Fairfax Committee of 100

September 9, 2013

The Washington Area Economy:

Transitioning From Federal

Dependency to a Global

Business Base

David E. Versel, AICP

Senior Research Associate

Center for Regional Analysis

George Mason University

The Washington Metropolitan Area in 2042 (population and employment in millions, GRP in billions of 2012 $s)

Metric 2012 2042 %Change

Population 5.810 7.938 36.6

Employment 3.915 6.074 55.1

Gross Regional

Product (GRP) $450.9 $1,149.2 154.9

Current Year $s $2,273.0 404.1

Source: IHS Global Insight, GMU Center for Regional Analysis

The Washington Area Economy’s

Competitive Position

• 1st in percent of residents with graduate or professional

degrees

• 3rd in number of workers per household

• 2nd in labor force participation rate

• 1st in median household income

• Lowest unemployment rate among peer metropolitan areas

• 1st for traffic congestion

• 2nd in the number of square feet of total office space

• 4th largest economy among U.S. metropolitan areas but only

7th in population

The Last 112 Years

Population and Federal Employment

In the Washington Area, 1900-2012

Ratio of Fed

Year DC Metro Area Fed. Jobs Jobs to Pop.

1900 278,718 378,605* 20,834** 5.5%

1930 486,869 672,198 68,510** 10.2%

1940 663,091 967,985 133,645** 13.8%

1950 792,234 1,452,349 214,077** 14.7%

1998 566,320 4,645,080 326,540 7.0%

2000 572,510 4,843,280 326,230 6.7%

2010 601,723 5,582,170 380,200 6.8%

2012 632,323 5,860,342 377,400 6.4%

*DC, Alexandria, Arlington, Fairfax, Montgomery, Prince George’s, **in DC only

Source: GMU Center for Regional Analysis

Population Growth by Decade

Washington MSA

1900 - 2010

68 130

102

315

527

611

841

274

745 700

795

0

100

200

300

400

500

600

700

800

900

00s 10s 20s 30s 40s 50s 60s 70s 80s 90s 00s

Thousands

Source: US Census and GMU Center for Regional Analysis

0

500

1000

1500

2000

2500

3000

Population in the Washington MSA

By Sub-State Area, 1900 - 2010 1000s

Northern VA

D.C.

Source: US Census and GMU Center for Regional Analysis

Suburban MD

Federal Spending Patterns

In the Washington Area

150

200

250

300

350

400

1950

1955

1960

1965

1970

1975

1980

19

85

19

90

19

95

20

00

20

05

20

10

Federal Employment in the

Washington Metro Area, 1950-2012 000s

Eisenhower Kennedy –

Johnson

Nixon -

Ford Carter Reagan Bush 1 Clinton Bush 2

- 5

+ 74

+ 35 + 17 0 -8.6

- 37 + 24

Obama

+17.5

Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

0

10

20

30

40

50

Changing Job Patterns in the

Washington Metro Area, 1950 – 2010

(Percent Share of Total)

0

10

20

30

40

50

60

70

80

90

Wages & Salaries

Federal Spending By Type

1984 - 2010 $ Billions

Source: US Census, Consolidated Federal Funds Report

Federal Government Employment

Washington MSA

-20

-15

-10

-5

0

5

10

15

20

25

30

20

02

20

05

Ja

n

Apr

Ju

l

Oct

Ja

n

Apr

Ju

l

Oct

Ja

n

Apr

Jul

Oct

Ja

n

Apr

Ju

l

Oct

Ja

n

Apr

Ju

l

Oct

Jan

Apr

Ju

l

(000s) Annual Data Annual Month over Year

2008 2009 2010 2011 2012 2013

Tot 2012 = 377,400 Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

SE

QU

ES

TE

R

0

10

20

30

40

50

60

70

80

90

Federal Procurement in the

Washington Metro Area, 1980-2012 $ Billions

TOTAL = $1,023.5 Billion

Source: US Census, Consolidated Federal Funds Report

$80.0 B $75.6 B

Federal Spending Trends in the

Washington Metropolitan Area: 2010-2017 (in billions of current dollars)

Year GRP %Change* Fed $s % GRP Procurement

2010 $425.0 3.0 $169.0 39.8 $82.5

2011 433.7 2.6 168.2 38.8 80.0

2012 447.9 2.4 165.6 37.0 75.6

2013 466.9 2.1 162.7 34.8 71.8

2014 489.8 3.0 161.1 32.9 70.0

2015 517.2 3.6 162.7 31.4 69.3

2016 544.1 3.3 164.3 30.2 69.0

2017 571.8 3.2 166.8 29.2 68.6

*real (inflation adjusted) percent change

Source: GMU Center for Regional Analysis

2010 Structure of the

Greater Washington Economy

Local Serving

Activities

34.8%

Non-Local

Business

12.0 %

Total

Federal

39.8% Procurement

19.1%

Other Federal

10.7 %

Fed Wages & Salaries

10.0%

Source: GMU Center for Regional Analysis

2017 Structure of the

Greater Washington Economy

Local Serving

Activities

37.8%

Non-Local

Business

16.2 %

Total

Federal

29.2% Procurement

12.0%

Other Federal

9.7 %

Fed Wages & Salaries

7.5 %

Source: GMU Center for Regional Analysis

All non-Federal sectors

of the regional economy

are growing

WMSA Payroll Job Change: Private Sector The Great Recession and Recovery

-4

-7

-10

-12

-10

-8

-48

-34

-23

0

-23

-60 -40 -20 0

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

Educ & Health Svcs

Prof. & Bus. Svcs

(000s)

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

3

1

0

0

11

11

19

69

25

29

52

0 20 40 60

Total -159 Total 218

Aug 2008-Feb 2010 Feb 2010-Jul 2013

Job Growth in the Washington Area

By Sector, 2012-2017 (in thousands)

Sector 2012 2017 Change Percent

Prof. & Bus. Ser. 697.4 841.2 143.8 20.6

Federal Gov’t 380.4 358.4 - 22.0 - 5.8

Education/Health 380.2 419.0 38.8 10.2

S & L Gov’t 309.7 321.6 11.9 3.8

Hospitality 276.8 285.0 8.2 3.0

Retail Trade 254.1 266.6 12.5 4.9

Other Services 182.8 185.3 2.5 1.4

Financial Services 150.0 154.7 4.7 3.1

Construction 146.4 201.8 55.4 37.8

Information Ser. 80.6 87.6 7.0 8.7

Other Sectors (3) 175.0 193.2 18.2 10.4

Total Jobs 3,033.4 3,314.4 281.0 9.3

Major Sources of Job Growth in the

Washington Area , 2012-2017 (in thousands)

Growth Sectors 2012 2017 Change Percent

Prof. & Bus. Ser. 697.4 841.2 143.8 20.6

Education/Health 380.2 419.0 38.8 10.2

Construction 146.4 201.8 55.4 37.8

Sub-Totals 1,224.0 1,462.0 238.0 19.4

% Total 40.4 44.1 84.7

Totals 3,033.4 3,314.4 281.0 9.3

Sources: IHS Global Insight; GMU Center for Regional Analysis

Northern Virginia has

led and will continue

to lead the way

10%

15%

20%

25%

30%

35%

40%

45%

50%

Share of Washington

Area Economy

1970-2010

Northern Virginia

Suburban MD

D.C.

99

394

830

0

100

200

300

400

500

600

700

800

900

District ofColumbia

SuburbanMaryland

NorthernVirginia

Growth in Jobs, 1980 - 2010

1000s

Source: US Bureau of Labor Statistics, GMU Center for Regional Analysis

-2

-1

0

1

2

3

4

5

6

7

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

%

Source: GMU Center for Regional Analysis

Economic Outlook (GRP), 2001-2017

Washington Area and Sub-State Areas (Annual % Change)

DC SM MSA NV

FORECAST > > > >

Annual Job Change

District of Columbia, 2002-2013

-40

-30

-20

-10

0

10

20

30

40

50

60

20

02

20

05

20

08

(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change

Suburban Maryland, 2002-2013

-40

-30

-20

-10

0

10

20

30

40

50

60

20

02

20

05

20

08

(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change

Northern Virginia, 2002-2013

-40

-30

-20

-10

0

10

20

30

40

50

60

20

02

20

05

20

08

(000s) Annual Data Annual Month over Year

2009 2010 2011 2012 2013

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Forecasted Employment Change in the

WMSA by Sub-State Area, 2013-2017

(000s)

2013 2014 2015 2016 2017 Chg % of Total

D.C. 7.3 8.7 9.7 7.9 5.7 39.3 14%

Sub. MD 13.6 16.8 20.7 18.5 15.2 84.8 30%

No. VA 24.5 30.5 39.1 36.8 26.1 157.0 56%

Wash. MSA 45.4 56.0 69.5 63.2 47.0 281.1 100%

Average Annual Change = 56,200

Source: BLS, IHS Global Insight Jan. 7 2013, GMU Center for Regional Analysis

Job Change by Sector

Jul 2012 – Jul 2013

Northern Virginia

0

0

0

0

6

0

-4

12

5

8

2

0

-2

-20 -10 0 10 20 30

Transp. & Util.

Wlse Trade

Manufacturing

Information

Financial

Other Services

Construction

Leisure & Hosp.

Retail Trade

State & Local Govt

Educ & Health Svcs

Federal Govt.

Prof. & Bus. Svcs

(000s) Total 25,800

Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

• Shortage of workers to fill the region’s projected job

growth

• Growing dependency on non-resident workforce;

• Shortages of housing in all jurisdictions to house the

future workforce

• Lack of long-term regional solutions and

implementation of public sector investments to support

the growth and development of the Washington area

economy

• Need for local and regional leadership

Key Development Challenges

for the Washington Region

Thank You

Questions

cra.gmu.edu