Defense spending nears $5 billion in local economic benefit, according to a new study.

The economic impacts of agriculture and hospitality, Monterey County’s number one and number two industries respectively, are well advertised year after year. A 2018 analysis showed ag contributed $11.7 billion in impact; See Monterey’s most recent study about the impact of hospitality boasted a $3.24 billion impact from hospitality in 2023. One sector of the economy gets less notice, yet packs a big punch, according to a new study.

Defense spending generated by the county’s military installations and presence of veterans provided an estimated $4.9 billion impact to Monterey County in 2023, according to the Monterey County Military Economic Impact Report commissioned by the Monterey Bay Defense Alliance and conducted by Colorado Springs-based Matrix Design Group, which specializes in defense community consulting.

“We’re very proud of our hospitality industry. We’re grateful for the economic impact. Yet the economic impact of the military sector and the federal dollars outshine the sector,” said Monterey City Manager Hans Uslar, using his city’s top industry for comparison, at a breakfast hosted by the Monterey Peninsula Chamber of Commerce for the MBDA on Friday, Jan. 31, where the study’s results were unveiled.

Part of the $4.9 billion comes from $2.4 billion in direct spending by the Department of Defense, the U.S. Coast Guard and Department of Veterans Affairs, including personnel compensation, procurement contracts and grants and veterans pensions and benefits. The county is home to nearly 12,000 military personnel and civilian workers, supporting facilities like the Defense Language Institute, Naval Postgraduate School and Fort Hunter Liggett.

A breakdown shows that the $2.4 billion came from $1.4 billion in compensation to over 11,800 uniformed service members and DoD civilian employees, $682 million in procurement and aid and $328 million in pensions, education benefits and medical benefits, including money that goes to an estimated 17,600 veterans and retirees.

Indirect spending, including by businesses in the supply chain, household spending by military families and other indicators generated another $2.5 billion in impact. In addition, defense activity in the county generated an estimated $69 million in local tax revenue and $254 million in state tax revenue.

The federal dollars spent on the military in the county are an investment, said Charlie Perham, director of planning and analytics for Matrix. “The federal government is investing in this community and in the people that are working in the industry,” he said, adding that it accounts for about 15 percent of the county’s economy.

The study estimated it generates 27,475 jobs, 10.5 percent of the labor force.

The complete study is available at bit.ly/MontereyCountyMilitaryReport.