The Changing Structure of the Washington Economy

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The Changing Structure of the Washington Economy

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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The Washington area economy has undergone significant restructuring in recent years with the historic domination of the government sector, which had accounted for 38 percent of all employment in the metropolitan area just thirty years ago, declining to an estimated 22 percent in 1998. This decline has accelerated since 1993, as the federal government implemented its nationwide program to reduce the size of the federal workforce. Since July 1993, the area's federal work force has declined from 396,600 to 338,700 (9/98) losing 57,900 jobs or 14.5 percent.

This dramatic change in the character of the area's employment has overshadowed a much more significant change. Over the past thirty years, total employment (inclusive of self- employed persons and small and recently established firms) in the Washington metropolitan area more than doubled, increasing from 1.5 to 3.2 million workers (see Table 1). During this period, the private sector generated 1.6 million new jobs, for a 175.6 percent increase, accounting for 95 percent of the region's total job gain. In contrast, total government employment, including military, grew by just 86,700 workers and the federal government, the area's largest employer, added just 9,800 new jobs representing a 2.8 percent gain over thirty years.

Table 1
The Changing Employment Structure in the Washington Area*
1968-1998
(employment in thousands)

Sector	1968	1998	Change	% Change
Total	1516.76	3207.16	1690.4	111.4
Private	913.04	2516.75	1603.7	175.6
Services	342.52	1265.86	934.3	269.6
Public	603.72	690.41	86.7	14.4
Federal	345.78	355.62	9.8	2.8
Military	106.77	79.55	-27.2	-25.5
S&L**	151.17	255.24	104.1	68.8

Source: NPA Data Services, Inc.
*Total employment excluive of self-employed workers and uniform military personnel for the Washington Primary Metropolitan Statistical Area;
**state and local government

The principal source of the region's private sector growth over this period was the service sector. It added more than 900,000 new jobs between 1968 and 1998, almost tripling its size, and accounted for 55 percent of the area's total job increase. This substantial growth in the service sector reflects the growing importance of the Washington area as a center of engineering and management services and business services. Additionally, the growth of the hospitality industry, membership organizations, health and education services and legal services all helped to establish the Washington region as the nation's fifth largest metropolitan economy.

Key to the service sector's rapid expansion has been the growth of business services and engineering and management services (see Table 2). Over the last five years (July 1993- July 1998), these two subsectors generated 123,400 new wage and salary jobs (excluding self-employed persons), for an increase of 36.7 percent. In 1993, jobs in these two subsectors accounted for 15 percent of the area's total job base and have generated 36 percent of all new jobs over the past five years. This job growth accounted for almost 60 percent of the service sector's job gain over this period.

Table 2
The Changing Employment Structure in the Washington Area*
1968-1998
(employment in thousands)

Sector	1993	1998	Change	% Change
Total*	2219.0	2560.2	341.2	15.4
Services	783.6	1001.6	218.0	27.8
Business	187.2	282.6	95.4	51.0
Eng & Mgt	148.6	176.6	28.0	18.8
Subtotal	335.8	459.2	123.4	36.7
% Services	42.8	45.8	56.6
% Total	15.1	17.9	36.2

Source: District of Columbia Department of Employment Services
*Wage and Salary Employment (excluding self-employed workers)

Over the past thirty years, the share of the area's total employment base accounted for by jobs in the InfoComm Industry has increased from 4.6 to 10.4 percent. And, since the recession, the rapid growth in the area's InfoComm Industry has been directly responsible for 40 percent of the job growth in business services and engineering and management services and 20 percent of all new jobs generated in the Washington area.

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