Richard Florida calls Washington a ‘boom town of the new economy’
In the October issue of the Atlantic, author Richard Florida argues that the recession created a series of winning and losing cities and regions in America and that the Washington area is one of the biggest winners.
Florida, author of “The Rise of the Creative Class,” suggests that because of its wealth, education and growing technology sector, Washington’s economy could overtake Chicago and Los Angeles on some measures.
That brings us to Washington, D.C. As the urbanist Aaron Renn wrote recently, Washington is well on its way to becoming America’s “second city,” on track to displace Chicago and Los Angeles “in terms of economic power and national importance.” Greater Washington has had among the nation’s lowest rates of unemployment, the most-stable housing prices, and high overall job growth since the crash. A whopping 59 percent of all new jobs created there since 2009 have been high-wage jobs, second only to San Jose. The Washington metro area includes six of the 10 most affluent counties in the nation.
Other writers (notably the author of this New York Times Magazine piece) have attributed Washington’s growth to the rapid expansion of the federal government. Government contracting dollars spent locally, for instance, more than doubled from 2000 to 2010, reaching $80 billion.
Florida gave a nod to the federal government but mostly rejected that argument.
Washington’s economy has clearly prospered from federal spending; lobbying and government contracts are significant sources of its wealth. But its economy is not entirely or even predominantly parasitic. The decline in the federal workforce over the past several years (a result of austerity) has not substantially altered the region’s economic trajectory. The ultimate source of the region’s wealth is Washington’s unparalleled human capital. The population is the best educated of any large metro’s in the United States; about half the region’s adults hold bachelor’s degrees, and nearly a quarter have graduate degrees.
Greater Washington is much more economically diverse than its reputation suggests. It is a major center for media and real-estate finance, and is home to a small but growing cluster of high-tech activity, in the city as well as in outlying Maryland and Northern Virginia. The greater Washington metro area consistently ranks among the nation’s leading centers of venture-capital-backed start-ups, alongside noted tech hubs like Austin, San Diego, and Seattle. For well-educated professionals, especially those with families, D.C. offers tremendous quality of life and a raft of opportunities at a fraction of Manhattan prices. And indeed, it is the southern terminus of the vibrant economic corridor stretching all the way up to Boston, which produced more than $2.5 trillion in economic output in 2011, more than all of the United Kingdom or Brazil.
Florida’s argument seems prescient during the government shutdown when, despite the federal government’s refusal to let the D.C. government spend its own tax dollars (threatening charter schools, Medicaid payments and AIDS prevention work) the local economy clearly has more at its disposal than it did before the recession.
For instance: from last summer to this summer, according to George Mason University’s Center for Regional Analysis, the region lost some 8,000 federal government jobs but added 15,000 in leisure-hospitality, 11,000 in state and local government, 11,000 in education and health, 9,000 in professional and business services and 8,000 in the financial sector. In all, the local economy added more than 50,000 jobs while the federal government cut back.
It’s not just cupcakes anymore.
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