D.C. area job market churns along despite federal drawdown

From The Washington Post:

The D.C. area economy generated 64,900 new jobs in the one-year period ended in August, the Bureau of Labor Statistics reported Friday, capping off a strong summer for the local job market. The number of federal jobs across the region dropped, however, while the category that includes federal contractors saw the largest job increase of any sector.

Job creation has slowed slightly from 2017 but remains far ahead of where it was in 2013, when the so-called sequestration budget cuts brought the regional economy to a low point.

“It’s a great time to be a job seeker in the Washington area,” said Anirban Basu, a regional economist with the Maryland-based Sage Policy Group. “Rarely is demand for talent greater than it is now, and more people are quitting their jobs to look for something better.”

Analysts said the figure might be overstated, however, because three separate Labor Department surveys, evaluating the District, suburban Maryland and Northern Virginia, added up to a much smaller 41,300 jobs over the same period. (Labor Department jobs estimates are preliminary and are often revised as the government collects additional information.)

Despite a healthy influx of new workers into the region, unemployment rates barely budged, according to the report. The unemployment rate held steady at 5.6 percent in the District, 4.2 percent in Maryland and 3.1 percent in Virginia. Job growth was strongest in the professional and business services, health care, and hospitality industries.

The region lost about 4,900 federal jobs in the past year, suggesting workers may be leaving the government at a faster rate than they are arriving. The Trump administration has taken steps to trim the number of people on federal payrolls over the past 18 months. Since February the administration has been pushing to freeze federal workers’ pay, which could make federal employment less attractive moving forward.

Those working for federal contractors — private-sector employees hired by the government — have fared better. That category that includes federal contractors added about 23,200 jobs in the past year, according to the jobs figures released Friday. Payroll data collected by the Human Resource Association of the National Capital Area found that government contractors allocated 5.3 percent more to payroll in 2018 than in 2017, compared with an increase of 3 percent for the median worker.

A boost in federal spending may be spurring the region’s economic growth. According to an analysis by the Stephen S. Fuller Institute at George Mason University, the federal government spent about $77.9 billion on goods and services in the Washington area last year, just a hair short of the region’s all-time high of $81.5 billion in 2010.

The D.C. area’s government economy has long been described as “countercyclical” compared with other metro areas. When the financial crisis gutted the national job market after the Great Recession, Washington was comparatively insulated. Years later, Washington experienced a slowdown of its own due to the Congress-imposed federal spending cuts known as sequestration, sending regional job growth into the red even as the recovery accelerated elsewhere.

The local job market has since recovered. “The regional economy has mended, and now it’s gathering steam,” said Stephen Fuller, an economist with George Mason University who studies the regional economy.

Economists are worried, however, that the types of jobs being created here are not contributing as much to the economy as in the past. Some have noticed a “bifurcation” in the area’s employment market, in which job growth includes high-paying technical jobs in fields such as information technology, alongside lower-paying work in the hospitality industry.

Another concern: Wages have hardly budged since 2008, mirroring national wage trends. For the 10th consecutive year, HRA-NCA reported that businesses allocated just 3 percent more to payroll than the previous year. Despite low unemployment rates, a healthy rate of new job creation and new workers entering the labor force, employers still aren’t handing out pay raises.

“We’re creating a lot of lower-wage jobs and a lot of higher-wage jobs, but what we’re missing is that middle area, which disappeared during the recession and sort of didn’t come back,” said Jeannette Chapman, deputy director and senior research associate at the Fuller Institute.

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