Table of Contents

Some politicians and policymakers contend that drastically reducing U.S. defense spending could make a big difference for the middle class. This could free up badly needed resources to address the broad range of domestic challenges Americans face. But in Colorado, the defense industry has substantial support and provides economic resources for many of its middle-class citizens.

Focus group participants and others interviewed pointed out that Colorado receives more defense dollars for personnel and contracts than most other U.S. states, in part because it has steadily become a leader in military aerospace and space over the last several decades. Its leadership role in those sectors has helped it grow its civilian aerospace industry and attract veterans and military retirees looking to start new careers. The defense sector now accounts for a sizable number of middle-class jobs, and it anchors the economy and community in El Paso (Colorado Springs), Colorado’s second-most populous county. In other words, defense spending is seen to have a positive economic impact for the middle class in key segments of Colorado’s economy and society. It is not self-evident, therefore, how Colorado’s middle class would come out ahead by drastically cutting it.

However, some of those interviewed were worried that the United States spends far too much on defense. Some described defense spending as excessive and wasteful. Others stated that it has led to an overly militarized foreign policy and diverted resources away from vital, unfunded investments at home. Yet even some of these critics stopped short of calling for drastic cuts in defense spending because they feared a weakening of the U.S. military in a dangerous world or an economic blow to their own state.1 In other words, they believed the United States could not afford to spend as much as it did on defense, yet were also unsure if it could afford to be spending far less.

Colorado Is a Leading Defense State, Especially in Military Aerospace and Space

Many people in Colorado might find it difficult to advocate cutting defense spending because the state has spent the last several decades building up its leadership role in the military aerospace and space industries. That investment continues to yield economic dividends, including an increased number of defense personnel and contracts, which often generate middle-class jobs.

In 1951, the Chamber of Commerce in Colorado Springs formed a Military Affairs Council to petition the U.S. government to locate the newly created U.S. Air Force Academy in its region.2 Colorado Springs was already home to the Camp Carson Army Base (later renamed Fort Carson) and the Peterson Air Force Base, but the area was suffering from a recession. It needed a catalyst to lift the local economy and create jobs. Like so many other U.S. states, Colorado sought to increase its military role for economic purposes.

Colorado worked hard to win the bid to host the Air Force Academy over formidable competition from around the country. That was just the start of Colorado’s leadership role in defense. Other notable military aerospace and space sites soon followed and grew:

  • At the height of the Cold War, the U.S. Air Force constructed a new military facility in the Cheyenne Mountains just outside of Colorado Springs. The Cheyenne Mountain Air Force Station (CMAFS) initially hosted the Combat Operations Center of North American Air Defense Command (NORAD). The center’s mission was to watch for ballistic and air attacks against North America.3 Since then, the Cheyenne Mountain CMAFS has continued to house additional elements of several other combatant commands, and NORAD is now defined as the North American Aerospace Defense Command.4
  • Peterson Air Force Base (AFB) in Colorado Springs hosts the headquarters of NORAD, the U.S. Northern Command, the Air Force Space Command, theS. Army Space and Missile Defense Command/Army Forces Strategic Command, and the 21st Space Wing.5
  • Schriever AFB in Colorado Springs hosts the 50th Space Wing, which is responsible for the operations and support of 185 DOD satellites.6
  • Buckley AFB in Aurora (near Denver) hosts, among other critical units, the 460th Space Wing that delivers “global infrared surveillance, tracking and missile warning for theater and homeland defense and provides combatant commanders with expeditionary warrior Airmen.”7

In addition to these important aerospace and space capabilities, Colorado hosts the U.S. Army’s 4th Infantry Division at Fort Carson in Colorado Springs, where soldiers are prepared and trained for the battlefield.8 The personnel at this base alone account for almost half of all military personnel in Colorado.9 And Colorado has been largely spared by successive rounds of base realignments and closures (though two important facilities in the Denver area, Lowry Air Force Base and Fitzsimons Medical Army Center, closed in 1994 and 1999, respectively).10

In total, there are eight major military installations and two smaller ones in Colorado and approximately 60,161 DOD personnel (of which 58 percent are active duty, 22 percent national guard and reserve, and 19 percent civilian). The federal government spent $3.5 billion on these personnel in FY 2017 and an additional $5 billion on defense contracts.11 To put things in perspective, it is useful to compare these amounts to those in Ohio, a state with almost double the population of Colorado (see Table 5).

Table 5: Defense Spending, Fiscal Year 2017
  Colorado Ohio U.S.
Total Spending on Defense Personnel and Contracts (billions) $8.4 $7.0 $407.0
Personnel $3.4 $3.1 $135.3
Contracts $5.0 $3.9 $271.7
Total Spending as % of GDP 2.4% 1.1% 2.3%
Total Spending per Resident $1,498 $603 $1,466
Source: U.S. Department of Defense, Office of Economic Adjustment, “Defense Spending by State: Fiscal Year 2017,” Revised Version, March 2019, http://www.oea.gov/sites/default/files/fy2017-r2/FY2017_Defense_Spending_by_State_Report_Web_Version_20190315.pdf.

Many people interviewed in Ohio pointed to defense spending as one of the aspects of foreign policy that most affects the state’s economy. It is not surprising that a greater number of those interviewed in Colorado did so, in even more strenuous terms. Overall, Colorado ranks tenth in the nation for defense spending on military personnel based in the state, thirteenth in the actual number of defense personnel, fourteenth in total defense spending per resident, and seventeenth for defense contract spending.12 And while it is not in the top tier in terms of defense spending as a percentage of GDP, it is nonetheless still ahead of most other U.S. states, as indicated in Figure 9.

As one of the planners with the Army Corps of Engineers indicated during an interview, the Corps alone was spending roughly $300 million per year on infrastructure and security at the Buckley, Peterson, and Schriever AFBs; Fort Carson; and other areas in Colorado. It was building water systems, roadways, bridges, and electrical grids and investing in cybersecurity.13

Colorado will likely move further up the list of U.S. states benefiting from defense spending if it becomes the permanent home of the unified Space Command (USSPACECOM). The DOD formally established USSPACECOM on August 29, 2019, at Trump’s direction, and it is temporarily headquartered at Colorado’s Peterson AFB, with additional personnel and functions at Schriever AFB, Colorado; Offutt AFB, Nebraska; and Vandenberg AFB, California.14 Further consolidation of Colorado’s leadership role in military aerospace and space could complement its brand as a leader in the aerospace industry, in general. Colorado is perennially among the top states securing NASA contracts (totaling $1.8 billion in 2017, or 13 percent of the nation’s total). The Air Force Academy and CU Boulder offer two of the nation’s top aerospace engineering degree programs. Eight of the United States’ biggest “prime” aerospace contractors are based in Colorado. As of 2016, Colorado hosts the second-largest number of aerospace industry jobs of all U.S. states. And Denver’s metropolitan statistical area has over 21,000 aerospace industry employees, surpassing any other big metropolitan area in the country.15

Thus, to speak about defense spending in generic terms, as if it were just about spending “x percent” any given year, fails to take into account the bigger picture. Some states like Colorado successfully establish comparative advantages in their military capabilities and leverage those advantages to complement or support wider economic development strategies. In the case of Colorado, the state’s leadership in aerospace and space has helped it capture highly skilled jobs within the defense sector and bolster its R&D sector.

Colorado’s Defense Sector Generates Middle-Class Jobs

In addition to the over 60,000 military and civilian personnel employed by the DOD, the defense sector also encompasses contractor personnel, veterans, military retirees, and employees with the Department of Veterans Affairs, as well as workers in other industries spurred by defense activity. By one study’s account, in 2016, the defense sector directly and indirectly accounted for up to 247,000 jobs in Colorado and about 7.5 percent of the total state wage and salary employment.16 In many, but not all, instances, defense sector jobs support middle-class households.  

Active military personnel generally fall within the middle-income band, though officers at the highest ranks break into the upper-income bracket. According to representatives of the military community interviewed for this study, once enlisted personnel get to the rank of E-5 (for example, a sergeant in the Army), they can start earning enough to sustain a modest middle-class lifestyle. Personnel also gain skills, such as in combat medics and signals, that can later help them break into related middle-income jobs in the private sector.17

Veterans make up almost 10 percent of Colorado’s adult population (in comparison to 6.6 percent nationwide), and their income can vary considerably.18 Many have opportunities to earn wages that afford them a middle-class lifestyle. Some veterans earn upper-income salaries with defense contractors, as their clearances and skills are particularly desired. Focus group participants in Colorado Springs noted that there are also many veteran-owned businesses that serve as key subcontractors for companies such as United Launch Alliance, Northrop Grumman, Raytheon, and Lockheed Martin.19 Other veterans (notably at retirement age) may just be living off their Pentagon pensions. The sheer number of veterans also creates employment opportunities for other Coloradans, including at the Department of Veterans Affairs and its new hospital in Denver.

The variety of jobs spawned from defense spending illustrates why people might associate the defense budget with the middle class. At the top end, former senior military engineers can go on to work in the aerospace industry, where salaries top $130,000 on average per year.20 Many others might not reach six figures but nonetheless can earn solid middle-income salaries, including in construction-related jobs.21

But it should also be noted that not all military personnel are guaranteed a middle income. According to focus group participants in Colorado Springs, not all enlisted personnel reach the E-5 rank before completing their military service or perform functions that could earn them a middle-class job after their service. This is especially true in the U.S. Army and Marine Corps, where there are many combat troops and turnover is high. Base pay for enlisted personnel starts around $20,000, which does not meet the middle-income threshold (though they receive healthcare, housing, food, and other allowances).22 Therefore, enlisted personnel who leave the service before rising up the ranks enter the civilian workforce without savings, the demanded skills, or a college degree that could help them land a better-paying job with defense contractors or private sector companies. In response, the U.S. military has invested in transition support services for departing military personnel. But as this is not always enough, veterans have also been dependent on the goodwill of local businesses and the support of nonprofit organizations—both of which are abundant in Colorado Springs.23

The Defense Sector in El Paso Creates Prosperity and Challenges

While those interviewed noted the importance of defense spending for the state as a whole, 90 percent of DOD personnel are concentrated in just two counties—El Paso and Arapahoe—with El Paso having the lion’s share between them. El Paso is the second-most populous county with over 700,000 residents, and the majority live in Colorado Springs.24 As shown in Figure 10, the county hosts eight of the ten military presences in Colorado and accounted for $2.1 of the $5 billion in defense contracts awarded in the state in FY 2017.25 The defense sector impacts all parts of the economy and society in El Paso.

According to one study, the defense sector directly and indirectly accounted for about 41 percent of El Paso County’s total labor income in 2016.26 A sizable portion of that income stemmed from military retirees and veterans. El Paso hosts the largest percentage of veterans in the state, though a sizable number also live in and commute from neighboring counties, where housing costs are lower.27 Focus group participants in neighboring Pueblo County, for example, stressed that many members of their community also depend on defense spending in El Paso for their livelihoods, as a significant number of them commute to the Colorado Springs bases.28

Focus group participants explained that a tight-knit community has developed in the region, comprising military personnel and their families, veterans and military retirees, local businesses, and nonprofit and faith-based organizations. And this community looks after its own. For example, one participant conjectured that her daughter, who was one of those leaving the military at a junior rank, “probably [still] had a higher likelihood of getting a job straight out of the military than she would straight out of college.”29 That confidence appeared to stem from the benefits of living in Colorado Springs, where local businesses went out of their way to hire veterans. Other focus group participants recalled local businesses in Colorado Springs offering temporary jobs and discounts to furloughed defense personnel during government shutdowns.30

El Paso’s economic fortunes have risen and fallen with major fluctuations in the defense budget. Focus group participants in Colorado Springs stressed that the local economy took a clear hit when defense spending cuts associated with “sequestration” kicked in between 2011 and 2015.31 While defense personnel, small businesses, and local communities have shown the ability to work together to weather temporary downturns, the region’s economy would be devastated by drastic cuts in defense spending over a sustained period of time. Community and business leaders recognize this danger and stressed the importance of advancing economic diversification in military towns. In the case of Colorado Springs, this means growing other industries, such as cybersecurity, that leverage the presence of former military personnel with security clearances.32 One focus group participant described the conundrum: “We don’t want the balance we have right now where it’s so high in the military. We’d rather this other sector grow so we can absorb the hits. But also the DOD allows us to absorb the blows when other industries in town take a hit because the legs are so long and relatively solid.”33

Concluding Thoughts: Moving Beyond a Binary Choice on Defense Spending

Those who work in and around the defense sector tend to think of it as an important source of good middle-class jobs. Therefore, they see Colorado’s middle class as having benefited considerably due to the military role the state has cultivated and built upon over the last several decades. That is why they might push back against those who argue that cuts to defense spending are required to help the middle class.

Yet there were Coloradans who cautiously supported defense cuts that, among other reasons, would eliminate wasteful spending and make U.S. foreign policy less oriented around the military. However, those expressing such views tended not to be in one of the four counties in Colorado where defense spending is concentrated, particularly El Paso.

Economic developers in El Paso were nonetheless among the most vocal proponents of diversifying their economy, because they have lived through the pain associated with downturns in defense spending. They clearly have compelling reasons to continue developing other industries. And it seems to be in the interests of those on all sides of the spending debate that they do so.

Decisions on defense spending levels in the years ahead should ideally flow from assessments about the evolving threats the United States faces and the military capabilities and capacity it requires to meet them. In Colorado’s case, that could mean sustaining or investing even more in the units it hosts, because military aerospace and space capabilities could become even more important in an era of rapid technological advances and increasing competition among major powers. Yet places like El Paso cannot afford to assume that will be the case. The economic costs of being wrong could be dire. And defense priorities and the politics around defense spending could shift decisively and unexpectedly.

Regardless of which side of the argument politicians and policymakers may fall, they should find common ground in advancing ideas on how to help communities heavily dependent on defense spending to more rapidly diversify their economies. In some cases, the goal might be to help communities better prepare for, and weather, temporary fluctuations in defense spending. In other cases, it might be to give Pentagon leaders’ greater flexibility to shift resources in relation to evolving threats, or it might be to enable significant reductions in defense spending over the longer term.

Notes

1 S. Ahmed, A. Gelman, B. Lewandowski and R. Wobbekind, focus group, Durango, February 25, 2019; S. Ahmed, A. Gelman, B. Lewandowski, and R. Wobbekind, focus group, Denver, March 19, 2019.

2 Cynthia Ambriz, “United States Air Force Academy,” Colorado Encyclopedia, last modified November 25, 2018, https://coloradoencyclopedia.org/article/united-states-air-force-academy.

3 North American Aerospace Defense Command, “Cheyenne Mountain Complex,” https://www.norad.mil/About-NORAD/Cheyenne-Mountain-Air-Force-Station/.

4 Ibid.

5 Peterson Air Force Base, “21st Space Wing: About Us,” https://www.peterson.af.mil/About/Welcome-to-the-21st-Space-Wing/.

6 Schriever Air Force Base, “The 50th Space Wing,” https://www.schriever.af.mil/Units/.

7 Buckley Air Force Base, “460th Space Wing,” https://www.buckley.af.mil/Units/460th-Space-Wing/.

8 U.S. Army, “Fort Carson: 4th Infantry Division,” https://www.carson.army.mil/units/4ID.html.

9 Summit Economics, “The Economic Impact of Department of Defense, Veterans and Military Retirees, and the Department of Veterans Affairs Activities in Colorado,” December 2017, https://static1.squarespace.com/static/59fba45ddc2b4ac95abbef63/t/5ce54a233e26da00018fd20b/1558530600071/2017+-+31+page+Abridged+Mil+Study+5-10-2018+%28Final%29.pdf.

10 Bruce Watson, “Denver’s Lowry Air Force Base Defies the Odds After the Military Departs,” AOL.com, August 17, 2010, https://www.aol.com/2010/08/17/denvers-lowry-air-force-base-defies-odds-after-the-military-dep/, accessed May 2019; and U.S. Department of Defense Office of Economic Adjustment, “Fitzsimons Army Medical Center, Colorado,” October 2017, http://oea.gov/project/fitzsimons-army-medical-center.

11 U.S. Department of Defense, Office of Economic Adjustment, “Defense Spending by State: Fiscal Year 2017.”

12 Ibid.

13 S. Ahmed, B. Lewandowski, and R. Wobbekind, interview with planner with the Army Corps of Engineers, Colorado Springs, April 3, 2019.

14 U.S. Department of Defense, “Department of Defense Establishes U.S. Space Command,” August 29, 2019, https://www.defense.gov/Newsroom/Releases/Release/Article/1948288/department-of-defense-establishes-us-space-command/; and United States Space Command, “United States Space Command Fact Sheet,” https://www.spacecom.mil/About/Fact-Sheets-Editor/Article/1948216/united-states-space-command-fact-sheet/, accessed September 4, 2019.

15 Metro Denver Economic Development Corporation, “Aerospace,” http://www.metrodenver.org/industries/aerospace/.

16 Summit Economics, “The Economic Impact of Department of Defense, Veterans and Military Retirees, and the Department of Veterans Affairs Activities in Colorado.”

17 S. Ahmed, B. Lewandowski, and R. Wobbekind, focus group, Colorado Springs, April 3, 2019.

18 National Center for Veterans Analysis and Statistics, U.S. Department of Veterans Affairs, “State Summary: Colorado,” September 30, 2017, https://www.va.gov/vetdata/docs/SpecialReports/State_Summaries_Colorado.pdf.

19 U.S. Department of Defense, Office of Economic Adjustment, “Defense Spending by State: Fiscal Year 2017;” and Salman Ahmed, B. Lewandowski, and R. Wobbekind, focus group, Colorado Springs, April 3, 2019.

20 Metro Denver Economic Development Corporation, “Aerospace.”

21 Bureau of Labor Statistics, “Quarterly Census of Employment and Wages,” www.bls.gov, accessed June 20, 2019.

22 Defense Finance and Accounting Service, “2019 Military Active & Reserve Component Pay Tables,” April 2019, https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html; S. Ahmed, B. Lewandowski, and R. Wobbekind, focus group, Colorado Springs, April 3, 2019; and U.S. Department of Defense, Office of Economic Adjustment, “Defense Spending by State: Fiscal Year 2017.”

23 S. Ahmed, B. Lewandowski, and R. Wobbekind, focus group, Colorado Springs, April 3, 2019.

24 Summit Economics, “The Economic Impact of Department of Defense, Veterans and Military Retirees, and the Department of Veterans Affairs Activities in Colorado.”

25 U.S. Department of Defense, Office of Economic Adjustment, “Defense Spending by State: Fiscal Year 2017.”

26 Summit Economics, “The Economic Impact of Department of Defense, Veterans and Military Retirees, and the Department of Veterans Affairs Activities in Colorado.”

27 National Center for Veterans Analysis and Statistics, U.S. Department of Veterans Affairs, “State Summary: Colorado.”

28 S. Ahmed, A. Gelman, and B. Lewandowski, focus group, Pueblo, March 5, 2019.

29 S. Ahmed, B. Lewandowski, and R. Wobbekind, focus group, Colorado Springs, April 3, 2019.

30 Ibid.

31 Ibid.

32 Ibid.

33 Ibid.