The Job Opportunity Cost of War

Source: Heidi Garrett-Peltier, Brown University, Watson Institute for International Studies, August 19, 2014

Wars stimulate economic activity by increasing the demand for goods and services needed by the military. Increased demand for weapons systems, munitions, uniforms, and vehicles spurs an increase in manufacturing. However, wars also entail opportunity costs: by mobilizing military personnel and stimulating war-related activity, we forgo opportunities to stimulate other types of economic activities, such as manufacturing clean energy or expanding access to education. In this paper I examine the opportunity costs of war. Specifically, I present estimates of lost employment opportunities: the difference between the number of jobs created by U.S. federal spending on wars since 2001 and the number of jobs that could have been created through other types of federal spending. I show that federal spending dedicated to fighting wars over the past 14 years has resulted in lost employment opportunities of between one and three million jobs….We find that for each $1 billion of federal spending, fewer jobs are created by spending on the military than on any other area in our study. While $1 billion creates 1,200 military-related jobs (direct, indirect, and induced, described below), the same level of spending creates 15,100 jobs through tax cuts for personal consumption, 16,800 jobs in clean energy, 17,200 jobs in health care, and 26,700 jobs in education. In other words, clean energy and health care spending create 50% more jobs than the equivalent amount of spending on the military. Education spending creates more than twice as many jobs….
The Costs of War Project