Military spending is a bright spot

Associated Press

Washington state’s economy is hurting. Boeing is laying off thousands of workers. The get-rich-quick allure of dot-coms has long since fizzled. Unemployment is higher than it’s been in nearly a decade.

But one sector is doing just fine: defense.

Military spending in Washington state is expected to grow over the next few years. And on Tuesday, 61,000 service members statewide will get a 6.8 percent raise — the largest the military has offered in two decades.

Economists say U.S. taxpayers get a good deal from the region’s military work, just as they do when they buy Washington airplanes, apples and software.

"We’re taking taxes from those nice people in Iowa and spending it here, and what the good people in Iowa get is that warm and fuzzy, comfortable feeling that comes from this good, high-quality Pacific Northwest national defense," state labor economist Chris Johnson told The News Tribune of Tacoma.

Defense spending in Washington state has held steady in the past several years, with nearly $6.9 billion in annual payroll, pensions and procurement contracts.

Most of that money goes to service members’ paychecks, which are about to increase. Congress recently passed military pay raises of 5 percent to 15 percent — 6.8 percent on average.

"That’s more money that’s going to go right into our economy, and that’s going to offset the loss of jobs at Boeing and other places," said Johnson, the state economist. "The entire state benefits from that."

The state also benefits from the large number of military retirees who live here. Retirement and disability payments totaled $1.18 billion statewide in 2000.

Puget Sound’s military installations have taken on new missions in recent years.

In the late 1990s, the Pentagon chose McChord Air Force Base as one of two homes for its new fleet of airlifters, the Boeing-built C-17 Globemaster III. At least $150 million in construction work followed to make way for the new jets.

The Puget Sound Naval Shipyard in Bremerton recently won a contract to transform two Trident nuclear submarines with Tomahawk cruise missiles and special operations commandos. The project is expected to cost $834 million per submarine over the next three years, and likely will add jobs to the shipyard’s civilian workforce of 8,100.

Another major project is the transformation of Fort Lewis into a base for one of the Army’s new medium-weight combat brigades. It began in 1999, bringing in $100 million of work so far. About $230 million in construction projects has been authorized for Fort Lewis for next year.

The fort is also part of the Army’s "residential communities initiative," a plan to renovate or rebuild 3,700 housing units and build another 360 units over the next several years. It’s a $300 million project, and Army officials say they’ll likely hire local contractors to perform much of the work.

Washington companies have done between $2.2 billion and $2.6 billion worth of business annually with the Pentagon in the last several years. Boeing gets a big share of that total, but hundreds of other companies find work with the U.S. military.

Officials say such high-priority projects could protect local bases from the Pentagon’s closure list in 2005, though there are no guarantees.

The Puget Sound region is home to most of Washington’s military installations, though 4,000 personnel at Fairchild Air Force Base play an important role in the Spokane area’s economy.

Economists say it will take time to determine whether growth in military spending will offset the state’s downturn.

Boeing has sent layoff notices to about 16,000 workers, and the state’s seasonally adjusted unemployment rate is 7 percent, one of the highest in the nation.

"What you have to watch out for is a cut in defense spending at the same time there’s a downturn in the economy," Johnson said. "That doesn’t seem likely under the present set of circumstances."