From The Washington Post:
The Washington area’s economy has long had its share of inequalities. Technology is continuing to exacerbate the differences between the haves and have-nots, two economic studies released in the past week suggest, as innovations in fields such as IT and mobile technology create high-paying jobs for some while eroding pay and benefits for others.
An analysis by Brookings Institution researchers found the transition to so-called digital work has primarily created jobs in high-paying and low-paying sectors here, hollowing out the middle-class opportunities that have long been an engine for growth in America. A separate study by researchers at George Mason University shined a light on the extent to which part-time contract work — where benefits are sparse and pay is declining — is becoming a bigger part of the local job market.
Job growth in the D.C. metropolitan area has slowed lately after a banner year in 2016.
The region added just 46,400 jobs in the one-year period ended in October, according to data released Friday by the Bureau of Labor Statistics.
Unemployment rates sank in Maryland and Virginia to 3.8 percent and 3.6 percent respectively, leading economists to question whether they can get any lower.
In the District the picture is less rosy: The unemployment rate for the city has been steadily climbing, reaching 6.6 percent in October, up from 5.8 percent the same time last year.
That could be partially caused by a hiring slowdown at many government agencies: The jobs figures released Friday estimate that federal employment has shrunk by 2,300 jobs since October 2016.
Still, the climbing unemployment rate has puzzled the region’s top economists. “I would be surprised if this sticks, just because it runs counter to what we’re hearing from businesses in the District,” said Andy Bauer, a regional economist with the Richmond Federal Reserve.
The jobs that are being created here tend to fall into two distinct categories: high-paying opportunities in technology and business sectors, which are often located in the suburbs, and service-related opportunities at restaurants, bars and entertainment venues.
“We have a lot of highly skilled digital workers being paid well, and their spending is supporting this growth at the other end . . . the yoga instructors, the physical therapists, those working in food preparation,” said Mark Muro, a senior fellow at Brookings.
Growth at the top end of the income spectrum has been driven by relatively high-paying software and IT jobs that are popping up primarily in the D.C. area’s outer suburbs.
Market analysts, cybersecurity analysts and software-related occupations grew by 10 percent, 2.7 percent and 1.3 percent, respectively, each year since 2010, the Brookings researchers found.
Even more jobs are being created for cooks, repair workers and personal health-care aides, where employment grew annually by 6.8 percent, 7.9 percent and 24 percent, respectively, between 2010 and 2016. The estimates released Friday suggest that trend has continued in 2017.
Some also see it as a problem that much of the new work in the D.C. region is occurring outside the traditional employment structure. As opportunities in the so-called gig economy proliferate with the rise of companies like Uber and Lyft, a large class of semi-employed individuals is growing without the same set of employment benefits offered by more traditional employers.
A new report from the Stephen S. Fuller Institute at George Mason University found 526,000 non-employer establishments in the D.C. area — meaning people who operate as freelancers, contractors or sole-proprietors — a category that saw a 78 percent increase between 1997 and 2015.
The number of people in a traditional employment situation went up by a much smaller 46.9 percent.
Gig-style work isn’t necessarily a bad thing. In many cases, it gives skilled workers a way to augment their income while sharing their expertise more widely. The report found many of these workers hold positions in the higher-paying scientific and business sectors, as well as in the real estate industry.
The region’s self-employed “are where some ideas are going to evolve from that will become sustainable businesses in the future,” said Stephen Fuller, an economist and the institute’s namesake. “This isn’t where those workers are going to end up. . . . It’s where they’re starting.”
The profile of people who work as part-time contractors is changing. Those working outside of a typical employment relationship once made about the same as their fully employed counterparts, the report found, but that started to change after 2004.
The report pegged a rough measure of average income for those contractors in the Washington area at $46,770 per year in 2015, a 20 percent drop from the category’s peak in 1998. That doesn’t even account for the fact that such workers often have to cover their own expenses.
For the first time in 2013, the number of contractors working locally in taxi and limousine services (read Uber and Lyft) exceeded the number of real estate agents, jumping from a little over 10,000 to almost 30,000 in about three years.
“There’s definitely an evolution happening here,” said Ellen Harpel, the report’s author. “It could be because there are more people joining the labor market, or it could be something more negative . . . like people taking these side-gigs for extra income.”