The guest speaker for the new Rotary Club’s first meeting in June? Supreme Court Justice Antonin Scalia.
A surge in contracting
Forty years ago, few people thought of Washington as a place to get rich. It was a staid town where a third of the residents earned modest but steady paychecks working for the federal government.
The new Washington is a global business hub with thriving technology, biotech and communications industries. Only 12 percent of workers are federal employees. But the federal government remains an engine of job creation, outsourcing its tech support and other services to contracting firms ringing the Capital Beltway, a phenomenon that exploded in the years after 9/11.
More than $80 billion in federal contracting dollars will flow to the region this year, up from $4.2 billion in 1980, according to Stephen Fuller, director of the Center for Regional Analysis at George Mason University. Adjusted for inflation, that’s a seven-fold increase. A third of the region’s gross regional product now comes from federal spending.
But that tide is likely to slow because of a $1 trillion debt-reduction package approved earlier this month by Congress and President Obama. In the coming months, a bipartisan“supercommittee” will be searching for another $1.5 trillion in savings. Defense contractors are already bracing themselves for deep cuts in military spending.
Federal cash has been “the major catalyst for economic growth in the last 30 years,” said Rep. Gerald E. Connolly (D-Va.), former chairman of the board of supervisors in Fairfax County, where companies garner more federal contracting dollars than anywhere else in the country. “Clearly that [federal] presence and that pattern of investment has transformed the economy.”
The CEOs of big defense contractors here received compensation packages that rival those on Wall Street: Robert J. Stevens, chief executive of Lockheed Martin, received $19 million last year, while General Dynamics CEO Jay L. Johnson made $13 million, according to a recent survey conducted for The Washington Post by the research firm Equilar. The CEOs of smaller outfits also do well. Richard Montoni, the CEO of Maximus, pulls in $3 million.
Even rank-and-file employees benefit. In a recent survey by the jobs Web site ClearanceJobs.com, contractors with security clearances earned an average salary of $98,221, or 18 percent more than those doing similar jobs in the government.
The concentration of wealth in Washington has helped fuel public resentment of the federal government. “I think it reinforces the cultural disconnect that exists between Washington and the rest of the country,” said James Galbraith, a government professor at the University of Texas and director of its Inequality Project. “Do you have a community of insiders that has a hammerlock on their share of the public resources? I think the answer is yes.”