Washington keeps adding jobs, but economists say they’re the wrong kind

From The Washington Post:

The Washington-metropolitan area added 60,300 jobs in the one-year period ending in June, according to new government data released Friday, as unemployment held steady in the District and declined in Maryland and Virginia.

Suburban Maryland added 26,100 jobs, the District tallied 19,100 and Northern Virginia counted 15,100 new positions.

In keeping with the trend in the past two years, growth in the Washington area was led by the private sector, particularly in the area of health and education and leisure and hospitality. In total, private-sector hiring accounted for 80 percent of the jobs added in last month.

Economists say the numbers are better than expected, but could drop in the second part of the year if federal lawmakers pare back spending — a key economic driver for the region.

“We are now averaging 52,800 for the first months of the year and we only expected 47,000 jobs,” said Stephen Fuller, a regional economist with George Mason University. “We still expect the second half of the year [to] be considerably slower once the budget hits the fan.”

Unemployment rates changed slightly over the past year. Unemployment in the District increased 0.1 percent, from 6.1 to 6.2 this year. Maryland’s rate declined from 4.3 to 4.1 and Virginia reported a decrease of 0.3 percent from 4 to 3.7.

Economists said the better-than-expected job growth was offset by the fact that the new jobs being added tended to be lower paying than positions in the government contracting and the professional services sector that have long dominated the region’s economy.

“We are adding more jobs in areas that tend to pay less, which in the long run is not how you build a strong economy,” Fuller said.

Economists say this is not a new trend, but rather a continuation of the budget-tightening that began during the Great Recession, which has slowed the flow of federal dollars into the region.

“What has made Washington, D.C., so wealthy over time?” said Anirban Basu, a regional economist with Sage Policy Group. “It has been the quality of the jobs that it managed to add. This is why Fairfax, Prince William, Montgomery and other counties are among the wealthiest counties in the nation. But the driver has always been the federal government and its capacity to contract [with the private sector] including high tech firms.”

The decades-long expansion of government may soon reverse.

“Over the course of a decade we are likely going to observe a general decrease in the pace of federal government spending growth and we might ultimately see the federal government begin to shrink,” Basu said.

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