THE PENTAGON AND THE SERVICE SECTOR

The substantial literature on military spending has largely overlooked the service sector, in which the vast bulk of the U.S. labor force is employed. This paper focuses on Pentagon prime contracts to service f irms in 1990, including their sectoral and spatial distribution. Rough ly 12 percent of total prime contracts, or $14.6 billion, was awarded to service firms, including large quantities to universities, engineer ing, communications, and water transportation. Geographically, the lar gest recipient communities were California and Washington, D.C., altho ugh metropolitan areas were also disproportionately represented. The a nalysis employs a series of 51 state-specific regionalized input-outpu t models to estimate the employment effects of prime contracts to serv ice firms, which generated a total of more than 620,000 jobs. The occu pational composition of this employment is compared to that of the lab or force as a whole. The conclusion points to the policy implications of potential reductions in such funding.