For decades, the health of the Washington area’s job market has rested primarily on hiring in its chief industry: the federal government and the contractors that serve it.
But not in 2012.
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As government hiring faltered and contracting spending tightened, the health-care industry has emerged as the chief driver of the region’s job growth.
The shift could be seen in the hiring patterns of some of the region’s largest employers: Major contracting firms Lockheed Martin, Northrop Grumman, General Dynamics and Computer Sciences Corp. shed a combined 5,104 local jobs last year as they girded themselves for tighter government spending. The federal government cut 4,200 local positions.
Meanwhile, some of the biggest names in local health care added jobs on a large scale: Northern Virginia’s Inova Health System added about 1,000 positions in 2012. Children’s National Medical Center in the District expanded its workforce by the equivalent of 349 full-time workers. In nursing roles alone, MedStar Washington Hospital Center added 200 positions in the past 18 months.
The strength in health-care hiring was critical in propelling the region’s overall economic growth and offsetting the pullback by the government and its contractors. In fact, the sector added more jobs than any other in the Washington area, helping to bring the region’s unemployment rate down from 5.5 percent to 5.3 percent.
The health sector has been flourishing nationwide as the massive baby-boom generation ages and spends more on care. Demand is likely to surge even higher as the Affordable Care Act extends health insurance to millions of Americans who did not have it.
It’s a trend that has mixed long-term implications for the local economy: The rise of the health-care industry in this region signals that its job market is becoming more diverse. Although the contracting business probably will continue to be the bedrock of the Washington area’s economy, health care’s recent strength reduces the region’s dependence on that industry.
The new jobs, however, tend to pay less than the contracting positions the region is losing. And because many of these jobs are centered on providing services rather than creating goods, their contribution to the overall economy can be less certain. Concerns about the rising costs of health care have put pressure on the people-heavy industry in the past to cut back, often at the expense of jobs.
Steady growth
The education and health services sector has been growing steadily in the Washington region since 2004 and now employs about the same number of people here as the federal government. It employs more than half as many people as the professional services industry.
The growth shows little sign of slowing. The sector is forecast to increase more than 10 percent by 2017, according to a January projection made by economist Stephen S. Fuller of the Center for Regional Analysis at George Mason University.
The number might be higher if not for a dearth of skilled workers.
“The potential for growth remains stronger than what we will actually be able to realize because of the shortage of workers,” Fuller said.
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