The Vision Series,

Transcription

1 The Vision Series, The Washington Area Economy: Transitioning From Federal Dependency to a Global Business Base Stephen S. Fuller, Ph.D. Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis George Mason University February 18, 213 The Washington Metropolitan Area from The International Space Station, January 2, 213 GMU Center for Regional Analysis 1

2 The Washington Metropolitan Area in 242 (population and employment in millions, GRP in billions of 212 $s) Metric Change Population Employment Gross Regional Product (GRP) $45.9 $1, Current Year $s $2, Source: IHS Global Insight, GMU Center for Regional Analysis GMU Center for Regional Analysis 2

3 The Washington Area Economy s Competitive Position 1 st in percent of residents with graduate or professional degrees 3 rd in number of workers per household 2 nd in labor force participation rate 1 st in median household income Lowest unemployment rate among peer metropolitan areas 1 st for traffic congestion 2 nd in the number of square feet of total office space 4 th largest economy among U.S. metropolitan areas but only 7 th in population The First 2 Years GMU Center for Regional Analysis 3

4 The Capital City in 18 The Washington Daily Advertizer had reported on June 11, 18, that the State, War, Navy, and Post Office departments all but the Treasury had been moved from Philadelphia. It sounded impressive, but the total number of employees (inclusive of Treasury) was only 131. (p.11) A great many of the federal employees thought well of their new location. While there was a great housing shortage and rents were high, provisions were plentiful and cheaper than in Philadelphia. They liked the situation and thought the place beautiful, and with good prospects for growth. (p. 12) From The Potomac (1949), by Frederick Gutheim The Capital City in 18 The Census of 18 found about 5, persons each in the established towns of Georgetown and Alexandria and about 3, in the rest of the Federal District. (p. 12) Nearly a million dollars had been spent in the nine years since the permanent seat of government had been chosen, but so huge the task that there was remarkably little to show for it. (p.13) Most of the difficulties were due to a simple lack of funds. Since the commencement of work on the public buildings there were seldom adequate plans and estimates, and when there were, the funds requested were not appropriated by Congress. (p. 17) From The Potomac (1949), by Frederick Gutheim GMU Center for Regional Analysis 4

5 Population and Federal Employment Growth In the Washington Area, 18-2 Years DC Metro Area Federal Employees 18 8,144 63,653* 131** ,8 141,215* 2,199** ,7 23,18* 6,222** , ,65* 2,834** , ,198 68,51** ,91 967, ,645** ,234 1,452, ,77** ,35 4,271,8 355, ,32 4,645,8 326, ,51 4,843,28 326,23 *DC, Alexandria, Arlington, Fairfax, Montgomery, Prince George s, **in DC only Source: GMU Center for Regional Analysis Thousands Population Growth by Decade Washington MSA s 1s 2s 3s 4s 5s 6s 7s 8s 9s s Source: US Census and GMU Center for Regional Analysis GMU Center for Regional Analysis 5

6 1s 3 25 Population in the Washington MSA By Sub-State Area, Northern VA 2 15 Suburban MD 1 5 D.C. Source: US Census and GMU Center for Regional Analysis Growth in Jobs, s District of Columbia 394 Suburban Maryland 83 Northern Virginia Source: US Bureau of Labor Statistics, GMU Center for Regional Analysis GMU Center for Regional Analysis 6

7 5 4 Changing Job Patterns in the Washington Metro Area, (Percent Share of Total) SERVICES 3 2 FEDERAL 1 Share of Washington Area Economy % of GRP 5% 45% 4% 35% 3% 25% Northern Virginia Suburban MD D.C. 2% 15% 1% GMU Center for Regional Analysis 7

8 Federal Spending Patterns In the Washington Area $ Billions Federal Spending Washington MSA Total & Procurement Source: US Census, Consolidated Federal Funds Report GMU Center for Regional Analysis 8

9 $ Billions 9 Federal Spending By Type Procurement Wages & Salaries 1 Source: US Census, Consolidated Federal Funds Report Federal Procurement in the Washington Metro Area, $ Billions TOTAL = $867.9 Billion < 8-9 = $96.5 B > < 91- = $27.9 B > < 1 1 = $563.5 B > Source: US Census, Consolidated Federal Funds Report GMU Center for Regional Analysis 9

10 $ Billions Federal Procurement Top 1 States VA CA TX MD DC PA FL MA NY GA Source: Census, Consolidated Federal Funds Report; GMU Center for Regional Analysis Federal Employment in the Washington Metro Area, s Eisenhower Kennedy Johnson Nixon - Ford Carter Reagan Bush 1 Clinton Bush Obama Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 1

11 $ Billions Federal Wages & Salaries Top 1 States TX CA DC VA GA NC MD NY FL WA Source: Census, Consolidated Federal Funds Report: GMU Center for Regional Analysis 21 Structure of the Greater Washington Economy Non-Local Business 12. % Other Federal 1.7 % Local Serving Activities 34.8% Total Federal 39.8% Fed Wages & Salaries 1.% Procurement 19.1% Source: GMU Center for Regional Analysis Other 1.5% Health/Ed. 4.5% Assn 1.8% Int l 3.5% GMU Center for Regional Analysis 11

12 The Washington Metropolitan Area Is Different It has the 4 th largest economy but only ranks 7 th in number of residents and is 2 nd to NYC in the square footage of total office space. ($ Bil , Largest Metro Areas 21 GRP Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis GMU Center for Regional Analysis 12

13 WASHINGTON Phoenix Miami Houston Los Angeles Atlanta Philadelphia Minneapolis Dallas-FW Seattle New York Chicago Boston SF-Oakland Detroit Metro Comparisons Job Change Largest Metro Areas (s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis % Largest Metro Areas GRP Percent Change 27-1 Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis GMU Center for Regional Analysis 13

14 Average Income Levels In the Washington Metropolitan Area, 199 % of Workers 3% 199 Income (in 211 dollars) 25% 2% 15% 1% 5% % Sources: Reuters, GMU Center for Regional Analysis Average Income Levels In the Washington Metropolitan Area, 21 % of Workers 3% 21 Income (in 211 dollars) 25% 2% 15% 1% 5% % Sources: Reuters, GMU Center for Regional Analysis GMU Center for Regional Analysis 14

15 The Changing Income Pattern in the Washington Area, 199 and 21 (percent share, inflation adjusted $s) Income Range $1K-$5K 44% 44% $5K-$7K 31% 14% $7K-$9K 2% 2% $9K and above 4% 39% Source: Reuters, GMU Center for Regional Analysis How did the recession change the Washington Area economy? GMU Center for Regional Analysis 15

16 US GDP and Washington GRP % Washington GRP US GDP ,s 16 Annual Change in Jobs Washington Metro Area Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis GMU Center for Regional Analysis 16

17 Wash MSA Payroll Job Change: Private Sector The Great Recession and Recovery To December 212 Prof. & Bus. Svcs Educ & Health Svcs Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. (s) Total -193 Total Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Washington Area Job Changes By Sector, (through Dec) (in thousands) SECTOR Washington Metro Area D.C. Suburban MD Northern Virginia Professional, Business Services Government Health, Educ. Svcs Other Services Hospitality All Other TOTAL Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 17

18 Annual Job Change Washington MSA, Annual Data Annual Month over Year (s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis (s) Largest Job Markets Job Change May 9 May 1 Washington + 13,2 Source: US Bureau of Labor Statistics, March 21 Benchmark, GMU Center for Regional Analysis GMU Center for Regional Analysis 18

19 (s) Largest Job Markets Job Change May 9 May 1 Washington + 13,2 Source: US Bureau of Labor Statistics, March 21 Benchmark, GMU Center for Regional Analysis (s) Largest Job Markets Job Change Washington + 11,3 Source: US Bureau of Labor Statistics, March 211 Benchmark, GMU Center for Regional Analysis GMU Center for Regional Analysis 19

20 (s) Largest Job Markets Job Change: Washington + 32, Source: US Bureau of Labor Statistics, March 211 Benchmark, GMU Center for Regional Analysis (s) Large Job Markets Job Change: Dec 211 Dec Washington + 3, Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 2

21 Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change by Sector Dec 211 Dec 212 Washington MSA (s) Total = 3, Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change by Sector Nov 212 Dec 212 Washington MSA (s) Total = -1, Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 21

22 (s) Annual Data Annual Job Change District of Columbia, Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change by Sector Dec 211 Dec 212 District of Columbia (s) Total 1, Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 22

23 (s) Annual Data Annual Job Change Suburban Maryland, Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change by Sector Dec 211 Dec 212 Suburban Maryland -2-1 (s) Total 12, Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis 8 GMU Center for Regional Analysis 23

24 (s) Annual Data Annual Job Change Northern Virginia, Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Prof. & Bus. Svcs Federal Govt. Educ & Health Svcs State & Local Govt Retail Trade Leisure & Hosp. Construction Other Services Financial Information Manufacturing Wlse Trade Transp. & Util. Job Change by Sector Dec 211 Dec 212 Northern Virginia (s) Total 2, Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 24

25 14 Unemployment Rates in the WMSA By Sub-State Area, DC 7.8 U.S. 5.7 SMD 5.2 MSA NVA 2 Source: US Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US Seasonally Adjusted) % Largest Job Markets Ranked by Unemployment Rate Dec US 7.8 Source: US Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US Seasonally Adjusted) GMU Center for Regional Analysis 25

26 New York Houston Dallas Los Angeles Phoenix SF-Oakland Seattle Atlanta Chicago WASHINGTON Boston Minneapolis Detroit Miami Philadelphia Metro Area Comparisons Job Change Dec 21 Dec Largest Metro Areas (s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Key Conditions Shaping the Future Washington Area Economy: Declining Federal Spending Wage and Salary Compression Population Change GMU Center for Regional Analysis 26

27 Federal Procurement in the Washington Metro Area, $ Billions TOTAL = $1,23.5 Billion < 8-9 = $96.5 B > < 91- = $27.9 B > < 1 1 = $563.5 B > $8. B $75.6 B Source: US Census, Consolidated Federal Funds Report Federal Government Washington MSA (s) Annual Data May Oct Mar Aug Annual Month over Year Jan Jun Nov Apr Sep Feb Jul Dec Source: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis GMU Center for Regional Analysis 27

28 Summary for Federal Spending Trends in the Washington Metropolitan Area, Federal Procurement Outlays declined 8.4% between FY 21 and FY 212. Federal employment has declined since peaking in July 21, losing 8,7 jobs or 2.25%. Federal payroll declined by.6% between FY 21 and FY 211 and will continue to decline as the workforce shrinks and older workers retire and are replaced by younger workers. Changing Job and Income Patterns In the Washington Metropolitan Area Professional & Business Services 14 Education & Health Services Oct-22 to Oct-27 Oct-27 to Oct-212 Source: US Bureau of Labor Statistics, GMU Center for Regional Analysis $92.2K $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $5.7K 211 Avg. Annual Pay GMU Center for Regional Analysis 28

29 Early Signs of Income Compression Washington MSA Jobs (in thousands) 3,92 3,9 3,88 3,86 3,84 3,82 3,8 3, , ,849 (in thousands, 211 dollars) 3, Earnings Per Employee 3, Jobs Earnings Per Employee 72. Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis The Washington Metropolitan Area Population Is Aging (percent share, total population in millions) Age Group Change Less than 25 years 32.7% 32.% 31.5% 17.2% 25 to 44 years old % 45 to 64 years old % 65 years old + 1.5% 12.7% 15.7% 82.4% Totals % Source: IHS Global Insight, GMU Center for Regional Analysis GMU Center for Regional Analysis 29

30 Having Had a Rich Uncle Was Great, But Now What? Job Growth in the Washington Area By Sector, (in thousands) Sector Change Percent Prof. & Bus. Ser Federal Gov t Education/Health S & L Gov t Hospitality Retail Trade Other Services Financial Services Construction Information Ser Other Sectors (3) Total Jobs 3,33.4 3, GMU Center for Regional Analysis 3

31 Major Sources of Job Growth in the Washington Area, (in thousands) Growth Sectors Change Percent Prof. & Bus. Ser Education/Health Construction Sub-Totals 1,224. 1, % Total Totals 3,33.4 3, Sources: IHS Global Insight; GMU Center for Regional Analysis GRP Per Job in the Washington Area By Sector (in 25 dollars) Sector % Change Prof. & Bus. Services $134,75 $154, % Federal Gov t 138, ,566.1 Education/Health 59,73 57, S & L Gov t 6,975 56, Hospitality 42,883 42, Retail Trade 6,87 64, Other Services 7,339 69, Financial Services 543, , Construction 98,824 82, Information Services 349, , Other Sectors 147,93 151, GRP per Job $13,653 $138, GMU Center for Regional Analysis 31

32 GRP Per Job in the Washington Area By Sector (in 25 dollars) High Job Growth % Change Prof. & Bus. Svs. (2.6%) $134,75 $154, Education/Health (1.2%) 59,73 57, Construction (37.8%) 98,824 82, Other High Value-Added Sectors Information Services (8.7%) 349, , Financial Services (3.1%) 543, , Federal (-5.8%) 138, ,566.1 Wholesale Trade (8.9%) 183,6 191, Transport/Warehsg (16.1%) 138, , GRP per Job $13,653 $138, GRP, Job and Workforce Growth in the Washington Metropolitan Area, (in billions of current $s, jobs in thousands) Indicator Change GRP Growth $45.9 $ % Net Job Growth 3, , % Replacement Job Growth % Resident Workforce 3,23.1 3, % GMU Center for Regional Analysis 32

33 Washington Metropolitan Area: Major Sources of Workforce Growth Occupation Total Openings % of Total % Change Sales Occupations 92, Business and Financial 89, Office Admin Support 85, Food Prep & Serving 6, Management Occupations 59, Computer, Math and Sci 55, Health Care (all) 53, Education & Training 42, Personal Care Occup. 42, Totals 58, Washington Metropolitan Area: Major Sources of Net New Jobs Occupation Net New % of Total % Change Business and Financial 52, Computer, Math and Sci 33, Health Care (all) 31, Office Admin Support 3, Sales & Related Occup. 29, Personal Care Occup. 23, Management Occupations 22, Education & Training 21, Totals 224, Source: EMSI Inc., GMU Center for Regional Analysis GMU Center for Regional Analysis 33

34 Educational Levels of Net New and Replacement Jobs in the Washington Metropolitan Area, Educational Level All Jobs Net New Replace ment Bachelor s or more 34.1% 278, % 144, % 133,645 Associate s 4.3% 35, % 18, % 17,117 HS/Voc. Ed. GED/OJT 61.4% 5, % 192, % 37, Structure of the Greater Washington Economy Non-Local Business 16.3 % Other Federal 8.9 % Fed Wages & Salaries 7.7 % Total Federal 28.8% Procurement 12.2% Local Serving Activities 38.% Health/Ed. 7. % Other 1.5% Assn 1.9 % Source: GMU Center for Regional Analysis GMU Center for Regional Analysis 34

35 The Changing Structure of the Washington Area Economy, (percent distribution) Professional + Bus. Svcs Education + Health Svcs. Hospitality State + Local Govt. Federal Other Sectors Source: IHS Global Insight, GMU Center for Regional Analysis Key Development Challenges for the Washington Region Shortage of workers to fill the region s projected job growth Growing dependency on non-resident workforce; Shortages of housing in all jurisdictions to house the future workforce Lack of long-term regional solutions and implementation of public sector investments to support the growth and development of the Washington area economy Need for local and regional leadership GMU Center for Regional Analysis 35

36 Thank You Questions cra.gmu.edu GMU Center for Regional Analysis 36