Region's Private Sector Isn't So Private

Today we are justly proud of the vitality of greater Washington's private sector -- in information technology, the life sciences, media, higher education, tourism and other fields.

We take umbrage at the suggestion that our economy is still at the mercy of the federal government. Well, I have news for you: It still is, almost as much as it ever was.

The growth of the federal government today is reflected not so much in direct employment by government agencies as it is in the money Uncle Sam shovels out the door to local companies.

The feds today employ only one-tenth of all workers in greater Washington -- about the same percentage as state and local government combined. It is projected that, over the next few years, the federal portion of regional employment will dip into single digits, for the first time in Washington history.

Okay, so federal employment is just 10 percent. But federal spending accounts for over one-third of the gross regional product of greater Washington. And half of that spending is procurement from local private companies.

So is our "private sector" true private enterprise in the normal sense? Well, it is privately owned, and it has created a stunning number of new multimillionaires. But many of our biggest local companies have essentially one customer: the federal government.

Of the 20 largest employers in greater Washington -- in number of employees -- 10 of them are predominantly federal contractors, either in defense and aerospace or information technology. Those 10 companies employ a total of 104,000 local employees -- almost one-third the number of direct federal employees based here.

We're proud of our private-enterprise, high-tech sector. An estimated 60 percent of all tech workers in this region work for government contractors.

It's not just defense, aerospace, IT and telecom that are so dependent on federal spending. Take the life sciences, one of our most vibrant industries.

It's no mystery why the biotech firms are here. Sure, we've got great local universities with superb science and engineering departments, but so do many other regions. The biotech companies are here because this is the home of the National Institutes of Health, the FDA, USDA, Fort Detrick, and the National Center for Biodefense at George Mason University. The NIH alone pumps $1 billion a year into university and private-sector research labs in this region.

We're very proud of the growing international flavor of business in the Washington area. Greater Washington now has branch offices of 700 foreign-based companies from 39 different nations. And why are they here in Washington, instead of -- or in addition to -- other U.S. cities? Because, pure and simple, this is the seat of the American government.

Uncle Sam's 35 percent share of our annual regional output is a pretty big number. But it doesn't even come close to stating the true impact of government on our economy. Why? Because many local firms that receive little or no direct payments from the federal government are nonetheless completely dependent on government for their prosperity. I include in this group the vast Washington empire of law firms, trade associations, consultants, specialty publishers, commercial and residential real estate industries and business services -- accountants, banks and others -- that support all those other companies.