Some seek economic diversity amid federal cuts

August 28, 2011

Evidence is mounting that the Washington area’s economic recovery, which at the beginning of the year led the nation, has not only significantly slowed but in several cases shifted into reverse.

Local business leaders are worried that the trend could accelerate as spending reductions take hold in the federal government, long the region’s economic mainstay. That uncertainty has some people looking for new jobs in areas such as manufacturing, foreign firms and personalized medicine.

For the first time since the recession ended, the region on an annualized basis lost more jobs than it gained in June, a situation that worsened in July. Several cities and counties, including Alexandria, Fairfax, Charles County and Prince George’s County, have higher unemployment rates today than a year ago.

And the District’s unemployment rate in July soared beyond its peak during the recession to reach its highest level since October 1983. The jump is particularly alarming given that the rate was only 9.5 percent in February and March.

“This shows us how . . . with the flow of federal spending even slightly interrupted it can have major implications for the economy of the region and its core city,” said Anirban Basu, chairman and chief executive of Sage Policy Group, a Baltimore-based economic and policy consulting firm.

To address the city’s growing unemployment problem, Barbara B. Lang, executive director of the D.C. Chamber of Commerce, said she is encouraging District leaders to expand job opportunities for lower-income residents.

D.C.’s jobless rate, which climbed to 10.8 percent in July from 10.4 percent in June, grew at a faster pace than its neighbors: Maryland’s increased to 7.2 percent from 7.0 percent, and Virginia’s to 6.1 percent from 6.0 percent.

The city, Lang said, has a large proportion of undereducated residents who can’t qualify for the higher-paying, traditionally more stable jobs in government and contracting. The jobs they are eligible for — in retail, leisure and hospitality and construction — have been much more susceptible to cutbacks.

D.C. leaders have wooed Wal-Mart, which wants to open several stores in the city and spend $3 million to train 2,000 residents for retail jobs, and San Clemente, Calif.-based MVM Technologies, which plans to open a printer-cartridge plant eventually employing 2,000 in Ward 8.

“The long-range answer to this, I think, is not just about training, but we’ve got to create some jobs in our city that have an entry-level base,” Lang said.

Officials in Fairfax County have significantly diversified its economy over the years, drawing the headquarters for Volkswagen Group of America and Hilton hotel. And Gerald Gordon, president and chief executive of the county’s Economic Development Authority, said he is stepping up efforts to establish a new sector: personalized medicine, which attempts to use information about people’s genetic makeup to keep them healthy.

“I have a great interest in this because I think there’s a lot of job growth [potential] in this sector,” Gordon said.

In Prince George’s County, officials say they are not abandoning their fight for more federal facilities. Still, they said, they are looking at a range of strategies to expand their tax base, including loosening regulations that had made it tough for some companies to locate there, attracting more international firms and establishing a major medical center there.

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