5 things to know about the D.C. area job market

Last year proved to be a middling one for the Washington area job market. While the region continued to add positions, new jobs weren’t coming at a fast enough clip to accelerate a local economic recovery.

Last week, the Labor Department released a trove of new data that brings into clearer focus exactly what happened in the region’s labor market last year and what kind of start we’re off to in 2014. Here are some key take-aways from these reports:

1.Things were even bleaker for government contractors in 2013 than we thought.

Government contractors faced a great deal of uncertainty last year because of the across-the-board spending cuts known as the sequester. Their sense of caution was evident throughout last year in the Labor Department’s reports, as the region consistently recorded meager job growth in the professional services sector. But newly revised Labor Department data show that the jobs picture in this industry was actually even gloomier. In every month from June through December, the professional services sector lost jobs on a year-over-year basis.

The professional services industry is one of the cornerstones of the Washington area economy and has typically been one of its key engines for job growth.

“We clearly didn’t generate the jobs we anticipated,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. “The more important higher-wage sectors felt it the worst. That’s 30-35 percent of all of our jobs that really got slammed.”

Some economists suggest that if the professional services sector is to experience significant growth in 2014 and beyond, a large share of the jobs are going to have to come from companies outside the government contracting sphere, such as those in cybersecurity or biotechnology.

2. 2014 didn’t get off to
a roaring start.

Economists and business leaders have forecasted that 2014 will be a stronger year for the local labor market than last year. After Congress struck a deal on the federal budget in December, local contractors were given a renewed sense of clarity about funding.

More robust hiring may indeed be on the horizon this year, but there was no sign of it in the jobs report for the month of January. The region added just 21,000 jobs between January 2013 and January 2014, a gain that is on par with the year-over-year gains seen at the end of 2013. The greatest job growth was in the leisure and hospitality industry, which added 13,100 positions.

Still, Anirban Basu, chief executive of economic consulting firm Sage Policy Group, cautions against reading too much into these figures.

“There was no calamitous economic event here, that was largely the weather,” Basu said.

In other words, the unusually cold and snowy weather that pummeled the Washington region in January may have interrupted the activities of job seekers and hiring professionals.

3.Don’t break out the champagne for the low unemployment rates.

The District, Maryland and Virginia each posted in January their lowest jobless rates since fall of 2008: The District’s was 7.4 percent, Maryland’s was 5.8 percent and Virginia’s was 5 percent.

However, in the District and Maryland, the size of the labor force is smaller in January than it was one year earlier. This suggests that part of the reason the rates are coming down is that people have become discouraged and have given up looking for work. In that circumstance, they are no longer counted as part of the labor force.

Lower labor force participation rates helped drive down the national unemployment rate in 2013. (In January and February, however, the national labor force increased again, a change that some analysts say signals a renewed confidence in the job market.)

4. The construction sector continues to be befuddling.

The District’s skyline is dotted with cranes, and major development projects are underway from Tysons Corner to White Flint. So it seems logical that the construction sector would be giving a boost to the local job market. However, January data show that the industry added just 3,100 jobs in the region in the last year.

James Bohnaker, an economist with Moody’s Analytics, said he expects to see greater job growth in this category as single-family homebuilding picks up in the suburbs.

5.The District is in a state of inertia.

Bohanker points out that if growth in the education and health services sector were subtracted from the District’s overall yearly job growth, D.C. would actually have lost jobs. If the employment picture is to improve in the District, hiring will likely need to pick up in other industries.

Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economics news.
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