Stimulus Spending Turns DC Into a Boomtown

Scan the national horizon and it's hard to find many cities with a robust job market. In Los Angeles, unemployment sits just under 13 percent; in Detroit, it's at 17 percent; and in Houston, it's at 10.3 percent. There is, however, one exception: Washington, D.C. A boom in government jobs, courtesy of stimulus spending and the city's ability to hunker down during tough times, has kept the unemployment rate for the area (which includes D.C., Northern Virginia, and parts of Maryland) down around 6 percent, among the lowest in the country.

When the recession first hit, the D.C. metro area was named by Businessweek as the top place to ride it out, and for a fairly obvious reason. The industries that have been most affected by the downturn are manufacturing and construction, both of which have seen double-digit losses since summer of last year. But Washington's leading industry is the blanketing expanse of the federal government, which has typcially acted as a buffer to normal economic downturns. To remedy high unemployment and sluggish economic activity, the federal government actually has to expand.

Over the past two years, it has, and government spending is one of the biggest reasons why. The district's fastest-growing industry is homeland security, which didn't exist at the beginning of the decade; now, it commands $7 billion in annual contracts to firms mostly around Northern Virginia. More recently, the area's jobless can thank the stimulus package Congress passed in February, which, in its aim to prop up new industries, also builds new legions of federal employees for things like overseeing renewable energy grants and spending on infrastructure projects.

Critics of government spending, ironically, have also contributed to government growth. The more money that is doled out in the form of grants or loan guarantees, the more federal oversight (read: junior data analysts) needed to ensure it gets spent accurately, and responsibly. From there, the ripples expand. More money means more think-tank academics and policy wonks to weigh in on what to do with it. More conflict means more billable hours for lawyers. And all of the tension means more juicy bits for reporters to dig up.

Of course, even with all its insulation from broader economic problems, D.C. hasn't been entirely unaffected by the slump. Like the rest of the country, the district and its surrounding suburbs have been slowly losing jobs, but at a fraction of the rate of other bustling metropolises. Since October 2008, the D.C. metro area, with a population hovering around 6 million, has cut slightly more than 23,000 jobs (roughly 0.4 percent of the population), half as many as the metro area of the next closest city, Seattle, which cut 50,000 jobs (about 1.4 percent), and one ninth of New York's 220,000 (about 1.1 percent). "We haven't escaped entirely," says Stephen Fuller, professor of regional development at George Mason University. "Our unemployment rate [accounting for seasonalization and emcompassing the whole D.C. metro area] is down, but it's still double what it was before the recession."

Fortunately, the unemployed or underemployed are something the government-centered parts of D.C. can work with"”it's a long-held D.C. truism that interns play a significant role in running the place. From Capitol Hill to the policy houses and K Street lobby shops, it can be surprising how much of the district's legwork is done by the bottom rung of eager and often unpaid (or low-paid) staffers, only to be "reviewed" by more senior officials before being completed. Internship statistics are difficult to track, primarily because being unpaid means organizations don't have to keep official records. But there is evidence of a vibrant ground floor of affordable workers around town. In the last U.S. census, almost a fifth of D.C. residents"”101,762 to be exact"”were in the 25"“34 demographic. That means that they command lower salaries, and being cheap on the balance sheet is an effective way to land a new job, or keep the one you have as your agency downsizes.

For as well as D.C. seems to be doing, the outlook isn't all rosy. For one, the D.C. that has kept its head above water is really only the Northwest part of the city"”the polished marble quadrant of Washington"”that houses virtually all of the main government buildings and upscale D.C. neighborhoods like Georgetown and Dupont Circle. The rest of the district, including the Northeast and Southeast quadrants, is separated by a deep socioeconomic divide; both are neighborhoods that even President Obama has acknowledged have been ignored for too long by the shinier parts of the nation's capital.

Still, there is both anecdotal and hard evidence that D.C. is suffering less from the downturn. On the popular thoroughfares of U Street or 18th Street in the Adams Morgan neighborhood, employees at hot spots such as Ben's Chili Bowl or Tryst coffee shop report at most a modest slowdown in customers at times over the past year. One also need not stand long in Dulles International Airport to see budding young professionals getting off planes still in their college sweatshirts and eager to build their careers. The reason they come is simple: in a region bolstered by federal spending and fueled by the omnipresent demands of crafting policy, hopelessness is in far scarcer supply than jobs.

© 2009