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 CAC Document Ho. 8 
 
 ECONOMIC RESEARCH GROUP WORKING 
 PAPER NO. 2 
 
 Occupational Manpower Impacts of 
 Shifting National Priorities 
 
 Roger H. Bezdek 
 
 July 27, 1971 
 
CAC Document No. 8 
 
 ECONOMIC RESEARCH GROUP WORKING PAPER NO. 2 
 
 Occupational Manpower Impacts of 
 Shifting National Priorities 
 
 By 
 Roger H. Bezdek 
 
 Center for Advanced Computation 
 University of Illinois at Urbana-Champaign 
 Urbana, Illinois 6l801 
 
 July 27, 1971 
 
 This work was supported in part by the Advanced Research Projects 
 Agency of the Department of Defense and was monitored by the U.S. 
 Army Research Office-Durham under Contract No. DAHCOU 72-C-0001. 
 
1NGJNEER1NG UBWUW 
 
 ABSTRACT 
 
 This paper presents the development of an economic model capable 
 of generating occupational manpower requirements from alternate specified 
 distributions of national expenditures reflecting different goals and 
 priorities. This model is used to simulate the effects of several specified 
 shifts in national priorities upon manpower requirements of the United 
 States in the early 1960's. The employment effects of these simulated 
 priority shifts are indicated and 150 occupations are classified and ranked 
 according to their sensitivity to changing patterns of resource allocation. 
 The implications of these results for economic and manpower forecasting 
 and planning are discussed. 
 
TABLE OF CONTENTS 
 
 Introduction 1 
 
 I. The Theoretical Model 2 
 
 II. Empirical Implementation of the Theoretical Model 8 
 
 III. Simulating Shifts in National Priorities 9 
 
 IV. Results 12 
 
 V. Conclusions and Policy Implications 17 
 
 
 
LIST OF TABLES 
 
 Table Page 
 
 1. Economic Activity Categories and i960 
 
 Expenditure Distribution . . . 20 
 
 
 2. Selected Occupations Insensitive 
 
 to Shifting Priorities 2k 
 
 3. Selected Occupations Negative 
 
 Disarmament Sensitive 26 
 
 k. Selected Occupations Positive 
 
 Disarmament Sensitive 28 
 
 5. Selected Occupations Countervailing 
 
 Sensitive 31 
 
INTRODUCTION 
 
 There continues to be a large amount of discussion in the United States 
 concerning the desirability and possibility of reallocating national expendi- 
 tures to emphasize different goals and priorities. Unfortunately this 
 dialogue rarely progresses beyond the point of highly subjective and super- 
 ficial discussion to the point of rigorous theoretical and empirical analy- 
 sis . This is especially true when it comes to determining the effects 
 on the labor market which shifting national goals and expenditure programs may 
 generate. A recent and notable example of this was nationwide debate over 
 funding of the Supersonic Transport Airplane . Although a large number of 
 widely varying and conflicting estimates of the employment impacts which would 
 result from cancellation of the SST were advanced by proponents and opponents 
 of the project it was obvious that the precise manpower effects of programs 
 such as the SST were unclear. More importantly, reliable estimates of the 
 detailed employment effects which would be generated by allocating the re- 
 sources freed by cancellation of the SST to other competing programs and 
 activities were not available — nor were they readily obtainable. The sub- 
 stance of this argument could be repeated in relation to contemplated shifts 
 in expenditures among a large number of different types of public and private 
 economic activities . At present a comprehensive integrated economic model 
 capable of translating functional distributions of national expenditures 
 among a wide range of economic activities into requirements for detailed 
 categories of manpower resources is lacking. In this paper a straight- 
 forward theoretical model for the generation of detailed manpower demands 
 from alternate functional distributions of national expenditures corres- 
 
ponding to different goals and priorities will be developed. Significant 
 results derived by simulating the effects upon the labor market of speci- 
 fied reorderings of national priorities will be presented, and implications 
 of these findings for manpower forecasting and planning will be indicated. 
 
 I. THE THEORETICAL MODEL 
 The theoretical basis for the priority-expenditure manpower demand 
 generating model developed here is the static open input-output model. 
 Analytically let: y denote an n-by-1 vector specifying the industrial 
 composition of final demand, z denote an n-by-n intermediate product flow 
 matrix, w denote a 1-by-n vector showing the value added in each sector, 
 and L denote a (partitioned) Leontief matrix. An interindustry model which 
 represents a complete economic system is referred to as a Leontief model 
 and a convenient way of representing an interindustry transaction table 
 is by a partitioned Leontief matrix: 
 
 (1) 
 
 L = 
 
 z 
 
 i 
 
 _w 
 
 i 
 
 0_ 
 
 The nonproduction accounts of the system are assumed to have been con 
 solidated, and all output is accounted for by either intermediate demand 
 or final demand. Letting x represent an n-by-1 total output vector and 
 d denote an n-by-1 vector of ones : 
 
 (2) 
 
 x = Zd + y 
 
Assuming that inputs vary proportionately with outputs the technical 
 :oefficient matrix may he ohtained from equation (2) "by dividing the ele- 
 ments in each column of Z hy the adjusted output total in the corresponding 
 w of the Leontief matrix. Letting A denote an n-by-n matrix of technical 
 oefficients and X denote an n-by-n diagonal output matrix: 
 
 A = ZX -1 
 
 The elements a. . of A show the direct purchases made hy the j sector 
 'rom the i sector per dollar of output. Solving (3) for Z and substituting 
 
 he result into (2) yields: 
 
 h) x = AXd + y = Ax + y 
 
 
 With input-output coefficient matrix A and total output vector x, 
 X represents the vector of input requirements corresponding to these out- 
 uts. The final demand vector y is the vector of outputs available for dis- 
 iosal outside of the processing sector and, letting I denote an identity 
 latrix of order n, using (k) the following equation may be derived: 
 
 5) x - AX = (I-A)x = y 
 
 Assuming (i-A) to be nonsingular the above may be solved for x: 
 
 5) x = d-ArV 
 
(I-A) " is the familiar Leontief inverse matrix and the elements of it 
 indicate the output requirements generated directly and indirectly from in- 
 dustry i by industry j per delivery of a dollar's worth of output to final 
 demand . 
 
 The fundamental problem of open model analysis is that of determining 
 the interindustry transactions necessary to supply a specified bill of goods, 
 and to determine the levels at which all industries must operate to produce 
 a certain bill of goods y, equation (6) is solved for x. 
 
 The manpower demand generating model developed here may in its simplest 
 form be considered to be a straightforward extension of the Leontief open 
 input-output model in several directions. To begin with, the final 
 demand vector y, itself can be derived as the sum of a number of n-by-1 
 vectors each of which give the industrial input requirements of a distinct 
 economic activity component of final demand. Letting u denote the number of 
 sectoral components of final demand, g. denote an n-by-1 vector specifying 
 the input requirements of exogenous activity j , and e . denote a vector 
 
 J 
 
 indicating the portion of final demand consumed by activity j : 
 
 n u n u 
 
 (7) y = g a + g 2 + + g ; Z y. = E e, (zy, )i Z e. = 1 
 
 u . 1 j . 1 . j 
 
 i J i J 
 
 Dividing each of the bills of goods vectors g. by the total direct 
 
 J 
 
 output requirements of the j activity yields the percent distribution of 
 direct output requirements generated by expenditures on that activity. 
 These percent bills of goods vectors may be arranged into an n-by-u activi- 
 ty-industry matrix denoted by P: each p. . element of P indicates the 
 direct requirements generated for the output of industry i per dollar of 
 expenditure in final demand activity sector j . The distribution of 
 
national expenditures among activities may be represented by a u-by-1 
 
 activity-expenditure vector denoted by q: each q. element of q shows 
 
 J 
 
 the total expenditures devoted to activity j . Thus the final demand 
 vector may be expressed as the product of the activity-industry matrix 
 and the activity-expenditure vector: 
 
 (8) y = Pq 
 
 In an economic sense changing national priorities implies shifting 
 national expenditures among competing public and private economic programs 
 and activities to emphasize particular goals and objectives. The 
 expenditure elements of the q vector can be reordered within limits to 
 reflect a wide range of different priority commitments, and this is the 
 manner in which specified shifts in national goals and priorities enter 
 the model. 
 
 Proceeding, the Leontief inverse matrix may be transformed into 
 labor units by having each of its rows multiplied by the appropriate employ- 
 ment-output ratio indicating the employment requirements per unit of output 
 in the particular industry. This results in the creation of an interindustry - 
 
 employment matrix showing the total employment generated by and within 
 
 2 
 every industry in the economy. This matrix may be represented by the 
 
 following array : 
 

 
 (9) 
 
 i>5 
 
 m 
 
 0) 
 
 -p 
 
 0) 
 
 (U 
 
 o 
 -p 
 
 0) 
 
 in 
 -P 
 en 
 
 Industry Employment Generated In 
 1 2 j n 
 
 1 
 
 m il 
 
 m !2 ••■ 
 
 m ij '• 
 
 m m 
 
 2 
 
 m 21 
 
 m 22 •' 
 
 m 2j •' 
 
 ' m 2n 
 
 i 
 
 m il 
 
 m. 2 .. 
 
 m. . . . 
 
 m. 
 m 
 
 n 
 
 m nl 
 
 m n2 •' 
 
 m . . . 
 
 m 
 nn 
 
 Each row of (9) indicates the manner in which employment is generated 
 
 within industry i by required activity in industries 1, 2, , 
 
 n and each column of (9) illustrates how the employment demands generated 
 by activity in industry j are distributed among all industries in the eco- 
 nomy. Postmultiplication of the interindustry-employment matrix, M, by 
 a diagonal final demand matrix, Y, yields the "total" interindustry employ- 
 
 ment matrix M 
 
 .T 
 
 (10) 
 
 m * 
 
 M = MY 
 
 The column sums of M T show the total employment generated by a speci- 
 fic industry and the row sums of M T show the total employment generated 
 within a specific industry. The interindustry-employment matrix thus make; 
 it possible to generate total interindustry manpower requirements from 
 
alternate specified distributions of national expenditures among economic 
 activities . 
 
 The final step in the construction of. the theoretical model involves 
 the relation of interindustry-employment requirements to occupational 
 employment demands. This transformation is accomplished by using an indus- 
 try-occupation matrix showing in percentage terms the occupational distri- 
 bution of industry employment for the time period under consideration. 
 Denote this .matrix by B: the rows of B represent industries, the columns of 
 B represent occupations, and any element b of B shows the percent of total 
 
 2.K. 
 
 employment in industry i composed of persons classified within occupation 
 
 k. Letting R denote a diagonal matrix whose diagonal elements are the 
 
 T 
 corresponding row sums of M an interindustry-occupation matrix is 
 
 obtained by premultiplying B by R: 
 
 (11) RB = S 
 
 S is one type of interindustry-occupation matrix, and the elements 
 of it show the occupational employment requirements generated within 
 each industry by a specified distribution of national expenditures. The 
 column sums of S show the total manpower demands generated for an indi- 
 vidual occupation, and it is thus possible to generate occupational man- 
 power requirements from different distributions of national expenditures 
 among economic activity categories reflecting alternate national priorities.' 
 
II. EMPIRICAL IMPLEMENTATION OF THE THEORETICAL 
 
 MODEL 
 
 Conceptually it is possible to identify gross national product or 
 national expenditures with final demand, and in the recent interindustry 
 studies of the U. S. economy conducted by the Office of Business Econo- 
 mics input-output data were integrated with national income and pro- 
 
 1+ 
 duct account data. Thus the correspondence between the concepts of 
 
 gross national product, national expenditures, and final demand used 
 here is complete > and gross national product for the time period in ques- 
 tion is totally distributed by the activity-industry matrix among every 
 industry in the economy as either purchases, transfers, or compensation. 
 
 The empirical model pertains to the early 1960's and i960 was the 
 initial base year chosen for analysis. Input vectors were developed for 
 55 distinct categories of economic activity and these categories together 
 with the estimated expenditures on these in i960 are given in Table 1. 
 Expenditures on each of these categories, expressed in terms of (constant) 
 1958 dollars, are distributed as required output from the 86 industries 
 used by the Office of Business Economics in the 1958 input-output study. 
 The 80-order 1958 Leontief inverse matrix expressed in labor units and 
 modified to reflect i960 interindustry and productivity relationships is 
 used to generate total interindustry employment requirements. These indus- 
 trial employment demands are disaggregated into requirements for 185 occu- 
 pational categories of manpower resources by using a modified version of 
 
the industry-employment-by-occupation matrix developed by the Bureau of 
 Labor Statistics from the i960 decennial census of population. 
 
 The resulting model is a general, comprehensive, empirical one 
 capable of translating alternate distributions of national expenditures 
 reflecting different priorities into requirements for detailed categories 
 of manpower resources. The model is empirical and yields a large quantity 
 of useful information relating to the manner in which employment require- 
 ments are generated throughout the economy. Expenditures upon 55 cate- 
 gories of economic activity generate direct output requirements within 
 86 industries and generate employment demands within 85 industries and 185 
 occupational categories. The model is comprehensive and it accounts con- 
 sistently for total gross national product, total direct and indirect 
 output requirements, total interindustry employment, and total occupational 
 employment. The model contains no double counting or overlapping 
 within activity categories, output categories, or employment categories. 
 Further, the model is general and allows, subject to a number of restric- 
 tions, the analysis of the manpower impacts of a number of different 
 types of priority reorderings . 
 
 III. SIMULATING SHIFTS IN NATIONAL PRIORITIES 
 As indicated, changes in national priorities enter the system as 
 shifts in the distribution of expenditures among the 55 activity cate- 
 gories . In reallocating expenditures to reflect concentration on alter- 
 nate national objectives, several constraints were adhered to in the simu- 
 lations conducted. First of all, the total size of gross national product 
 
was neither increased nor reduced, for interest centered upon analyzing 
 the manpower consequences of reallocating a given gross national product 
 among competing resource uses according to several different specified 
 patterns. Further, the expenditures devoted to any single activity 
 category were not altered by more than thirty percent in either direction. 
 This latter convention at the very least was deemed necessary to preserve 
 the validity of the assumption of constant activity input coefficients. 
 
 Initially the employment requirements generated by the empirical 
 model for i960 from the actual i960 distribution of expenditures given in 
 Table 1 were compared with those which existed in that year to test the 
 overall accuracy of the manpower demand generating mechanism. For prac- 
 tically all the manpower categories for which this type of comparison was 
 possible the two estimates agreed, and the discrepencies recorded were 
 small enough to be negligible. Then using the actual i960 expenditure 
 distribution as a starting point expenditures were redistributed in order 
 to reflect within the confines of the model four different hypothetical 
 types of priority reorientation on the part of the United States. 
 
 The first priority alternative derived, disarmament- control, was a 
 type of control reallocation of expenditures which had been suggested to 
 the author by Wassily Leontief . In this redistribution expenditures for 
 defense and defense related activities were reduced 30 percent and the 
 funds released by this cutback were reallocated proportionately among 
 all the other final demand categories. Aside from acting as a general 
 control type of redistribution this first reallocation pattern also 
 permitted the employment effects generated by the model to be compared with 
 
 10 
 
those obtained by Leontief and others using this type of alternative to 
 
 7 
 
 study the economic and employment effects of disarmament. 
 
 The second set of expenditure alternatives analyzed, disarmament- 
 welfare, was one corresponding to a shift in national priorities away from 
 defense in favor of domestic welfare programs. In this case expenditures 
 for defense oriented activities were again reduced by 30 percent . However, 
 rather than being allocated pro rata to every other activity category, the 
 funds released were distributed to social welfare and public service acti- 
 vities. Thus this second alternative represents a shift of defense and 
 defense related expenditures to social welfare payments, public housing 
 programs, health and sanitation activities, educational programs, and 
 so forth. 
 
 The third alternative experimented with, disarmament -tax cut, was 
 meant to reflect a national consensus markedly different from that hypo- 
 thesized above . It assumes that the political mood of the nation dic- 
 tates that the expenditures released by a 30 percent cut in military 
 expenditures be given back to the private sector — say, in the form of tax 
 relief — rather than being allocated to domestic welfare activities. 
 Accordingly, here the funds freed by the 30 percent reduction in defense 
 expenditures are distributed among the categories of personal consumption 
 expenditures, private investment, industrial and commercial construction, 
 and so forth. 
 
 Finally, the fourth expenditure redistribution simulated, butter and 
 guns, is one which differs considerably from any of the first three and 
 represents a type of "butter and guns" choice by the nation. Here defense 
 oriented activities received an expenditure increase amounting to 20 
 percent and all other public service categories received an increase in 
 
 11 
 
expenditures amounting to 10 percent — the necessary funds "being transferred 
 from all the other final demand activity categories. 
 
 The hypothetical priority reorderings discussed above are meant to 
 have no subjective significance attached to them, and they do not come 
 close to exhausting the analytic capabilities of the model. Further, the 
 expenditure shifts simulated here correspond to the priorities indicated 
 only to the degree that the 55 activity categories contained in the empir- 
 ical model can be validly used to represent different social and economic 
 choices on the part of the nation. Nevertheless, the resource realloca- 
 tions hypothesized here are believed to plausibly reflect broad types of 
 shifts in national goals and priority commitments which are not at all 
 unrealistic. With these points in mind it is interesting and important to 
 analyze the overall , structural manpower impacts which these types of 
 priority shifts tend to generate. 
 
 IV. RESULTS 
 
 l&us section shall be confined to an analysis of the occupational manpowr 
 
 o 
 
 impacts generated by the priority reorderings hypothesized. In general the 
 occupational manpower requirements of the United States appeared to be 
 highly sensitive to even the limited shifts in national priorities and expen- 
 diture programs specified here. Overall, the three alternate types of 
 disarmament priorities specified generated a total increase in manpower 
 demands of approximately one half of one percent of the I960 labor force, 
 
 12 
 
while the priority alternative emphasizing defense and nondefense govern- 
 ment programs generated a net decrease in national employment requirements 
 slightly larger than one half of one percent. The effects of the simulated 
 shifts in national priorities on the requirements for individual occupa- 
 tions , however, were much more varied and pronounced. Some occupations 
 appeared to be virtually insensitive to any type of expenditure redistri- 
 butions, some occupations were consistently sensitive in one direction to 
 the disarmament and "peace" priorities simulated, and sensitive in an oppo- 
 site direction to the hypothesized "butter and guns" priority alternative. 
 Still other occupations defied classification, for the demands for 
 manpower within these changed to a different degree and often in a different 
 direction depending on the distinct priority shift considered. But 
 despite the wide range of variability in degree and direction it was possible 
 to classify a large portion of the occupations contained in the model on 
 the basis of the percentage change in demand for them corresponding to 
 each alternate specified priority alternative . These classifications 
 are presented in Tables 2 through 5. 
 
 Table 2 lists selected occupations which appeared to be relatively 
 insensitive to redistributions of expenditures among economic activities 
 reflecting any of the alternate priority commitments hypothesized here. 
 That is, for the manpower categories given in Table 2 the percentage change 
 in employment requirements generated by any of the priority reorderings 
 simulated in the empirical model was either negligible, or, at most, approached 
 the vicinity of one percent. Thus these occupations would tend to be 
 unaffected by either a cut in military expenditures distributed several 
 iifferent ways among competing civilian resource uses or, conversely, 
 
 13 
 
by an increase in defense and nondefense government programs. Another 
 way of viewing the manpower categories listed in Table 2 is that the 
 demand for employment within them is generated in such a widespread, divers 
 and interdependent manner by many factors throughout the economy that they 
 are to a very considerable degree insulated from any favorable or un- 
 favorable repercussions resulting from changing national goals and prioriti 
 
 The occupations listed in Table 3 share a considerably different 
 characteristic. The employment demands for these occupations are generated 
 in a manner such that they all showed a marked increase for the priority 
 simulations emphasizing increases in defense and other public expenditures 
 and a marked decrease for any of the alternate hypothesized nondefense 
 priority reorderings . Thus these manpower categories are among the ones 
 which would probably be the most adversely affected by cuts in defense 
 oriented programs, and are labeled as "negative disarmament 
 sensitive" occupations . 
 
 However, employment requirements for the occupations listed in 
 Table 3 did not respond uniformly to shifts in the distribution of 
 expenditures and for this reason a simple sensitivity ranking was 
 devised to indicate the degree to which the individual occupations were 
 found to be sensitive to the various disarmament alternatives. The 
 demands for occupations indexed by the letter "C" were the least sensitive 
 and decreased about two or three percent in shifts from military to non- 
 military priorities . The requirements for occupations indexed by the 
 letter "B" exhibited a net decrease of about four or five percent in 
 response to changes to nondefense priorities, while the employment demands 
 for the occupations indexed by the letter "A" fell by more than five per- 
 cent in response to the same types of priority changes. Thus Table 3 should 
 
 Ik 
 
be interpreted in the following manner: the demands for all the occupations 
 listed there are likely to show a non-negligible net decrease in response 
 to a cutback in defense and related expenditures, and the alternate uses 
 to which the released funds are put will do little to offset this. Those 
 occupations indexed by "A" will be affected the most adversely by these 
 cutbacks, those denoted by "B" may not be hurt quite so badly, and those 
 indexed by "C", while still likely to suffer from a switch to a more 
 civilian oriented economy, will be less adversely affected than the other 
 two classes. 
 
 The occupations listed in Table k reacted in a manner completely 
 opposite to those given in Table 3, for the employment demands for these 
 manpower categories all increased in response to shifts from defense 
 related priorities to any type of specified nondefense alternative. These 
 occupations are indexed in the same manner as those in Table 3, only 
 here the demand response indicated in a shift away from military spending 
 programs is positive, and accordingly, these occupations are referred to 
 as "positive disarmament sensitive." Thus in Table k: occupations in- 
 dexed by "A" increased by more than five percent in simulated shifts in 
 favor of disarmament, the demands for those denoted by "B" increased about 
 four or five percent, and the demands for those indexed by "C" increased 
 about two or three percent. In other words, the transfer of military 
 expenditures to civilian uses would be likely to increase employment 
 requirements to varying degrees in the occupations listed in Table h, 
 and this is likely to be true for the transfer of defense expenditures 
 to a wide range of nonmilitary activities . 
 
 Finally, the occupations listed in Table 5 shared a characteristic 
 which is in one sense the most interesting, for the responses in demand 
 
 15 
 
for employment within these occupations followed no set pattern but, 
 rather, varied uniquely according to the specific priority alternative 
 specified. While the demands for most of these occupations were sensitive 
 to shifting priorities and expenditure distributions, the demand responses 
 generated for these occupations fell into no easily classifiable patterns . 
 Demands for some of these categories increased for some types of nondefense 
 priorities and decreased for other patterns of reallocation of military 
 expenditures . Thus , whether or not the requirements for manpower within 
 these occupations would increase or decrease with a cut in military 
 expenditures depends upon the specific alternate civilian uses to which 
 the freed resources are devoted. 
 
 There is thus an interesting and potentially very significant 
 distinction between the occupations given in this table and those 
 listed in Tables 2, 3, and k. The effect of disarmament on the demand for 
 the occupations listed in the first three tables is generally easy to 
 predict: the occupations in Table 2 would be relatively unaffected, the 
 occupations in Table 3 are likely to be adversely affected, and the occupa- 
 tions given in Table k are likely to be favorably affected. But the net 
 employment effect of disarmament — or of the other types of priority shifts 
 hypothesized here — on the categories listed in Table 5 is indeterminate 
 and will depend critically upon the specific type of alternate priority 
 receiving increased emphasis. Viewed slightly differently, for those 
 occupations given in Table 5 it may be possible to offset the unfavorable 
 effects of disarmament by emphasis on selected types of nondefense programs; 
 these occupations are labeled "countervailing sensitive." 
 
 16 
 
V. CONCLUSIONS AND POLICY IMPLICATIONS 
 In interpreting the findings reported here several limiting factors 
 must be kept in mind: the model involved utilizes a number of very 
 restrictive assumptions concerning the nature of economic phenomena, due 
 to gaps and inconsistencies in the data available a large number of 
 modifications of this data were necessary, and the relationships in the 
 empirical system pertained to the early 1960's. Most of the restrictive 
 assumptions involved were required to permit the empirical implementation 
 of the theoretical model, and while research recently conducted with an 
 updated version of this model does in general support the results presented 
 
 here, the entire system itself must still be considered to be in a prelimi- 
 
 Q 
 
 nary stage of development. Nevertheless, to the degree that the simplifying 
 
 assumptions made represent a plausible approximation to reality, that the 
 methodology employed is valid, and that the economic relationships of 
 the early 1960's are capable of generating results presently of interest, 
 from the findings reported here the following conclusions do appear to be 
 warranted: 
 
 l) The occupational manpower requirements of the United States are, 
 in general, sensitive to shifts in the allocation of resources reflecting 
 different national goals and priorities. While this is by no means uniform- 
 ly true for all occupations and while changes in employment requirements 
 for even the sensitive occupations often vary in degree and direction 
 according to the expenditure reallocation hypothesized, there appears to 
 be little doubt that this hypothesis must be accepted. 
 
 IT 
 

 2) Accurate and reliable manpower forecasting is currently impossi- 
 ble. Given that national manpower demands are sensitive often to even 
 slight shifts in expenditure distributions reflecting different priorities 
 and granted that future national goals and priorities cannot be foretold 
 with any degree of accuracy, it follows that there is no way to 
 validly forecast the future requirements for many important occupational 
 manpower categories. On the other hand, for certain types of occupations, 
 such as those listed in Table 2, which do not appear to be sensitive to 
 
 changing patterns of national expenditures it may be possible to forecast 
 
 t 
 employment requirements with a passable degree of accuracy. By beginning 
 
 to distinguish the sensitive occupations from the insensitive ones and 
 
 by classifying these accordingly it is hoped that the research reported 
 
 here has taken the first step toward the development of a more rational 
 
 manpower forecasting methodology. 
 
 3) From the above it follows that most if not all of the manpower 
 forecasts presently available may be seriously suspect and that policies 
 implemented on the basis of them may as likely as not turn out to be mistake 
 Conditional manpower demand projections varying widely may not be very 
 satisfying to administrators and policy makers who wish to have a single 
 set of estimates to base their decisions on, but this does appear to be 
 
 the most advisable approach. 
 
 k) The manner in which employment requirements are generated differs 
 considerably among dissimilar classes of occupations. Demands for some 
 occupations, such as those identified in Table 2, seem to be generated 
 by a variety of factors throughout the economy in a manner widespread 
 and interdependent enough to make them relatively insensitive to 
 
 18 
 

 shifts in the pattern of national expenditures and priority commitments. 
 The demand structures for other occupations, such as some of those listed 
 in Tables 3 and h, is such that they are tied very strongly to specific 
 types of economic activities and expenditure programs, and it may he 
 difficult to generate employment within these types of occupations except 
 "by emphasizing the appropriate types of programs and activities. Finally, 
 the manner in which employment requirements are determined for other 
 occupations, such as those listed in Table 5 } is even more complex and 
 indeterminate, with the adverse employment effects of certain expenditure 
 cutbacks appearing to be partially or entirely offset by expenditure 
 increases reflecting different types of priorities. Thus those occupa- 
 tions listed in Table 5 may be the only type for which it is reasonable to 
 hope that reductions in defense and defense related programs may be 
 successfully compensated for by concentration on select types of 
 "alternate domestic priorities." 
 
 19 
 
Table 1 
 
 Economic Activity Categories and 
 I960 Expenditure Distribution 
 
 Activity Category 
 Number and Title 
 
 i960 Expenditures 
 (in millions of 1958 dollars) 
 
 I. Personal Consumption 
 
 Expenditures, Total 287,67^ 
 
 1. Food and tobacco 79,0^7 
 
 2. Clothing, accessories, and 
 
 jewelry 29,756 
 
 3. Personal care U,270 
 k. Housing UO,8U5 
 
 5. Household operation ^0,993 
 
 6. Medical care and death expenses 15,^96 
 
 7. Personal business li+,390 
 
 8. Transportation 37,528 
 
 9. Recreation l6,kk0 
 
 10. Private education and research 3,^3^ 
 
 11. Religious and "welfare activities 3,38l 
 
 12. Foreign travel and remittances, net 2,09^ 
 
 II. Gross Private Domestic Investment 33,522 
 
 13. Private fixed capital investment 30,032 
 ik. Net inventory change 3,^90 
 
 20 
 
(Table 1, cont.) 
 
 III. New Construction, Total 53,739 
 
 A. Residential buildings (nonfarm), total 21,1*35 
 
 15. one-to-four family apartments 13,^22 
 
 16. Five-or-more family apartments 2,237 
 
 17. Additions and alterations ^,265 
 
 18. Public dwelling units 6Qk 
 
 19. Other residential construction 827 
 
 B. Nonresidential buildings, total 1^,3^7 
 
 20. Offices 2,102 
 
 21. Industrial 3,128 
 
 22. Educational 3,2*19 
 
 23. Hospital and institutional 966 
 2k. Other residential ^,902 
 
 C. Public utilities ^,^79 
 
 25. Railroads and local transit 266 
 
 26. Gas and petroleum 1,17^ 
 
 27. Electric light and power 1,980 
 
 28. Telephone and telegraph 1,059 
 
 D. 29. Highways 5,758 
 
 E. 30. Military facilities 1,366 
 
 F. 31. Oil and gas well drilling 
 
 and exploration 2,122 
 
 21 
 
(Table 1, cont. ) 
 
 G. 32. Water Systems 563 
 
 H. 33. Sewer Systems 817 
 
 I. 3k. Conservation and Development h"j6 
 
 J. 35- All other public and private 
 
 new construction 2,k06 
 
 IV. Maintenance and Repair 
 
 Construction, Total 17,933 
 
 36. Residential buildings (nonfarm) , total 6,191 
 
 37. Nonresidential buildings, total ^,175 
 
 38. Railroads and local transit 99^ 
 
 39. Highways 2,776 
 
 kO. Military facilities 782 
 
 kl. Water systems and sewer systems 901 
 
 ^2. All other public and private maintenance 
 
 and repair construction 2,llU 
 
 V. k3. Net exports ^,067 
 
 VI. Federal Government Expenditures, total ^9,600 
 
 kk. National defense 1+0,500 
 
 h-5. Other 9,100 
 
 VII. State and Local Government 
 
 Expenditures, Total 28,000 
 
 k6. Education 13,900 
 
 U7. Health, welfare, and sanitation ^,700 
 
 hQ. Safety 3,000 
 
 k9. Other . 6,1+00 
 
 22 
 
(Table 1, cont.) 
 
 VIII. Social Welfare Benefit Expenditures 30,826 
 
 IX. Water Resource Civil Works 
 
 Project Expenditures, Total 6l3 
 
 51. Large multiple-purpose water' 
 
 resource development projects 20 8 
 
 52. Locks, dams, and reservoirs 198 
 
 53. Local flood protection 75 
 5^. Dredging and navigation projects 119 
 
 55- Miscellaneous water resource 
 
 development projects 13 
 
 Total National Expenditures 505,975 
 
 9. 
 
 In order to develop a consistent framework for disaggregating national 
 expenditures it was necessary to modify most of the individual activity 
 categories in a unique manner. For convenience the original activity 
 and program titles were retained; however, neither in concept nor expen- 
 diture magnitude should these categories be interpreted as corresponding 
 to those bearing the same title appearing in the national income and 
 product accounts, the Office of Business Economics input-output studies, 
 and other U. S. Government statistical sources. 
 
 For a number of reasons pertaining to the manner in which the individual 
 activity categories and activity category expenditure levels were derived 
 this figure is not equal to i960 gross national product, but, rather, is 
 approximately three percent larger than i960 GNP. Adjustments made in 
 other parts of the empirical system insure that this convention does not 
 generate excess employment requirements. 
 
 23 
 
Table 2 
 
 Selected Occupations Insensitive 
 to Shifting Priorities 
 
 Professional and Technical 
 
 Chemical engineers 
 
 Mining engineers 
 
 Chemists 
 
 Accountants and auditors 
 
 Airplane pilots and navigators 
 
 Editors and reporters 
 
 Photographers 
 
 Workers in the arts and entertainment 
 
 Managerial and Clerical 
 
 Railroad conductors 
 Purchasing agents 
 Office machine operators 
 Accounting clerks 
 Telephone operators 
 Miscellaneous clerical workers 
 
 Craftsmen and Foremen 
 
 Blacksmiths, forgemen, and hammermen 
 
 Millwrights 
 
 Radio and television mechanics 
 
 21+ 
 
(Table 2, cont.) 
 
 Radio and car shop mechanics 
 
 Air-conditioning, heating, refrigeration, and other mechanics 
 
 Compositors and typesetters 
 
 Electrotypers and Stereotypers 
 
 Engravers , except phot oengr avers 
 
 Pressmen and plate printers 
 
 Cranemen, derrickmen, and hoistmen 
 
 Telephone and power linemen and servicemen 
 
 Locomotive engineers and firemen 
 
 Inspectors , except log and lumber 
 
 Unclassified craftsmen and kindred workers 
 
 Operatives, Service, and Other Workers 
 
 Furnacemen, smeltermen, and pourers 
 
 Railroad brakemen and switchmen 
 
 Power station operators 
 
 Sailors and deckhands 
 
 Blasters and powdermen 
 
 Mine operatives and laborers 
 
 Airline stewards and stewardesses 
 
 Janitors and sextons 
 
 Charwomen and cleaners 
 
 Laborers , except farm and mine 
 
 Selected occupations for which employment requirements changed one percent 
 or less in response to simulated shifts in national priorities. 
 
 25 
 
Table 3 
 
 Selected Occupations Negative 
 Disarmament Sensitive 
 
 ■i_ 
 
 Occupation Sensitivity Index 
 
 Professional and Technical 
 
 Aeronautical engineers A 
 
 Electrical engineers A 
 
 Industrial engineers B 
 
 Mechanical engineers A 
 
 Metallurgical engineers B 
 
 Sales engineers and engineering technicians C 
 
 Mathematicians A 
 
 Physicists A 
 
 Unclassified natural scientists C 
 
 Economists . C 
 
 Statisticians and actuaries C 
 
 Miscellaneous social scientists B 
 
 Draftsmen C 
 
 Radio operators and air traffic controllers A 
 
 Electrical, electronic, and physical 
 
 science technicians B 
 
 Personnel and labor relations workers B 
 
 26 
 
(Table 3, cont.) 
 
 Craftsmen, Foremen, and Operatives 
 
 v,««_ t ^, J . lii^ua-L wunveiB 
 
 C 
 
 
 Machinists and job setters 
 
 B 
 
 
 Boilermakers 
 
 C 
 
 
 Heat treaters, annealers , and temperers 
 
 B 
 
 
 Metal molders, except coremakers 
 
 C 
 
 
 Metal and wood patternmakers 
 
 B 
 
 
 Tinsmiths, coppersmiths, and sheet 
 metal workers 
 
 B 
 
 
 Toolmakers, diemakers , and setters 
 
 A 
 
 
 Airplane mechanics and repairmen 
 
 A 
 
 
 Metalworking assemblers, all classes 
 
 A 
 
 
 Metalworking inspectors, examiners, 
 and checkers 
 
 A 
 
 
 Machine tool operators 
 
 A 
 
 
 Electroplaters and electroplaters helpers 
 
 A 
 
 
 Metal heaters 
 
 C 
 
 
 Welders and flame cutters 
 
 C 
 
 
 stanSally^ ^if^eT f " h ™»ent requires decreased sub- 
 prioricies. W ° f Slmulated ^lft s from defense to nondefense 
 
 Occupations indexed bv "C" qhmmH Q ^ 
 
 ^approximately two or tLf p^t f ^ati^fndSf cy^Tf I 
 .decrease in employment retirements 'of approximately four or ttvfplr- 
 s C ^e trtn^i^eXf ~* * "~ ^ — A^re- 
 
 27 
 
Table k 
 
 Selected Occupations Positive 
 Disarmament Sensitive 
 
 Occupation Sensitivity Index 
 
 Professional, Technical, Managerial, and Clerical 
 
 Dentists C 
 
 Dietitians and nutricianists C 
 
 Professional nurses C 
 
 Optometrists and Osteopaths B 
 
 Pharmacists B 
 
 Physicians and Surgeons C 
 
 Medical and dental technicians C 
 
 Veterinarians C 
 
 Teachers: elementary, secondary, 
 
 and college . C 
 
 Ship officers, pilots, and engineers B 
 
 Bookkeepers B 
 
 Cashiers and hank tellers A 
 
 Sales workers A 
 
 Craftsmen, Foremen, and Operatives 
 
 Brickmasons, stonemasons, and tilesetters C 
 
 Carpenters C 
 
 Cement and concrete finishers C 
 
 28 
 
(Table k, cont.) 
 
 Plasterers . C 
 
 Roofers and slaters C 
 
 Motor vehicle mechanics B 
 
 Office machine mechanics B 
 
 Bakers A 
 
 Cabinetmakers C 
 
 Glaziers C 
 
 Jewelers and watchmakers B 
 
 Loom fixers B 
 
 Log and lumber inspectors A 
 
 Deliverymen and routemen B 
 
 Bus, truck, and tractor drivers C 
 
 Knitters , loopers , and toppers A 
 
 Textile spinners and weavers A 
 
 Manufacturing sewers and stitchers A 
 
 Automobile service and parking attendants A 
 
 Laundry and dry cleaning operators B 
 
 Meat cutters, except meatpacking B 
 
 Service and Other Workers 
 
 Private household workers A 
 
 Bartenders and cooks B 
 
 Counter and fountain workers C 
 
 Waiters and waitresses A 
 
 29 
 
(Table h, cont. ) 
 
 Hospital and institutional attendants C 
 
 Practical Nurses C 
 
 Miscellaneous service workers C 
 
 Selected occupations for -which employment requirements increased sub- 
 stantially for all types of simulated shifts from defense to nondefense 
 priorities . 
 
 Occupations indexed by "C" showed an increase in employment requirements 
 of approximately two or three percent; occupations indexed by "B" showed 
 an increase in employment requirements of approximately four or five 
 percent; occupations indexed by "A" showed an increase in employment re- 
 quirements of greater than five percent. 
 
 30 
 

 Table 5 
 
 Selected Occupations Countervailing 
 Sensitive 
 
 Professional and Technical 
 
 Civil engineers 
 
 Psychologists 
 
 Unclassified teachers 
 
 Foresters, conservationists, and agricultural scientists 
 
 Biological scientists 
 
 Geologists and geophysicists 
 
 Surveyors 
 
 Architects 
 
 Designers, except design draftsmen 
 
 Lawyers and judges 
 
 Librarians 
 
 Social service and welfare workers 
 
 Managerial, Clerical, and Craftsmen 
 Creditmen 
 
 Postmasters and assistants 
 Stenographers, typists, and secretaries 
 
 Mail carriers, postal clerks, and other postal employees 
 Shipping and receiving clerks 
 
 31 
 
(Table 5, cont.) 
 
 Electricians 
 
 Excavating, grading, and road machinery operators 
 
 Plumbers and pipefitters 
 
 Painters, construction and maintenance, and paperhangers 
 
 Structural metal workers 
 
 Rollers and roll hands 
 
 Miscellaneous foremen 
 
 Photoengravers and lithographers 
 
 Opticians, lens grinders, and lens polishers 
 
 Upholsters 
 
 Operatives, Service, and Other Workers 
 Asbestos and insulation workers 
 Miscellaneous operatives 
 Firemen 
 
 Policemen and other law enforcement officials 
 Guards, watchmen, and doorkeepers 
 
 Selected occupations for which the employment requirements increased or 
 decreased depending upon the precise type of defense or non defense priority 
 simulated. 
 
 32 
 
FOOTNOTES 
 1. 
 
 discussed in"^!]! °' " 1, ^^*^«^*»«t taole is 
 
 3 
 See chapters 3 and 7 of Bezdek [2]. 
 
 study is dileLse'fif [11]?^^ ^ * 8 "^^ *» t6 ^ a ° d «» 1*3 
 
 lii 
 
 nodel and h^beenSe'u in Sih""?" 7 * Dalntaln the TOll3 "y <* the 
 fcdel; see BezdeTana IcoviSe H f"^ r6Sear ° h C ° nducted with <**. type of 
 
 Jdel; see Bezdek and Scoville [h] . 
 
 7 
 See Leonteif [8], [p], and [10] 
 
 8„ 
 
 »ent „S ^^'S^ i, SS^«^ 1 2lS^ ] r^ 
 and ^^Z^T^^^^^ 
 
 10 T + • 
 
 castin g undo" ^t^^^^ theT^ ^ ^^ f °- 
 produot uas Be g un to Be ^^Z-tV; ^^11^^ ZZkT^ 1 
 
 33 
 
BIBLIOGRAPHY 
 
 [I] Alterman, Jack. "Interindustry Employment Requirements." Monthly 
 
 Labor Review , 88 (July 196 5) , 841-850. 
 
 [2] Bezdek, Roger H. Manpower Implications of Alternate Patterns of 
 
 Demand for Goods and Services . Ph. D. thesis and report pre- 
 pared for the Manpower Administration of the U. S. Department 
 of Labor, 1971- 
 
 [3] • General Theoretical Framework for Rational Manpower 
 
 Planning at the National Level." Paper presented at the New 
 York State School of Industrial and Labor Relations, Cornell 
 University, February 25, 1971. 
 
 [h] , and Scoville, James G. Manpower Implications of 
 
 Reordering National Priorities . Washington, D. C: National 
 Urban Coalition, 1971. 
 
 [5] Folk, Hugh. The Shortage of Scientists and Engineers . Lexington, 
 Massachusetts: D. C. Heath, 1970. 
 
 [6] Goldman, Morris R. , Marimont, Martin L. , and Vaccara, Beatrice N. 
 "The Interindustry Structure of the United States: A Report 
 on the 1958 Input-Output Study." Survey of Current Business 
 hk (November 1964), 10-17. 
 
 [7] Lecht, Leonard A. Manpower Needs for National Goals in the 1970 's . 
 New York: Frederick A. Praeger, 1969 . 
 
 [8] Leontief, Wassily W. "Statement," in hearing on the Economic Effect 
 of Vietnam Spending (Joint Economic Committee, April 2k, 25, 26, 
 and 27, 1967)9 Washington, D. C. : U. S. Government Printing 
 Office, 1967, 237-263. ; 
 
 [9] , and Hoffenberg, Marvin. "The Economic Effects of Disarmament. 
 
 Scientific American , 204 (April 196l), UT-55- 
 
 [10] , et. al. "The Economic Impact — Industrial and Regional — of an 
 
 Arms Cut." The Review of Economics and Statistics , 47 (August 
 1965) , 217-241. 
 
 [II] U. S. Department of Commerce, Office of Business Economics. "Input- 
 
 Output Structure of the U. S. Economy: 1963." Survey of Current 
 Business, 49 (November 1969) , 16-47. 
 
 3^ 
 
[12] U. S. Department of Labor, Bureau of Labor Statistics. Projections 
 
 1970 ' Interindustry Relationships, Potential Demand, Employment , 
 Bulletin 1536. Washington, D..C. : U. S. Government Printing 
 Office, 1966. 
 
 [13] , • Tomorrow's Manpower Needs . Bulletin 1606, 
 
 four volumes. Washington, D. C. : U. S. Government Printing 
 Office, 1966. 
 
 [ik] , . Patterns of U. S. Economic Growth . Bulletin 
 
 1672. Washington, D. C. : U. S. Government Printing Office, 
 1970. 
 
 35 
 
UNCLASSIFIED 
 
 Security Classification 
 
 DOCUMENT CONTROL DATA R&D 
 
 (Security claaaltleatlon ol title, body ol ab* tract and Indexing annotation muet he entered when the overall report la cleaellled) 
 
 originating ACTIVITY (Corporate author) 
 
 Center for Advanced Computation 
 University of Illinois at Urbana- Champaign 
 Urbana, Illinois 6l801 
 
 2a. REPORT SECURITY CLASSIFICATION 
 
 UNCLASSIFIED 
 
 2b. enoup 
 
 REPORT TITLE 
 
 ECONOMIC RESEARCH GROUP WORKING PAPER NO. 2 
 
 Occupational Manpower Impacts of Shifting National Priorities 
 
 DESCRIPTIVE notes (Type ol report and htelualwa dataa) 
 
 Research Report 
 
 AUTHOR(S) (Flrmt name, middle Initial, laat name) 
 
 Roger H. Bezdek 
 
 REPORT DATE 
 
 July 27, 1971 
 
 CONTRACT OR GRANT NO. 
 
 DAHCOU 72-C-OOOl 
 . PROJECT NO. 
 
 ARPA Order 1899 
 
 7«. TOTAL NO. OF PACES 
 
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 76. NO. OF REFS 
 
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 fta. ORIGINATOR'S REPORT NUMBER(S) 
 
 CAC Document No. 8 
 
 0b. OTHER REPORT NOISI (Any other numbers that may be aaelgned 
 this report) 
 
 DISTRIBUTION STATEMENT 
 
 Copies may be requested from the address given in(l) above, 
 
 . SUPPLEMENTARY NOTES 
 
 None 
 
 12. SPONSORING MILITARY ACTIVITY 
 
 U.S. Army Research Office-Durham 
 Duke Station, Durham, North Carolina 
 
 ABSTRACT 
 
 This paper presents the development of an economic model capable of 
 generating occupational manpower requirements from alternate specified dis- 
 tributions of national expenditures reflecting different goals and priorities. 
 This model is used to simulate the effects of several specified shifts in 
 national priorities upon manpower requirements of the United States in the 
 early 1960's. The employment effects of these simulated priority shifts are 
 indicated and 150 occupations are classified and ranked according to their 
 sensitivity to changing patterns of resource allocation. The implications of 
 these results for economic and manpower forecasting and planning are discussed. 
 
 VJ 1 NOV SB I *» / O 
 
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 STFTET 
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 Classification 
 

 UNCLASSIFIED 
 
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 ITT 
 
 KEY WORDS 
 
 Social and Behavorial Sciences (Economics) 
 
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