How Much Does Military Spending Add to Hawaii's Economy?

Abstract : Defense activity in Hawaii may account for a significant portion of Hawaii's economic activity, but the extent of this association has not been assessed since the publication in 1963 of a study of the relationship between defense jobs and employment in Hawaii. Therefore, the Hawaii Institute of Public Affairs and the Military Affairs Council of the Chamber of Commerce of Hawaii asked RAND to assess the relationship between DoD spending in Hawaii and the levels of output, employment, and earnings in Hawaii's economy. RAND researchers first collected data on defense spending in Hawaii in FY 2007-2009 and then analyzed the data using the regional input-output model for Hawaii, which is maintained by the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce and was most recently updated with 2006 data. Data on defense personnel and procurement were obtained from the Defense Manpower Data Center and the Federal Procurement Data System. Personnel data comprise expenditures for active-duty personnel serving in Hawaii, members of the Hawaii Selected Reserve, and DoD civilian employees, as well as retirement benefits paid to military retirees residing in Hawaii. Defense procurement expenditure data include all contracts greater than $3,000 in which Hawaii is designated as the principal place of performance.