a decade.  To prove the validity of this assertion, Jobenomics is working with a number of US cities to implement Jobenomics Community-Based Business Generators to create thousands of new-start businesses.  The objective of a Jobenomics Business Generator is to increase “birth rates” of start-up businesses, extend the “life span” of small businesses, and increase the number of employees per business, which has decreased by approximately 30% since the Great Recession.  Jobenomics is focused on four demographics with high growth potential:  Generation Y-, Women-, Minority-, and Veteran-Owned Businesses.

If Jobenomics can help create thousands of highly-scalable small businesses, America writ-large can facilitate creation of millions of small businesses that would transform our economy.  2014 could be a break-out year for small businesses that traditionally have been the primary source of employment for entry-level workers and the long-term unemployed.

Service-Providing Sector.  The US service-providing sector has grown 77% over the last three decades.

Today, the US service-providing sector employs a total of 98,363,000 people across seven industries.  Since year 2010, the US service-providing sector created 8,952,000 new jobs, which equates to 87% of all new jobs created by the private sector.

Employment statistics for industries in the service-providing sector are ranked by the number of new jobs created between 1 January 2010 and 1 October 2014 (57 months):

  • Professional and Business Services: 2,938,000 new jobs
  • Trade, Transportation, Utilities: 2,015,000 new jobs
  • Education and Health Services: 1,868,000 new jobs
  • Leisure and Hospitality: 1,743,000 new jobs
  • Financial Activities:  242,000 new jobs
  • Other Services: 198,000 new jobs
  • Information (non-internet, like publishing): -52,000 jobs lost

Of the seven service-providing industries, only the Information (non-internet companies like broadcasting and publishing, such as newspapers) industry lost jobs (-1.9%) during the post-Great Recession recovery period starting in January 2010.  The top three industries are Professional and Business Services (17.8%), Leisure and Hospitality (13.5%) and Education and Health Services (9.5%).

Goods-Producing Sector.  The US goods-producing sector includes Manufacturing, Construction and Mining/Logging industries and has declined 22% since its peak in March 2000.

Today, the goods-producing sector employs a total of 19,161,000 people across the three industries: manufacturing, construction and mining/logging.  Since year 2010, the US goods-producing sector created 1,367,000 new jobs, which equates to 13% of all new jobs created by the private sector.

Employment statistics for industries in this sector are ranked by the number of jobs created between 1 January 2010 and 1 October 2014 (57 months):

  • Manufacturing:  677,000 new jobs
  • Construction: 425,000 new jobs
  • Mining and Logging: 265,000 new jobs

The fastest growing industry in the goods-producing sector is Mining/Logging (40.0%), followed by Construction (7.5%) and Manufacturing (5.9%).  The explosive growth in the Mining/Logging industry is largely due to oil and natural gas extraction (via new technologies of fracking and horizonal drilling), and related exploration and support activities.

US Manufacturing Assessment.  While manufacturing has added 677,000 new jobs since the beginning of this decade, it has a long way to go to achieve peak its peak level of 19.6 million in June 1979 after sustaining a consistent growth rate from its post-World War II low of 12.5 million in September 1945.   Since its peak in 1979, the US manufacturing industry has declined by 38%.

While the addition of 677,000 new jobs from manufacturing’s all time low of 11.5 million in January 2010 is positive, the manufacturing sector is still in the doldrums from a historical perspective.

Over the last 12 months, manufacturing has had 10 up-months and 2 down-months in terms of employment with a net increase of only 156,000 jobs in the last year (out of a total of approximately 2.6 million new jobs across all industries).

Notwithstanding  the political rhetoric  about increasing US exports, re-shoring of US manufacturing jobs and increased US productivity, Jobenomics forecasts limited upside jobs potential in manufacturing due to excessive government regulation, improved automation, competitive foreign labor rates, and a lack of high-tech manufacturing skills in our civilian labor force (see Jobenomics’ Manufacturing Industry Forecast posting).  The advent of new technologies (like 3D printing of manufactured parts and advanced robotics) reduce the need for non-skilled labor as well as automating many higher level positions in marketing, accounting, machinists and administration.  As of the most recent BLS Job Openings and Labor Survey, US manufacturers have 292,000 open high-tech jobs that currently are unfilled out of a total of 5.0 million unfilled jobs across all industries.  Jobenomics is also concerned by the amount political and public  emphasis on the manufacturing growth as the primary engine for jobs creation.  While manufacturing is vitally important to our nation, political emphasis needs to be on the high growth industries in the service sector.  Manufacturing emphasis should be on protecting our gains and focusing on next-generation manufacturing technology, processes and recapitalization.

US Construction Industry Assessment.  Even though the construction industry is showing signs of growth, the construction sector continues to struggle after a rapid rise (69%) during the go-go years in the 1990s and the housing bubble in the early 2000s.

In the 2006-07 time period, peak construction employment was 7.73M.  Today, it is 6.08M, a loss of -21%.  The good news is that construction employment stopped its decline and has increased for its post-recession low of 5.44M in January 2011.

Over the last 12 months, construction has had 11 up-months and only one down-month in terms of employment with a net increase of 230,000 jobs in the last year.

Residential construction employment has been the hardest hit segment with a 43% decrease from its pre-recession peak (3.45 million) to its post-recession low (1.98 million).  Today, residential construction employment is still down from its peak by 33% with a total employment of 2.30 million.   Nonresidential construction fared slightly better with losses of  -24% from peak and -17% today with 2.85 million employed.  The heavy and civil engineering sector fared the best (largely due to federal stimulus programs) loosing -19% from peak and now down only -9% with a total of 918,000 employed.

As of the most recent BLS Job Openings and Labor Survey, US construction companies have 125,000 open jobs (mainly higher skilled jobs) that currently are unfilled out of a total of 5.0 million unfilled US jobs.  While these number are positive overall, the bulk of job hires occurred last year or early in 2013.  The construction industry had a downturn occurred during peak summer construction months.  In addition, increasing mortgage rates coupled with an eroding middle-class will hamper new home construction starts for the future.

Robust residential construction usually leads economic recoveries.  However, this recovery is different.  As shown above, according to US Census Bureau Data, new residential starts dropped from a peak 2,273,000 in 2006 to a low 478,000 in April 2009.  As of the latest US Census Bureau data available[6], new residential construction starts was 956,000 in August 2014, which represents an improvement from a 80% decrease in April 2009 to a 58% decrease today from the January 2006 peak.

The Census Bureau also reports[7] that US homeowership has dropped to its lowest level since 1977 and down -6.2% from its high in 2004.   This drop is due to less affordable housing, more restrictive lending, fewer first-time buyers who are renting rather than buying, and people who have dropped out of the housing market.

Jobenomics forecasts that the residential construction industry will not produce a significant number of jobs for the remainder of this decade due to foreclosures, underwater mortgages, unemployment as well as changing attitudes to the value of homeownership.  Due to the stagnant economy and government deficits, commercial and heavy construction is also unlikely to produce a significant number of new domestic jobs.  Jobenomics does see potential in major foreign construction projects, green construction and renovation of older homes, and reconstruction of disaster areas.

US Mining/Logging Industry Assessment.  Mining (oil & gas extraction, coal and minerals) and logging goods-producing sector continues to be a bright area for employment growth.  From the beginning of this decade, mining increased employment by 255,000 jobs, with an impressive growth rate of 38.5%.  With proper private and public sector support, this industry has significant upside potential.

Mining exploration and support employment has more than doubled in the last decade and likely to double again with exploration for domestic energy sources.  Oil and gas extraction is also likely to double with new natural gas, oil shale, oil sands and offshore oil resources are exploited via new  technology, like horizontal drilling and hydraulic fracking.  Minerals mining employment has been stagnant over the decade, but this may change as commodity prices (gold, silver, copper) increase as well as worldwide demand for these commodities increase.  Coal mining and logging are not likely to increase anytime soon mainly due to environmental pressure and the emphasis on clean renewable technology.

The Government Employment Sector.  Total government sector employment currently is 21,911,000.  Since 1 January 2010, government has lost 571,000 jobs, a negative 2.5% growth rate.  Employment statistics in this sector is shown in the following chart.

The government sector continued to lose jobs with 65.3% of all job losses occurring with local government (mainly teachers, police and firefighters), 13.7% at the state level, and 21.0% in the federal government (not including military, which is also downsizing).  Jobenomics predicts that government job losses will continue to decline due the effects of sequestration as well as debt and deficit spending.  In addition, if the US economy suffers an economic disruption due to either domestic or foreign events, government spending will likely decrease further.

In conclusion, business and jobs creation is the number one issue facing US economic recovery.  While some would argue that debt/deficits or entitlement/welfare are the biggest issues, it takes businesses to create lasting jobs that generate tax revenue to run government as well as supporting the less fortunate.   The following chart is about as simple as Jobenomics can make it.

Today, out of a total population of 319 million Americans, the US has 108 million taxpayers (34%) working in the private sector who support: 32 million government workers (including 10 million government contractors), 18 million unemployed or underemployed (BLS U6 rate) workers who are looking for work, 93 million able-bodied people (Not-in-Labor-Force category) who can work but are not looking, and 69 million (mainly children, retired and disabled) who cannot work.   The US economy cannot be sustained by 34% supporting an overhead of 66% via a combination of welfare, entitlement, familial and charitable programs.   More people must be productively engaged in the private sector labor force for the US economy to flourish.

The solution to growing America’s economic base involves engaging our small business economic engine.  Even though severely constrained by limited financing and restrictive government policies, small businesses created 72.9% of all new jobs in the US since the end of Great Recession.  Jobenomics believes that new small, emerging and self-employed businesses could create 20 million new jobs within a decade, if properly incentivized and supported.  Consequently, Jobenomics is focused on four demographics with high growth potential that include Generation Y (via monetizing social networks), Women-Owned Businesses (via direct care business creation), Minority-Owned and Veteran-Owned Businesses.  Jobenomics is also working on urban mining of high-value electronic waste and tires to fund Jobenomics Community-Based Business Generators that are designed to mass produce small and self-employed businesses as well as accelerating extant small and medium-sized businesses.   If Jobenomics can help create thousands of highly-scalable small businesses, America writ-large can facilitate the creation of millions of small businesses that would transform our economy.

[1] US Bureau of Labor Statistics, Employment Situation Summary,

[2] BLS, Job Openings and Labor Survey,

[3] US Small Business Association, Office of Advocacy, Which businesses create more jobs—startups or existing businesses?,

[4] Thomson Reuters/PayNet Small Business Lending Index,

[5] Thomson Reuters/PayNet Small Business Delinquency Index, onReutersPayNetSmallBusinessDelinquency.aspx

[6] US Census Bureau, Business and Industry, Time Series/Trend Charts, New Residential Construction, Annual Rate for Housing Units Started,

[7] US Census Bureau, Table 14. Homeownership Rates for the US and Regions:  1965 to Present,

5 Million Government Layoffs Ahead?

Recent US Employment Trends addressed the three most important employment sectors: private sector service-providing industries, private sector goods-producing industries, and the government sector.   This article examines the government sector in more detail and hypothesizes how many more job losses could occur in the near future.

2012 will be a pivotal year for the US economy.  For 2012, Jobenomics assesses the following probabilities:  20% chance that the economy will improve, 30% that it will continue to muddle along, and 50% it will get worse depending on the severity of financial disruptions (see 2012 Jobenomics Outlook article).  Given this 50/50 forecast, Jobenomics forecasts that the current government trend of government layoffs will continue.

The Jobenomics plan calls for creation of 20 million new private sector jobs with emphasis on small, emerging and self-employed businesses in service-providing industries in order to generate a robust economic recovery.   Our plan also calls for zero government growth as opposed to cuts in government employment.  However, since the US is creating new jobs at only 45% of what is needed (see Recent US Employment Trends) reductions in the government workforce appear inevitable.  A drop of 5.4 million government jobs is our best guess given current economic conditions and trends.  It is our hope that these reductions will not occur if the economy improves on its own, or is nudged by the Jobenomics national grassroots movement.

Local Government Civilians: 2 million potential job reductions. 

State and local governments have been shedding jobs for the last three years. This trend will likely accelerate and perhaps double from the current rate of 250,000 (see BLS/CBPP chart) to as much as 500,000 layoffs per year.  There are four major reasons for this assertion.  The first reason deals with decreased discretionary income due to unemployment, under-employment, and declining middle-class wages and net-worth.   Decreased discretionary income translates to reduced consumption and lower government tax revenues.  Second, federal stimulus funding has ended and new stimulus funding is unlikely.  Third, non-essential state, municipal and local programs and services have already been cut.  Future cuts are likely to involve personnel.  Fourth, reduced property tax revenues will be a major new factor with local governments that are responsible for 82% of all recent government sector layoffs.

Property taxes are the main source of tax revenues for municipal and local governments.   Because it takes years to process property assessments, the collapse in housing values are just now beginning to impact local governments at a time when federal and state aid are ending.  Most local governments predict that their tax base, generated by residential and commercial property taxes, will shrink consistently each year over the next five years.

Since the Great Recession of 2008, when tax revenues from inflated property values and federal/state aid were plentiful, local governments were compelled to shed hundreds of thousands of jobs.  Today times are much worse financially.  Rainy-day funds have been largely depleted.  Cuts in non-essential programs and services mostly have been made.  Without a robust US economic recovery, a perfect storm is brewing where local governments may have to make deep cuts in essential services including teachers, police and firefighters.  Since education constitutes 56% of local government employment, teachers will be particularity hard hit.

In the last two years, local government jobs decreased from 14,498,000 to 14,078,000, a loss of 420,000 jobs or 1.45% per year.  Due to the shrinking tax base, it is likely that this rate could increase to 3%, resulting in 2 million job losses over five years.

State Government Civilians: 340,000 potential job reductions.  Over the last three years, states had budget shortfalls of $430 billion.  State governments rely heavily on sales taxes, income taxes, business taxes, excise taxes and tuitions for state-funded universities.  All of these sources of tax revenues are likely to increase, which should keep state layoffs to the minimum.  On the other hand, increasing entitlement (Medicaid) and welfare expenses, dwindling federal subsidies, persistently high unemployment rates, and a sluggish economy make balanced budgets a difficult goal for the 42 states that are projecting a $110 billion budget shortfall in 2012.

In the last twelve months, state government jobs decreased from 5,144,000 to 5,073,000, a loss of 71,000 jobs or – 1.4%.  While states have the capability of raising many forms of taxes, Jobenomics predicts that voters reject most of the legislative efforts to increase taxes.  Without additional tax revenue, states will continue to reduce its public sector workforce.  Consequently, it is likely that the -1.4% trend will continue and 340,000 jobs will be lost over the next five years.

Federal Government Civilians: 300,000 potential job reductions.  In the last twelve months, federal government employment decreased from 2,844,000 to 2,817,000, a loss of 27,000 jobs or – 0.9%.   This modest rate is likely to increase due to budget and deficit concerns.   There are growing calls from Congressional conservatives that the US federal government should reduce size by as much as 10%.   While opposed, Congressional liberals are faced with a dilemma justifying high federal government salaries in relation to growing needs of the unemployed and other financially challenged groups.  Jobenomics predicts that federal civilian workforce reductions (not including the US Postal Service and DoD Civilians) will average 2.5% over the next five years, which would result in 170,000 job losses.

612,000 US Postal Services employees are federal employees.  In the last twelve months, the postal service lost 30,700 jobs, or 4.8% of its workforce.  Due to inefficiencies within the postal service, private sector competition and increased use of email, this trend is likely to continue at its current rate for a loss of 130,000 jobs in five years.

US Military: 435,000 potential job reductions.  The Department of Defense (DoD) is comprised of 1,430,895 active duty, 848,000 reserve, and 779,000 federal civilian employees for a total of 3.1 million personnel.  Secretary of Defense Leon Panetta is considering reductions once thought sacrosanct.  Planned cuts of $450 billion will reduce the military budget by 7% to 8%.  According to Panetta, “Rough estimates suggest after ten years of these cuts, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest Air Force in its history.”   SecDef’s forecast does not include $600 billion of other potential congressionally mandated DoD reductions which could increase DoD cuts to approximately 20%.   $600 billion is half of the potential $1.2 trillion sequestration amount.

Priority currently is being placed on cutting weapons programs, but in the end, manpower will have to be reduced since it is the largest component of the national security budget.  Due to annual trillion dollar budget deficits, a flagging economy, priority given to mandatory accounts (Social Security, Medicare) over discretionary accounts (National Security), attrition of returning Iraqi and Afghani veterans on top of normal attrition, rising personnel and retirement costs, and inflation, the DoD is a prime target for severe cuts in manpower.

Jobenomics estimates that the US military and civilian workforce is likely to decrease at an annual rate of 3% per year over the next five years.   If this occurs, 435,000 positions will be lost.

Government Contractors: 2.3 million potential job reductions.  Exact numbers of government contractors are hard to obtain.  So Jobenomics accessed data from which provides the public with information about how their tax dollars are spent.  According to, in fiscal year 2011, the US federal government’s direct payment to federal government civilian contractors was $895 billion.   Jobenomics estimates the approximate number of federal contractor employees by dividing their estimated average wage and benefits of $120,000 (triple the median private sector wage, but equal to the average federal government civilian pay) into $895 billion, which equals 7.4 million federal contractor employees.   While the number of state and local civilian contractors jobs are unknown, it is safe to assume at least 2.6 million (1/3 of federal contractor jobs), for a total of 10 million government (federal, state, local) civilian employees.

Due the size of budget deficits at all levels of government (federal, state and local), 5% cuts are likely for federal contractors over the next five years, resulting in the loss of 2.3 million jobs.

Cuts of this magnitude would cause a crisis for defense and aerospace industries.  While national security enthusiasts will vigorously resist the magnitude of these cuts, similar defense industry cutbacks occurred after WWII, Vietnam, and the Cold War.  Cold War spending was replaced by the so-called “Peace Dividend” which reduced military expenditures as a percent of GDP by approximately 50% over ten years.  Considering the severity of annual trillion dollar budget deficits, and a potential post-Iraq/Afghanistan peace dividend, it is conceivable that massive defense contractor reductions could occur in a period of five years, if the US economy does not significantly improve soon.