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InfoComm in the Washington Area Economy, 1980-1998
 
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Executive Summary
Introduction
The Changing Structure of the Washington Economy
InfoComm in the Washington Area Economy, 1980-1998
InfoComm in the Future of the Washington Area Economy
Economic Impact of Unfilled InfoComm Jobs
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2005:Digital Economy
The Washington area economy was the second fastest growing metropolitan area in the nation during the Eighties but its economy was hard hit by the 1990-1991 recession (see Table 3). And, its expansion since the recession has been undercut by the Clinton Administration's National Performance Review that established the downsizing the of the federal workforce as a major national goal.

This federal downsizing cost the Washington area economy almost 60,000 net jobs or 14.5 percent during the past five years. Also, during this post-recession period, the District of Columbia government reduced its workforce by 15,700 jobs or 26.2 percent

The local economy's ability to sustain a moderate rate of growth during this period of significant sectoral restructuring underscores the significant expansion occurring in the private sector over the past eighteen years. A major source of this expansion was the accelerated growth of the InfoComm Industry.


Table 3
Gross Regional Product in the Washington PMSA, 1980-1998
(GRP in billions of 1998 dollars)

Year GRP
$
Change*
$
Percent
Total
Change
Annual
1980 107.4 - - - - - -
1990 166.6 59.2 55.12 5.5
1992 167.4 0.8 0.47 0.2
1998 191.9 24.5 14.66 2.4
1980-1998 - - 84.5 78.65 4.4


Source: Center for Regional Analysis, GMU
*change from previous period


During this 1980-1990 period, the InfoComm Industry added 136,665 jobs for an increase of 95.2 percent, a rate more than twice the metropolitan average of 40.2 percent for all jobs, a growth rate that was the second only to the Los Angeles metropolitan area. The importance of the InfoComm Industry to the overall growth of the Washington area can be seen by comparing its 9.5 percent annual job growth to the non-InfoComm job base in the metropolitan area; non-InfoComm jobs grew 36.2 percent over the Eighties or 3.6 percent annually (see Table 4). It is clear that the InfoComm Industry contributed to the rapid growth of the Washington economy during the Eighties even though this Industry's importance was not widely recognized at the time.


Table 4
InfoComm and Total Employment Growth, 1980-1990
Washington PMSA
(employment in thousands)

Year InfoComm
Jobs
Non-InfoComm
Jobs
Total Jobs
1980 143.62 1953.96 2097.54
1990 280.29 2660.94 2941.23
Change 136.67 706.98 843.69
% Change 95.2 36.2 40.2


The rapid growth of the InfoComm Industry in the Washington area, and its growing importance as a source of employment, is quite apparent when its share of the Washington employment base is compared to its share within the national employment base. These comparisons are illustrated in Figures 1 and 2 for the 1988 to 1995 period, which spans the 1990-1991 recession. During the recession, the InfoComm Industry experienced a loss of 2,733 jobs or 1.0 percent. In comparison, non-InfoComm employment declined by 54,737 jobs or 2.0 percent.

Over the 1988-1995 in the Washington area, inclusive of the recession and the first two years of federal and District of Columbia downsizing, the InfoComm Industry average 2.5 percent annual job growth while the total employment base gains just 0.8 percent annual (see Figure 1). In comparison, at the national level, job growth in the InfoComm Industry also averaged 2.5 percent annually but overall employment grew at 1.4 percent considerably outperforming the Washington area.

These differential job growth rates have resulted in the InfoComm Industry becoming more specialized within the Washington area since the recession and, as a result, it has increased its relative contribution to the area's economy. As shown in Figure 2, InfoComm has been almost twice as concentrated in the Washington area as in the nation and, in the Nineties, it has become even more concentrated. While in the years preceding the recession, InfoComm employment in the Washington area accounted for just under two-times (1.98) its share in the national base, since the recession its share has increased to more than two times (2.04); InfoComm now accounts for 10.4 percent of area employment compared to 5.0 percent nationally.

In the six years since the recession (1992-1998), the InfoComm Industry has grown to 344,455 jobs and is now equivalent in size to the federal civilian workforce. During this six-year period, it added 66,600 new jobs while the federal workforce was losing almost 60,000 jobs. And, the InfoComm directly accounted 18.8 percent of the private sector's increase of 353,500 new jobs. With InfoComm's 2.01 multiplier, its direct job generation accounted indirectly for 67,300 other new jobs in the Washington area. Together, the direct and indirect new jobs associated with the Infocom Industry accounted for 38 percent of the total job growth generated in the area since the recession.

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