STUDY: PENTAGON'S LOSS IS U.S.'S GAIN

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, January 25, 1993                   TAG: 9301250080
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE:                                 LENGTH: Medium
STUDY: PENTAGON'S LOSS IS U.S.'S GAIN
Shifting money from the Pentagon to state and local governments could create two new jobs for every one it eliminates, says a congressional study that is being challenged by defense industry executives.
The study to be released today assumed that $3 billion in defense money was transferred to programs such as education, road projects and sewer construction.
Congressional researchers said 23,600 jobs could be created under such a scheme, and 11,500 lost.
Done at the behest of Rep. John Conyers, a Pentagon critic, the study is an early salvo in the annual debate over the size of military spending.
The Pentagon has a budget of $289.3 billion in fiscal 1993. When the fiscal 1994 budget is debated in the coming months, lawmakers for the first time will be able to shift funds directly from the military to domestic programs without running afoul of a deficit-cutting plan approved several years ago.
The study said jobs would continue to increase in direct proportion to the amount of money diverted from Pentagon accounts: "If the magnitude of the reallocation were increased by tenfold, then the job creation estimate would increase by tenfold."
Conyers, who favors cutting the Pentagon budget, said, "Think of all the positive things we could accomplish by peacetime uses of this funding and we wouldn't increase the deficit a dime. This only makes sense in both human and economic terms, now that the Cold War is over."
The Michigan Democrat is chief sponsor of legislation to transfer $3 billion from defense to needy local governments.
Conyers' proposal is poor policy as well as unfair to workers, said defense industry representatives.
"The idea that you can convert an aircraft factory to a storm door factory - that dog don't hunt," said Robert O'Brien, Washington spokesman for major defense contractor McDonnell Douglas Corp. "It takes a lot more people to build airplanes. Modern airplanes virtually are hand-built."
"In the aerospace industry, you would have a large number of highly skilled employees looking for jobs," said David Vadas, an economist for the Aerospace Industries Association, which represents 55 companies.
"These are jobs that generate exports. We contribute to the national security of the nation," he said. "Trained people, the longer period they are unemployed, tend to lose their skills in a highly technical area like aerospace."
Vadas said U.S. Labor Department statistics show that aircraft manufacturing employees earned an average $16.28 an hour in 1991.
Additionally, he said, there were 401,000 employed in the military aircraft industry in 1986 compared to an estimated 299,000 today.
An economic model by DRI/McGraw-Hill, an economic forecasting and consulting firm, was used in the study to estimate job creation in 429 industries that would benefit from the transfer.
The study pinpointed five industries that each could gain more than 1,000 jobs in a $3 billion transfer: road construction; sewer construction; engineering, architecture and surveying services; private contractors doing government repair work on schools and other projects; and providers of nursing and personal care.
More than 1,000 jobs could be lost in the fields of communication equipment manufacturing and guided missile production, according to the study.

by Bhavesh Jinadra by CNB