“I’m going to make our military so big, so powerful, so strong, that nobody—absolutely nobody—is gonna mess with us,” said Donald Trump during the 2016 presidential campaign. Now that he’s president, he will have to convince lawmakers to go along with his plan to expand the American military arsenal—no small task for a plan few would describe as modest. He has promised to increase the number of vessels on the sea, fighters in the sky, and soldiers on the ground, and he intends to put them to work. “I will quickly and decisively bomb the hell out of ISIS, will rebuild our military and make it so strong no-one—and I mean, no one—will mess with us.” What does that mean for the defense sector jobs and wages, and where does the industry stand today?
THE END OF SEQUESTRATION
A military expansion will likely prove a jobs bonanza for the defense industry—someone has to build those boats, after all. The price tag for Trump’s plan is estimated to be somewhere on the order of $450 billion, with $300 billion of that paid for through offsets in government spending elsewhere. “We expect rising defense budgets over the next few years and think that Trump is likely to end sequestration, which has forced defense budget cuts,” said James Corridore, an equity analyst at CFRA Research.
Sequestration was born of the Budget Control Act of 2011, an effort to rein in government spending. In short, Congress was unable to agree on a deficit reduction plan that year, and a sweeping, across-the-board cap on spending was imposed through 2021. The total cut to defense: $1 trillion. In all, the defense sector lost 185,000 jobs.
Salaries in defense fared better. A 2016 report by Deloitte examined trends in the defense and aerospace sector, and noted that during shrinking employment figures—a result not only of the Budget Control Act, but also by a drawdown of forces in the Middle East—salaries rose 7.2%. (Notable among the defense double-digit salary increases over the same period: computer design and programming, small arms manufacture, ship building, and aerospace manufacturing. In other words, cyber, soldiers, boats, and planes—the core of the looming Trump defense buildup.)
Only last year did the defense sector see its first sequestration-era growth, increasing its workforce by 3.2%.
According to a forecast by Hay Group, a human resources data and analysis firm, U.S. employees overall can expect to see a 1.9% salary increase in 2017. This is flat relative to much of the world and suggests that the U.S. is not at full employment. Assuming Trump is successful in creating jobs, wages should increase as the unemployment rate drops.
The Bureau of Labor Statistics does not have data specifically on those with a security clearance. Anecdotally, salaries have risen along with the rest of the defense industry. Already, skilled cybersecurity workers can write their own check. If the rest of the defense business follows this path, it could be a good time indeed to hold a clearance.
Randy Starr, an aerospace and defense industry advisor for Strategy&, PwC’s strategy consulting business, tells ClearanceJobs that cleared professionals command a salary premium. ”Not only,” he says, “because they are harder to source, but also because contractors at times compete for the same individuals that the government wants to use on a particular contract because of past experience or unique skills.” Presently, according to one survey, a secret clearance is worth a 5.8% salary bump on average. Top secret goes for 12.8%.
One unknown in defense industry salaries, and defense jobs more broadly, is the graying of the workforce. Though it’s effects have yet to be felt in full, nearly 20% of the industry has reached retirement age, and those workers will need to be replaced. A younger, incoming workforce possesses the requisite skills and education, but is wooed heavily by Silicon Valley and companies similar thereto.
PREDICTING THE FUTURE
Right now, such technology firms are not in particularly good graces with Trump, having sided firmly against him during the presidential campaign. That can have consequences, says Mercedes LeGrand, a technology and defense executive search consultant with Russell Reynolds Associates. “What they’re not factoring in is the impact that regulation can have on their businesses,” she tells ClearanceJobs. “The government is controlled by a unified Congress and White House. Silicon Valley just doesn’t have a lot of champions right now.”
LeGrand is watching how Trump structures his defense and intelligence teams, and waiting to see his administration’s attitude toward newer technology companies versus the traditional defense and aerospace players. Historically, Trump has favored the legacy defense industry. “The defense industrial base already has the momentum,” she says. “The tide is in their favor. They have the contracts. They have the relationships in government. It’s the newer companies that will have to be a lot scrappier to figure out how to get in. The government procurement system is not set up to be nimble and respond to changes.”
Trump is known to be unpredictable, which makes defense sector forecasts uniquely challenging, she explains. “He’s very willing to change his opinion about something as he gets more informed. He’s outspoken. He says what he thinks, and when he gets more information, he’s fine with changing his opinion. For anyone like that, you want to wait until he has all of the necessary information and develops a fully informed position. With him, you have to wait and see.”
