Study Sees Job Gain in Shifting Pentagon Funds : Congress: Report says two positions could be created for every one lost by transferring money to state, local governments.

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 (D-Mich.), 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 found that 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.”

Conyers is chief sponsor of legislation to transfer $3 billion from defense to local governments.

Defense industry representatives said his proposal is poor policy as well as unfair to workers.

“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 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 H. Vadas, an economist for the Aerospace Industries Assn., 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,” he said.

Vadas said Labor Department statistics show that aircraft-manufacturing employees earned an average of $16.28 an hour in 1991.

Additionally, he said, there were 401,000 people employed in the military aircraft industry in 1986, compared with 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.

In the simplest terms, the economic model estimates how many jobs would be created by a specified amount of spending in specified industries.