Military’s Impact on State Economies

4/9/2018

Jets flying over Buckley Air Field in Denver, CO.The Department of Defense (DoD) operates more than 420 military installations in the 50 states, the District of Columbia, Guam and Puerto Rico.

These installations sustain the presence of U.S. forces at home and abroad. Installations located within the United States and its territories are used to train and deploy troops, maintain weapons systems and care for the wounded. They also support military service members and families by providing housing, health care, childcare and on-base education.  

The DoD contributes billions of dollars each year to state economies through the operation of military installations. 

This spending helps sustain local communities by creating employment opportunities across a wide range of sectors, both directly and indirectly. Active duty and civilian employees spend their military wages on goods and services produced locally, while pensions and other benefits provide retirees and dependents a reliable source of income. States and communities also benefit from defense contracts with private companies for equipment, supplies, construction and various services such as health care and information technology.

According to an analysis by the DoD Office of Economic Adjustment (OEA), the department spent $408 billion on payroll and contracts in Fiscal Year 2015, approximately 2.3 percent of U.S. gross domestic product (GDP). Spending was highest in Virginia, followed by California, Texas, Maryland and Florida. Virginia has the largest defense spending as a share of state GDP at 11.8 percent, followed by Hawaii at 9.9 percent.

Place your mouse over the columns for details.

Figure 1. Top States by Total Defense Spending (in billions)

 
 

Figure 2. Highest Defense Spending as a Percentage of State GDP

 
 

The economic benefits created by military installations are susceptible to change at both the federal and state levels. Recent events such as the drawdown of troops in Iraq and Afghanistan, federal budget cuts, and potential future rounds of Base Realignment and Closure have left government officials uncertain of the future role and sustainability of military installations.

These trends have been a driving force behind many states’ decisions to commission studies that define the military activity and infrastructure that exists in the state and measure the economic impact of military presence. Economic impact studies allow states to better advocate on behalf of their installations and plan for future growth or restructuring.

At least 24 states have commissioned their own study to quantify the direct and indirect effects of military presence on a state’s economy. Impacts generally include salaries and benefits paid to military and civilian personnel and retirees, defense contracts, local business activity supported by military operations, tax revenues and other military spending. In 2015, for example, military installations in North Carolina supported 578,000 jobs, $34 billion in personal income and $66 billion in gross state product. This amounts to roughly 10 percent of the state’s overall economy.

In 2014, Colorado lawmakers appropriated $300,000 in state funds to examine the comprehensive value of military activities across the state’s seven major installations. The state Department of Military and Veterans Affairs released its study in May 2015, reporting a total economic impact of $27 billion.

Kentucky has also taken steps to measure military activity, releasing its fifth study in June 2016. The military spent approximately $12 billion in Kentucky during 2014-15. With 38,700 active duty and civilian employees, military employment exceeds the next largest state employer by more than 21,000 jobs.

Even states with relatively small military footprints have reported significant economic gains. In Michigan, for example, defense spending in Fiscal Year 2014 supported 105,000 jobs, added more than $9 billion in gross state product and created nearly $10 billion in personal income. A 2016 study sponsored by the Michigan Defense Center presents a statewide strategy to preserve Army and Air National Guard facilities following a future Base Realignment and Closure (BRAC) round as well as to attract new missions. 

Economic Impact of Military Presence by State

State

DoD Office of Economic Adjustment Study (FY 2015)

State-Commissioned Studies

Defense Spending FY 2015

% of State GDP

Defense Personnel (Active, Civilian, Guard/Res)

Year

Key Findings

Alabama

$12.2 billion

5.9%

52,116

N/A

None Found

Alaska

$3.3 billion

6.1%

27,764

N/A

None Found

Arizona

$10.0 billion

3.4%

42,547

2008

  • $9.1 billion in economic output
  • 96,328 jobs created or supported
  • Annual state and local tax revenue of $401 million

Arkansas

$1.4 billion

1.2%

20,229

N/A

None Found

California

$49.3 billion

2.1%

269,540

N/A

None Found

Colorado

$8.7 billion

2.8%

61,294

2015

  • $27 billion in total state output from DoD expenditures
  • 170,000 jobs, 5.2% of total
  • $11.6 billion in earnings, 7.5% of total

Connecticut

$9.7 billion

3.8%

15,414

N/A

None Found

Delaware

$676.8 million

1.0%

9,959

2011*

  • The Delaware National Guard paid costs of nearly $67.5 million to employ 759 military personnel and civilian employees as well as $24.2 million to the 2,462 Soldiers and Airmen on drill status. 
  • The DNG spent nearly $33 million in construction

District of Columbia

$6.8 billion

5.7%

25,550

N/A

None Found

Florida

$17.6 billion

2.0%

126,292

2013

  • Total defense spending amounted to $31.3 billion
  • Defense spending was directly or indirectly responsible for $73.4 billion, or 9.4% of Florida’s 2011 Gross State Product
  • Provided a total of 758,112 direct and indirect jobs.

Georgia

$12.6 billion

2.6%

129,463

N/A

None Found

Hawaii

$7.8 billion

9.8%

73,487

2012

  • Direct and indirect impacts exceeded $14.7 billion
  • Provided 102,000 jobs

Idaho

$643.3 million

1.0%

10,436

N/A

None Found

Illinois

$7.0 billion

0.9%

57,078

2014

  • $13.3 billion in gross state product
  • $9.7 billion in earnings and retirement benefits
  • Provided 150,000 jobs

Indiana

$3.9 billion

1.2%

31,376

N/A

None Found

Iowa

$1.4 billion

0.8%

12,969

N/A

None Found

Kansas

$3.3 billion

2.3%

41,152

2009

  • $7.7 billion per year in gross state product, 7% of total
  • 169,560 jobs supported directly or indirectly (9.4% of total employment)
  • $393.6 million per year in city/county, region and state tax revenue

Kentucky

$9.0 billion

4.7%

57,080

2016

  • Nearly $12 billion in federal military spending
  • With over 38,000 full-time employees, it is the largest employer in Kentucky.
  • About 28,500 military retirees received $637 million in retirement pay.

Louisiana

$3.8 billion

1.5%

41,250

2013

  • $8.7 billion in economic output
  • 82,700 jobs tied to the military (4.35% of total employment)
  • $287 million in state and local tax revenue

Maine

$2.6 billion

4.7%

11,794

N/A

None Found

Maryland

$20.5 billion

5.7%

93,183

2015

  • 15 military installations supported 410,219 jobs
  • Generates $57.4 billion in total output and $25.7 billion in total wages

Massachusetts

$12.2 billion

2.6%

24,174

2015

  • Military installations total expenditures over $8 billion in 2013
  • A total of 57,618 jobs supported directly or indirectly by the military’s presence in Massachusetts.
  • Total economic output of $13.2 billion

Michigan

$2.9 billion

0.6%

25,689

2016

  • Supported over 105,000 job throughout the state
  • Added more than $9 billion in Gross State Product
  • Created nearly $10 billion in personal income
  • Activities supported nearly $8 billion in personal expenditures

Minnesota

$4.3 billion

1.3%

21,823

N/A

None Found

Mississippi

$5.2 billion

4.9%

37,006

N/A

None Found

Missouri

$10.6 billion

3.7%

43,020

2013

  • Created $39.76 billion in total economic impact
  • Added 275,350 direct and indirect jobs

Montana

$519 million

1.1%

9,185

N/A

None Found

Nebraska

$1.5 billion

1.3%

16,776

2015*

  • Nebraska Military Department employed 4,545.5 jobs with a total payroll of about $150 million
  • Received $22 million in federal appropriations

Nevada

$2.3 billion

1.6%

20,683

2014

  • The DoD budget in Nevada accounted for 53,000 jobs
  • Increased economic output by $28 billion
  • Provided $9 billion in increased personal earnings
  • Created $307 million in increased state taxes

New Hampshire

$1.4 billion

2.0%

6,350

N/A

None Found

New Jersey

$6.6 billion

1.2%

33,834

2013

  • $4.8 billion in DoD military expenditures resulted in $6.5 billion in gross state product
  • Creation of 73,234 direct and indirect jobs

New Mexico

$3.1 billion

3.4%

23,539

N/A

None Found

New York

$9.1 billion

0.6%

61,765

2012

In Progress

North Carolina

$9.8 billion

2.0%

144,881

2015

  • $66 billion in gross state product, roughly 10% of the state’s economy
  • 578,000 direct and indirect jobs
  • Provided for $34 billion in personal income

North Dakota

$747.2 million

1.4%

13,296

N/A

None Found

Ohio

$6.9 billion

1.2%

60,224

N/A

None Found

Oklahoma

$4.7 billion

2.6%

57,080

2011

  • $9.6 billion in gross state product, 7% of statewide total
  • Supported 133,800 direct and indirect jobs
  • Average military job paid $41,742 compared to the state average of $38,237

Oregon

$1.3 billion

0.6%

13,356

N/A

None Found

Pennsylvania

$12.7 billion

1.9%

57,919

N/A

None Found

Rhode Island

$2.0 billion

3.5%

12,216

N/A

None Found

South Carolina

$5.3 billion

2.7%

65,632

2012

  • $15.7 billion in economic activity
  • 138,161 jobs supported
  • Since 2000, DoD has distributed over $34 billion to defense contractors, accounting for 2% of gross state product each year

South Dakota

$456.8 million

1.0%

9,257

N/A

None Found

Tennessee

$2.4 billion

0.8%

71,441

N/A

None Found

Texas

$37.9 billion

2.3%

218,523

2015 – 2016

  • $136 billion in total economic impact
  • More than 232,000 personnel at 15 military installations
  • $16.64 billion in total defense contract funds
  • $13.8 billion in DoD military expenditures

Utah

$3.2 billion

2.2%

30,486

2014

In Progress (2014 HB 313)

Vermont

$295.5 million

1.0%

4,931

N/A

None Found

Virginia

$53.0 billion

11.2%

246,553

2014

  • Defense spending was $59.6 billion or 13% of gross state product
  • Military spending accounts for 44% of federal spending in Virginia

Washington

$12.6 billion

2.9%

107,341

2010

  • $7.9 billion in military installation expenditures and $5.2 billion in contract spending
  • $12.2 billion in gross state product, 4% of total
  • Supported 191,600 jobs

West Virginia

$527 million

0.7%

10,204

N/A

None Found

Wisconsin

$2.3 billion

0.8%

18,035

N/A

None Found

Wyoming

$370 million

0.9%

7,171

N/A

None Found

American Samoa

N/A

N/A

N/A

N/A

None Found

Guam

N/A

N/A

N/A

N/A

None Found

Northern Mariana Islands

N/A

N/A

N/A

N/A

None Found

Puerto Rico

N/A

N/A

N/A

N/A

None Found

U.S. Virgin Islands

N/A

N/A

N/A

N/A

None Found

* Study focused on National Guard

Additional Studies

Study

Year

Key Findings

Link

50-State Study

2011

(2009 Data)

This Bloomberg Government study examines U.S. military spending in fiscal year 2009 and provides a snapshot of defense spending at the state and local levels for all 50 states and the District of Columbia.

For fiscal year 2009, $527.8 billion was spent in the U.S. for the salaries of military personnel and civilian employees, military pensions, contracts for military equipment supplies, construction, services and research, and for grants.

The Defense Department operated 4,742 sites, such as bases and office buildings, in the U.S. in 2009.

Bloomberg Government Study

50-State Study

2016

State leaders’ focus on preserving the presence and economic contribution of military installations has reached an all-time high, with eight states establishing military affairs organizations in the past three years.

Budget cuts at the Pentagon have fallen particularly hard on installations, trimming funding for facility maintenance, upgrades and new construction, as well as quality-of-life services for military members and their families

At the same time, DOD has urged Congress to approve a new round of base closures every year since 2012.

State Support for Defense Installations

New England Study

2012

(2011 Data)

The defense industry is a major contributor to the economy of New England and to each of the six states that comprise it.

Defense and Homeland Security contracting is responsible for a total of more than 319,000 jobs and a total payroll of more than $22.6 billion across the region.

The overall direct, indirect and induced economic activity generated by the resulting work performed in New England exceeds $62 billion

New England Defense Industry

Additional Resources