Latest / Defense B2B podcast news daily - for industry professionals subscribe to develop your skillsets / Defense’s Loyalty Crisis — For Industry Professionals Thu Oct 15, 2026 — 10:43 PM PT
Transcript
- 0:00Welcome to Copilot Podcasts. Here's a number
- 0:04that should stop you cold. The US aerospace and
- 0:07defence industry supports roughly 2 .1 million
- 0:10jobs, generates a trillion dollars in total business
- 0:13activity and yet right now there are more than
- 0:1670 ,000 security cleared positions sitting completely
- 0:19empty. An industry that literally builds the
- 0:23tools of national security cannot find enough
- 0:25people to staff itself. Today we're getting into
- 0:29the workforce disruption tearing through defence
- 0:32B2B, specifically why corporate loyalty has collapsed,
- 0:36what the self -employment era means for a sector
- 0:38that runs on clearances and long -term commitment,
- 0:41and what defence corporations actually have to
- 0:43do to win top -tier talent back. By the end of
- 0:47this episode you'll understand the structural
- 0:49forces behind this crisis and what a real fix
- 0:52looks like. And the person I want to dig into
- 0:55all of this with knows this space deeply. So
- 0:57let's get right into it. Walk me through. So
- 1:00the picture is pretty stark. The Vital Signs
- 1:022026 survey, which goes out to US defense industry
- 1:05members every year, found that 56 % of respondents
- 1:08said it was somewhat or very difficult to hire
- 1:11cleared workers. And that same 56 % figure showed
- 1:14up for skilled trade workers. And again, for
- 1:17STEM workers, three categories, same number,
- 1:20three years in a row. Wait, the exact same percentage
- 1:22across all three categories? Exactly. And that
- 1:25consistency is actually the alarming part. It's
- 1:28not a blip. It's a structural condition. The
- 1:30Amtech 2026 benchmark report puts the industry
- 1:34-wide attrition rate at around 15%, which AIA
- 1:37and McKinsey note is more than double the cross
- 1:39-industry average. More than double. So people
- 1:42are leaving defense at twice the rate they're
- 1:44leaving other industries. Right. And the Vital
- 1:47Signs survey is pretty direct about why. Defense
- 1:50companies, because of regulations that limit
- 1:51their profits and cap wages, have not been able
- 1:54to keep up with pay increases in the commercial
- 1:56sector. There used to be a wage premium in defense,
- 1:59the idea being that working on national security
- 2:01was both meaningful and financially competitive.
- 2:04That premium has been erased. So the industry
- 2:07that once attracted the nation's best engineers
- 2:09and cleared professionals by paying them well
- 2:12can no longer do that? That's exactly what the
- 2:15National Defense Magazine's Vital Signs 26 piece
- 2:18says. And it creates this brutal competitive
- 2:20dynamic. Defense doesn't operate in isolation.
- 2:23It's competing with tech companies, commercial
- 2:25aerospace, cybersecurity startups, all of them
- 2:28for the same pool of qualified workers. And those
- 2:31sectors don't have the same wage constraints.
- 2:33OK, so before we get into what defense companies
- 2:36should do about it, I want to zoom out a bit
- 2:38because this isn't just a defense problem, right?
- 2:40The broader collapse of corporate loyalty is
- 2:42the backdrop here. How did we get to a place
- 2:45where workers, especially younger workers, just
- 2:48don't feel any obligation to stay? Yeah, and
- 2:51this is where the history really matters. There
- 2:53was a period, mid -20th century, that analysts
- 2:56sometimes call the golden age of employee loyalty.
- 3:00Companies offered job security, steady wage growth,
- 3:03retirement benefits. Workers gave long -term
- 3:05dedication in return. The social contract was
- 3:08clear. You stay. We take care of you. the gold
- 3:11watch at retirement kind of era. Exactly that.
- 3:14And Rick Garlick, who's a consulting partner
- 3:16at WorkProud and led their major study on this,
- 3:19put it really well. He said, and I'm quoting
- 3:21here, That's a pretty striking thing to say about
- 3:35something that used to be completely normal.
- 3:37So what broke it? What actually ended that era?
- 3:40The analysis from LinkedIn, a piece by Gulshan
- 3:42Verma, traces it back to the 1980s. That's when
- 3:45companies started engaging in large -scale corporate
- 3:48restructuring, mergers, acquisitions, and downsizing.
- 3:51Employees who had given decades to a company
- 3:53found themselves laid off with little warning
- 3:55or compensation. And when workers see that happen
- 3:58to long -serving colleagues, the implicit promise
- 4:01of reciprocal loyalty just shatters. So employers
- 4:04broke the contract first? That's the argument,
- 4:07yeah. And it's a compelling one. The Verma analysis
- 4:10is pretty direct. It says employers are largely
- 4:13to blame for the erosion of loyalty as a beneficial
- 4:15attribute in the workplace. Short -term profit
- 4:18motives, restructuring, and then the rise of
- 4:20the gig economy all compounded it. Companies
- 4:23like Uber and Lyft popularized a model of work
- 4:25that explicitly avoids traditional employment
- 4:28relationships in favor of short -term contract
- 4:30engagements. And that model spread way beyond
- 4:33ride -sharing? Way beyond. It normalized the
- 4:36idea that work is transactional. You show up,
- 4:39you deliver, you get paid, and neither side owes
- 4:42the other anything beyond that specific exchange.
- 4:44There's actually a real person in the CNBC reporting
- 4:47on this who kind of embodies that shift. Vera
- 4:50Lau, she's 27, she's worked at three different
- 4:52companies in three years, and she told CNBC,
- 4:56quote, I don't think loyalty pays off. It's all
- 4:59very transactional. You're only valuable for
- 5:01as long as they see you as valuable. If you don't
- 5:04learn and you don't earn, it's time to go. And
- 5:07she's not an outlier. The WorkProud study surveyed
- 5:10a thousand full -time employees and found that
- 5:12only 23 % of workers aged 42 and under express
- 5:16strong interest in staying with their companies
- 5:18long -term. For workers aged 30 and under, that
- 5:21dropped to 18%. So fewer than 1 in 5 workers
- 5:25under 30 actually want to stay long -term. And
- 5:27it gets more pointed than that. Only 11 % of
- 5:30workers aged 30 and under said they'd stay loyal
- 5:33to their employer if they found a similar role
- 5:35that paid more elsewhere. 11%. That's basically
- 5:39saying the moment a better offer shows up, I'm
- 5:42gone. Which, honestly, when you frame it that
- 5:45way, is that even irrational? Like, Jerome Zapata,
- 5:49who's the HR director at Kickstart Ventures,
- 5:51told CNBC that loyalty basically doesn't pay
- 5:54financially. Job hoppers get paid more because
- 5:57merit increases can only go so far, but when
- 6:00you join a new company, you can negotiate from
- 6:02a position of strength. Right. And Zapata said
- 6:04something else that really lands. During previous
- 6:07generations, if you stayed loyal, the organization
- 6:10would take care of you for life. But now, he
- 6:12said, the retirement benefits are not livable.
- 6:15So the incentive structure that made loyalty
- 6:17rational has been dismantled from both ends.
- 6:20OK, so now bring this back to defense specifically.
- 6:23Because Defence B2B has some unique wrinkles
- 6:25here that make this even more complicated, right?
- 6:28It's not just about pay. Yeah, Defence has layers
- 6:31on top of the general loyalty problem. The most
- 6:34obvious one is security clearances. You can't
- 6:36just walk into a cleared position, the process
- 6:39takes time, it's expensive, and there are over
- 6:4270 ,000 unfilled cleared positions right now,
- 6:45according to the Amtech 2026 benchmark report,
- 6:49citing AIA and PwC data. And that number is likely
- 6:52higher given how much defense spending has accelerated
- 6:54since that estimate was made. So the pipeline
- 6:57for cleared workers is already constrained, and
- 7:00then you layer on top of that the fact that cleared
- 7:02workers have options. They can go to commercial
- 7:04cybersecurity firms, defense tech startups, consulting
- 7:07firms, all of whom can pay more. Exactly. And
- 7:10the XPRS 2026 Aerospace and Defense Report from
- 7:14Manpower Group's Work Intelligence Lab frames
- 7:16this as a mission 2030 challenge. The idea being
- 7:19that if the industry doesn't close these tech
- 7:21talent gaps now, the pipeline problem compounds
- 7:24through the second quarter of the century. It's
- 7:27not a short -term hiring crunch. It's a structural
- 7:29threat. And meanwhile, defense spending is at
- 7:33record levels. The DOD's FY 2025 budget request
- 7:36was $849 .8 billion, according to the Jobs with
- 7:40DOD Defense Outlook. So you have this almost
- 7:43paradoxical situation, more money flowing into
- 7:46defense than ever, and yet the workforce crisis
- 7:49is getting worse. That paradox is real, and it's
- 7:52important. More budget doesn't automatically
- 7:54translate to more talent, especially when the
- 7:57regulatory structure caps what you can pay workers.
- 8:00The Vital Signs 2026 survey is explicit about
- 8:03this. Defense companies can't keep up with non
- 8:06-defense pay increases because of profit and
- 8:08wage limits tied to government contracting rules.
- 8:10So the money is there at the macro level, but
- 8:13it doesn't flow down to the individual worker
- 8:15in a way that makes defense competitive. That's
- 8:18the bind. And it's why the talent problem in
- 8:21defense is so hard to solve with just a budget
- 8:23increase. You need structural reform, not just
- 8:27more dollars. And there is actually movement
- 8:29on that front, right? The government has been
- 8:30trying to address this. There is. The acquisition
- 8:33workforce reform strategy published in February
- 8:362026 is a direct response to this. It lays out
- 8:40a framework for building what it calls a highly
- 8:42skilled, adaptable acquisition workforce. And
- 8:45one of its explicit pillars is incentivizing
- 8:47the workforce, paying acquisition professionals
- 8:49well and holding them accountable for results.
- 8:52It also calls for fostering a culture of continuous
- 8:54learning and cross -functional collaboration.
- 8:57That sounds like the kind of language that could
- 9:00either be genuinely transformative or just very
- 9:03nice words in a PDF. Ha, fair. And that tension
- 9:06is real. The strategy itself acknowledges that
- 9:09reforming the acquisition workforce demands,
- 9:12quote, decisive empowerment and unambiguous motivation
- 9:15to uproot entrenched processes. That's pretty
- 9:18candid language for a government document. It's
- 9:21essentially admitting that the existing system
- 9:23has been resistant to change. The acquisition
- 9:26transformation strategy from the DOW also has
- 9:29this line about incentivizing the workforce,
- 9:31pay our acquisition professionals well and hold
- 9:33them responsible for getting the best deals for
- 9:35the warfighter no matter what it takes. That's
- 9:38a pretty direct statement. It is. And the framing
- 9:41of no matter what it takes is interesting because
- 9:43it signals a willingness to push against the
- 9:46regulatory constraints that have historically
- 9:48capped compensation. Whether that actually happens
- 9:50in practice is the open question. Let me push
- 9:53on something here. Because we've been talking
- 9:55about pay as the primary lever. But the post
- 9:58-COVID research on talent attraction suggests
- 10:00it's more complicated than that. The Integrated
- 10:03Benefits Institute's systematic review found
- 10:05that what workers want now includes flexible
- 10:07work arrangements, emphasis on wellbeing, culture,
- 10:11development opportunities, and communication.
- 10:14Is defense even capable of offering those things?
- 10:17That's the harder question. And honestly, some
- 10:20of those levers are genuinely difficult in a
- 10:22defense context. Flexible work arrangements are
- 10:25complicated when you're dealing with classified
- 10:27environments and CS if requirements. You can't
- 10:30just work from a coffee shop when you're handling
- 10:32TS and SCI material. Right. The nature of the
- 10:35work itself creates constraints that don't exist
- 10:37in, say, a software company. Exactly. But the
- 10:40other levers, culture, development, communication,
- 10:43career growth, those are absolutely within reach.
- 10:46And the research from Management Decision Journal,
- 10:48published in late 2024, makes the point that
- 10:51the pandemic fundamentally disrupted traditional
- 10:54leader -follower dynamics and created what they
- 10:56call significant threats to attachment security
- 10:59in workplace relationships. Rebuilding that attachment
- 11:02is now a strategic imperative, not a nice -to
- 11:04-have. Attachment security. That's an interesting
- 11:08frame for a workforce conversation. It is. And
- 11:11it maps directly onto what Kathleen Schulz from
- 11:14Gallagher said in the World at Work reporting.
- 11:16Being proud to work for their organization is
- 11:18a classic behavioral characteristic of engaged
- 11:21employees. That said, pride is not something
- 11:24you can mandate. You have to earn it. And defense
- 11:27companies, for a long time, assumed that mission
- 11:29and patriotism would do that work for them. And
- 11:32that assumption is no longer holding? Not for
- 11:35the generation that's entering the workforce
- 11:37now. The World at Work research found that while
- 11:40all generations reported similar levels of pride
- 11:43in their organization, the relationship between
- 11:45pride and actual loyalty was particularly strong,
- 11:49and particularly fragile, among younger workers.
- 11:52Pride alone doesn't translate to retention if
- 11:55the underlying conditions aren't there. There's
- 11:57also this interesting wrinkle with the defense
- 11:59sector specifically, the Coast Guard's new Robotics
- 12:02Mission Specialist rating, which the Jobs with
- 12:05DOD reporting covers. It's essentially creating
- 12:08a government -funded training pipeline that produces
- 12:10operators with hands -on robotics experience,
- 12:13and then those people can transition to the private
- 12:15sector. So defense is inadvertently training
- 12:19talent for its own competitors. That's a really
- 12:21sharp observation. And it's not unique to robotics.
- 12:24The defense sector has historically been a training
- 12:26ground. You get your clearance, you get your
- 12:28specialized skills, and then the commercial sector
- 12:30offers you more money to bring those skills over.
- 12:33The jobs with DoD piece on emerging defense careers
- 12:36in 2026 notes that defense contractors like Lockheed
- 12:39Martin are actively recruiting AI and machine
- 12:42learning engineers, but so is every major tech
- 12:44company. And the National Defense Authorization
- 12:47Act allocated $30 billion to cyber security according
- 12:50to that same reporting. So there's massive demand
- 12:53for cyber talent inside defense, but the people
- 12:56with those skills have enormous leverage to go
- 12:58elsewhere. Enormous leverage. Entry -level cybersecurity
- 13:01positions in defense start around $52 ,500 annually
- 13:05according to the jobs with DoD data. Experienced
- 13:08analysts command substantially more, but the
- 13:11commercial sector is competing hard for those
- 13:13same people. And without the wage flexibility
- 13:15to match, defense is always going to be fighting
- 13:18uphill. So what does a real fix actually look
- 13:21like? Not the aspirational language in a strategy
- 13:24document, but the actual mechanics of rebuilding
- 13:26trust and attracting top -tier talent back to
- 13:29defense B2B. I think it has to start with honesty
- 13:32about what broke the relationship. The Verma
- 13:34analysis on LinkedIn is pretty clear. Employers
- 13:37broke the social contract first. Decades of restructuring,
- 13:41downsizing, and short -term profit prioritization
- 13:43created a workforce that rationally concluded
- 13:46loyalty doesn't pay. Defense companies can't
- 13:49just ask for loyalty back without acknowledging
- 13:51that history. So it's not just a compensation
- 13:54problem, it's a credibility problem. Exactly.
- 13:58And the Integrated Benefits Institute's post
- 14:00-COVID retention review points to some concrete
- 14:02levers, increased communication with employees,
- 14:05a genuine focus on career development and growth,
- 14:08and revived onboarding processes that treat the
- 14:11first year as critical to long -term retention.
- 14:13These aren't revolutionary ideas, but they require
- 14:16consistent execution, which is where a lot of
- 14:19organizations fall short. The acquisition workforce
- 14:21reform strategy also talks about fostering a
- 14:24culture of continuous learning and cross -functional
- 14:27collaboration, which, if you actually implement
- 14:29that, starts to look a lot more like what the
- 14:31commercial sector offers. Right. And that's the
- 14:33competitive play. Defense can't always win on
- 14:36salary, but it can win on mission, on the scale
- 14:39and complexity of the problems being solved,
- 14:41and on career development if it actually delivers
- 14:44on those promises rather than just putting them
- 14:46in a strategy document. There's also the question
- 14:49of what the Deloitte 2026 Aerospace and Defense
- 14:53Outlook describes as a new era of growth powered
- 14:56by AI and digital sustainment. If defense companies
- 15:00can position themselves as genuinely cutting
- 15:02edge, not just bureaucratic legacy institutions,
- 15:06that changes the talent calculus. It does. And
- 15:09the US Army's creation of the 49B AI and ML officer
- 15:13concentration, where officers operationalize
- 15:16AI -enabled systems across warfighting functions,
- 15:19is a signal that defense is trying to modernize
- 15:21its identity, not just its technology. If you're
- 15:24a young engineer who wants to work on genuinely
- 15:26hard AI problems at scale, that's a compelling
- 15:29pitch. But only if the culture and compensation
- 15:31actually support it. Otherwise, it's just a recruiting
- 15:34pitch that doesn't survive contact with reality.
- 15:37And that's the credibility gap. The Expirus 2026
- 15:40report frames this as a challenge to the industry's
- 15:43long -standing approach to talent. That approach,
- 15:46which assumed mission alone would attract and
- 15:48retain people, is no longer sufficient. The industry
- 15:51has to fundamentally rethink how it values and
- 15:54treats its workforce. And the stakes of not doing
- 15:56that are genuinely high. This isn't just a business
- 15:59problem, it's a national security problem. If
- 16:02you can't staff the defence industrial base,
- 16:05you can't deliver the capabilities the warfighter
- 16:07needs. The Acquisition Workforce Reform Strategy
- 16:10says exactly that. It frames the workforce crisis
- 16:13as a direct threat to the ability to deliver
- 16:15warfighting capabilities at speed and scale.
- 16:18The language is urgent. War footing, speed of
- 16:21relevance. The government is treating this as
- 16:23a crisis. The question is whether the industry
- 16:26follows. And whether the regulatory environment
- 16:29actually changes to give defense companies the
- 16:31tools they need to compete on compensation. That's
- 16:34the structural piece that no amount of culture
- 16:36work can fully substitute for. You can build
- 16:38a great culture, offer development, communicate
- 16:41well, and still lose people to a tech company
- 16:43that pays 40 % more. The Vital Signs 2026 survey
- 16:47is clear. The wage premium that once made defense
- 16:50the destination for top talent is gone. Rebuilding
- 16:54it requires regulatory change, not just organizational
- 16:57will. So when you step back from all of this,
- 17:00the 70 ,000 unfilled cleared positions, the 15
- 17:04% attrition rate, the 18 % of workers under 30
- 17:08who actually want to stay long term, what does
- 17:11this really come down to? It comes down to a
- 17:13broken compact. The defense industry, and really
- 17:17corporate America broadly, spent decades dismantling
- 17:19the conditions that made loyalty rational. Restructuring,
- 17:23downsizing, wage stagnation, short -term thinking.
- 17:26And now it's a surprise that workers have internalized
- 17:29exactly the lesson those actions taught. Protect
- 17:31yourself, because the institution won't. And
- 17:34the defense sector has a uniquely hard version
- 17:37of this problem, because it can't just throw
- 17:39money at it the way a tech company can. Right.
- 17:42So the path forward has to be multi -dimensional.
- 17:45Regulatory reform to restore wage competitiveness.
- 17:47Genuine investment in culture, development and
- 17:50career growth, not just as talking points, but
- 17:52as measurable commitments. And an honest reckoning
- 17:55with the fact that trust, once broken, takes
- 17:57time and consistent action to rebuild. There's
- 18:00no shortcut. And the acquisition workforce reform
- 18:03strategies framing of accountability and performance
- 18:05excellence, clear metrics, transparency, rewarding
- 18:09high performers, that's actually part of what
- 18:11younger workers say they want. They want to know
- 18:14their contributions matter and are recognized.
- 18:17Exactly. And that's where defense has a genuine
- 18:20opportunity. The mission is real. The problems
- 18:23are consequential. If the industry can pair that
- 18:26with the conditions that make talented people
- 18:28feel valued and invested in, not just used, it
- 18:30can compete. But it has to actually do it, not
- 18:33just say it. Here's what I keep coming back to.
- 18:36Vera Lau, 27 years old, three companies in three
- 18:39years, said something that I think is the clearest
- 18:41diagnosis of this whole situation. She said,
- 18:47Our lives are not built around it anymore. That's
- 18:49not laziness. That's a generation that watched
- 18:52the social contract get shredded and decided
- 18:54to respond rationally. And Defense B2B, more
- 18:58than almost any other sector, needs workers who
- 19:01are deeply committed, who will go through the
- 19:03clearance process, who will work on complex,
- 19:05long -horizon problems, who will stay long enough
- 19:08to build institutional knowledge. You cannot
- 19:10build that kind of workforce on a purely transactional
- 19:12relationship. You need people who believe in
- 19:15what they're doing and believe the institution
- 19:17believes in them. So the industry that builds
- 19:19the tools of national security now has to do
- 19:21the harder work of rebuilding something more
- 19:23fundamental, the trust of the people it needs
- 19:26to build those tools. That's it. And the data
- 19:28is pretty unambiguous about what happens if it
- 19:31doesn't. A 15 % attrition rate that's more than
- 19:33doubled across industry average. Over 70 ,000
- 19:37cleared positions unfilled. The same three hiring
- 19:39categories, cleared, skilled trades, STEM, flagged
- 19:43as critically difficult for three consecutive
- 19:44years. the trend line is not moving in the right
- 19:47direction. And the Deloitte 2026 outlook describes
- 19:51this as a new era of growth for aerospace and
- 19:53defence, powered by AI, digital sustainment,
- 19:57rising demand. So the opportunity is real. The
- 20:00question is whether the workforce will be there
- 20:02to capture it. That's the central tension. Record
- 20:05defence budgets, record demand, record technological
- 20:08ambition, and a workforce that is walking out
- 20:10the door at twice the rate of any other industry.
- 20:13The spending power is there. The strategic vision
- 20:15is there. What's missing is the human infrastructure
- 20:18to execute it. So here's the thing that I think
- 20:20should linger with anyone listening to this,
- 20:23especially if you're in defence B2B or in any
- 20:26B2B sector dealing with this talent crunch. The
- 20:29gold watch is gone. Nobody expects it anymore.
- 20:32But what workers do expect, what the data shows
- 20:35they will stay for, is a workplace that actually
- 20:37invests in them, communicates honestly with them
- 20:40and gives them room to grow. That's not a revolutionary
- 20:44ask. It's the original deal. The industry just
- 20:47has to be willing to honor it again. And the
- 20:49cost of not honoring it is already visible in
- 20:51the numbers. 70 ,000 unfilled cleared positions
- 20:54isn't an abstraction. It's 70 ,000 gaps in the
- 20:57capability the defense industrial base is supposed
- 21:00to deliver. Every one of those is a mission that's
- 21:03slower, a contract that's delayed, a warfighter
- 21:05who's waiting. The talent crisis is a national
- 21:08security crisis, and it has a human solution.
- 21:11We started this episode with a number that should
- 21:13have stopped you cold, 2 .1 million jobs, a trillion
- 21:17dollars in economic activity, and 70 ,000 positions
- 21:20that nobody is filling. Now you know why. And
- 21:23more importantly, you know what it would actually
- 21:25take to change it. Thanks for being here on Copilot
- 21:29Podcasts. And if this one made you think differently
- 21:31about loyalty, trust, and what the defence sector
- 21:33is really up against, share it with someone who
- 21:36needs to hear it.