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Greater Washington’s Innovation Economy at a CrossroadsLessons from today’s challenges and Amazon HQ2
Amy Liu, Brookings Metropolitan Policy Program | @amy_liuw
NAIOP Northern Virginia Annual Forecast Luncheon| February 7, 2019
1
Economic and
demographic
changes within
Greater
Washington
2
Why place
matters to the
regional
economy
3
HQ2’s
implications
and what
leaders in the
region should
do
1
The state of
Greater
DMV’s
innovation
economy
2
Why place
matters to
the regional
economy
3
Implications
of HQ2 and
beyond
1 2 3
Why place
matters to
the regional
economy
The state of
Greater
DMV’s
innovation
economy
Implications
of HQ2 and
beyond
Every region should pursue three goals 1 2 3
Median wage
GROWTH INCLUSIONPROSPERITY
Jobs
Entrepreneurship
ProductivityStandard of Living
Average wage
Employment rate
Relative poverty rate
Output
76th2011-2016
Source: Brookings, “Metro Monitor,” 2018
GROWTH
1 2 3Every region should pursue three goals
Jobs
EntrepreneurshipOutput
76th2011-2016
91st2011-2016
Source: Brookings, “Metro Monitor,” 2018
GROWTH PROSPERITY
1 2 3
Jobs
Entrepreneurship
ProductivityStandard of Living
Average wage
Output
Every region should pursue three goals
76th2011-2016
91st2011-2016
94th2011-2016
Source: Brookings, “Metro Monitor,” 2018
GROWTH PROSPERITY INCLUSION
1 2 3
Median wageJobs
Entrepreneurship
ProductivityStandard of Living
Average wage
Employment rate
Relative poverty rate
Output
Every region should pursue three goals
Source: Brookings, “Metro Monitor,” 2018
PROSPERITY
95
100
105
110
115
120
Greater DMV
United States
2011 2013 2016
1 2 3
96thon productivity per capita growth,
2011 - 2016
Greater DMV is trailing the nation on prosperity and inclusion
Source: Brookings, “Metro Monitor,” 2018
PROSPERITY INCLUSION
95
100
105
110
115
120
Greater DMV
United States
90
92
94
96
98
100
102
104
Greater DMV
United States
2011 2013 2016 2011 2013 2016
93rdon median earnings growth,
2011 - 2016
1 2 3
96thon productivity per capita growth,
2011 - 2016
Greater DMV is trailing the nation on prosperity and inclusion
-0.4%
-0.3%
-0.2%
-0.1%
0.1%
0.2%
0.3%
0.4%
0.5%
Change in share of national digital services jobs
Top 100 metros, 2015-2017
San Francisco, CA
Seattle, WA
San Jose, CA
Los Angeles, CA
Washington-Arlington-Alexandria
The DMV registered the
largest decline in tech share
Source: Brookings, “Tech is (still) concentrating in the Bay Area,” December 2018
The region is adding tech jobs but losing market share 1 2 3
Source: Brookings, “America’s advanced industries: New trends” August 2016
The advanced industry sector is experiencing job growth.
The region’s advanced industries have lackluster growth 1 2 3
Share of all advanced industries jobs, 2015
Computer Systems
Design
Management and Scientific
Consulting
Architectural and
Engineering
Scientific Research and
Development
Data Processing and
Hosting
Other jobs
40%
22%
12%
11%
3% 13%
Annual average change in
advanced industry jobs
(2013-2015)
+0.9%
out of 100 largest metro
areas
65th
Source: Brookings analysis, 2015
The advanced industry sector is experiencing job growth.
of advanced industries revenue in Greater DMV
comes from federal sources
64%
1 2 3The region’s advanced industries have lackluster growth
Source: Brookings, “Digitalization and the American workforce,” November 2017
2002 2016Low Medium High
Share of U.S. employment by digital skill level
56%
40%
5%
30%
48%
23%
Jobs across all sectors are rapidly digitalizing 1 2 3
Low Medium
Greater DMV demographics by race, 2018
25%45% 16% 11% 3%
BlackWhite Hispanic Asian Other
Meanwhile, the workforce is diversifying 1 2 3
Source: Brookings analysis of EMSI data, January 2019
Greater DMV demographics by race, 2018
25%45% 16% 11% 3%
BlackWhite Hispanic Asian Other
Percent Growth 2013 to 2018
6%
0%
16%15%
14%
Meanwhile, the workforce is diversifying 1 2 3
Source: Brookings analysis of EMSI data, January 2019
Source: Brookings, “Metro Monitor,” 2018
Stark racial disparities in Greater DMV persist 1 2 3
60%
65%
70%
75%
80%
85%
2010 2012 2014 2016
Employment rate2010-2016
75%
80%
White
Black
Hispanic
Source: Brookings, “Metro Monitor,” 2018
$0
$10
$20
$30
$40
$50
$60
$70
2010 2012 2014 2016
Hispanic
Black
White$60K
$40K
$30K
Median wages2010-2016, thousands
60%
65%
70%
75%
80%
85%
2010 2012 2014 2016
Employment rate2010-2016
75%
80%
White
Black
Hispanic
1 2 3Stark racial disparities in Greater DMV persist
Black employment
Source: Brookings, “Black and Hispanic underrepresentation in tech: it’s time to change the equation,” 2018
23.9%24.5%
15.8%
19.4%
1 2 3
+ 3.6percentage pt.
increase in tech
employment share
Blacks and Hispanics are underrepresented in tech jobs
2010 2016 2010 2016
All occupations
Tech occupations
Hispanic employment
Source: Brookings, “Black and Hispanic underrepresentation in tech: it’s time to change the equation,” 2018
All occupations
Tech occupations
2010 2016 2010 2016
14.1%15.3%
4.4% 5.5%
Blacks and Hispanics are underrepresented in tech jobs 1 2 3
+ 1.1percentage pt.
increase in tech
employment share
2 31
Why place
matters to
the regional
economy
The state of
Greater
DMV’s
innovation
economy
Implications
of HQ2 and
beyond
Market demand for place has shifted over time 2 31
LARGE
COMPANIES
HOSPITALS
UNIVERSITIES
Spin-offs
Small firms
Entrepreneurs
INTERMEDIARIES
R&D Labs
Today’s innovation economy requires collaboration… 2 31
Increase in well-educated young adult population (age 25-34), 2000 to 2010
19%
37%
51 largest metro areas
Neighborhoods within 3 miles of central business district
Source: City Observatory, “Where are young and restless moving?”, 2016
…and skilled workers, who are moving to urban areas 2 31
1 2 3Companies are moving to be near other firms & talented people
31 2
Why place
matters to
the regional
economy
The state of
Greater
DMV’s
innovation
economy
Implications
of HQ2 and
beyond
TECHNICAL
TALENT
“Include information
on your K-12
education programs
related to computer
science.”
“Sidewalks, bike lanes,
trams, metro, bus, light rail,
train…”
“…energy-efficient lighting…
as well as public plazas and
pockets of green space.”
SUSTAINABLE
PLACEMAKING
“Proximity to an international
airport and major highways …
optimal fiber connectivity is
paramount.”
GLOBALLY
CONNECTED
INFRASTRUCTURE
“This project
requires … the
presence and
support of a diverse
population.”
DIVERSITY
Amazon selected Greater DMV for its regional assets 1 2 3
Direct
employment
Indirect employment
1high-tech job creates up to
5additional jobs in a region,
including lawyers, teachers, nurses, waiters, and carpenters
Source: Enrico Moretti, “The New Geography of Jobs,” 2012
High-tech jobs create significant spillover benefits for a region 1 2 3
Seattle and other fast-growing tech hubs are cautionary tales 1 2 3
1 2 3Five actions the Greater DMV region could undertake
Set goals to help this region lead on inclusive innovation 1 2 3
Minneapolis - Saint Paul
Regional dashboard
Solidify strengths in key technologies and sectors 1 2 3
Build a local digital skills talent pipeline 1 2 3
Work regionally to expand housing and transportation choice 1 2 3
Walkable
suburban
district
Waterfront
Arts & creative
district
Innovation
district
Downtown
Create a regional network of accessible, vibrant economic districts 1 2 3
Five actions the Greater DMV region could undertake
• Set goals to help this region lead on inclusive innovation
• Solidify strengths in key technologies and sectors
• Build a local digital skills talent pipeline
• Work regionally to expand housing and transportation choice
• Create a regional network of accessible, vibrant economic districts
1 2 3
Greater Washington’s Innovation Economy at a CrossroadsLessons from today’s challenges and Amazon HQ2
Amy Liu, Brookings Metropolitan Policy Program | @amy_liuw
NAIOP Northern Virginia Annual Forecast Luncheon| February 7, 2019
