Unemployment In D.C. Region Highest Since '03

By V. Dion Haynes
Washington Post Staff Writer
Wednesday, January 7, 2009

Unemployment in the Washington region reached its highest level in November since June 2003, inching up to 4.4 percent from 4.1 percent the month before.

While the region created more jobs than it lost and was tied with one other metropolitan area for the nation's lowest unemployment rate, analysts saw in the government data released yesterday two seemingly contradictory scenarios: The region's job losses could be more severe than the downturn of 2001, yet recovery could come much sooner here than in other areas of the country.

"The 4.4 percent unemployment rate for the rest of the country looks like a great rate, but it's higher than parts of the Washington area are used to," said William F. Mezger, chief economist for the Virginia Employment Commission.

"Unemployment is higher now than it was a couple of years ago," he added. But the multitude of new jobs expected to be created by the Obama administration to oversee economic stimulus and bailout programs "could shock the Washington area into recovery quicker than in other places."

Analysts said they expect the Washington area unemployment rate to climb higher in December and January, when retailers and landscaping and construction firms shed seasonal workers. The regional data, unlike the national figures, are not seasonally adjusted.

In the November data, Washington tied with the Oklahoma City region for the lowest unemployment rate. Because that economy is connected to the oil industry, some analysts said joblessness there could increase and the Washington region ultimately could emerge with the lowest unemployment rate.

Federal government employment helped keep the region's rate at 4.4 percent, far below the nation's 6.7 percent unemployment rate. About 120 metropolitan regions reported rates of 7 percent and above. The El Centro, Calif., area recorded the highest jobless rate at 23.4 percent.

Unemployment in the region -- including the District, Northern Virginia and suburban Maryland -- also is much lower than the separate jobless rates in the three jurisdictions, which according to data reported last month reached their highest levels since the mid-1990s. Maryland's statewide rate increased to 5.3 percent in November from 4.9 percent in October. Virginia's rose to 4.8 percent from 4.4 percent. And D.C's rate was 8 percent, up from 7.3 percent.

Over the past few months, the Washington area has lost more than 12,000 jobs, including 5,000 in construction, 3,200 in financial services, 2,400 in information technology and 600 in retail. At the same time, according to the Bureau of Labor Statistics, the region gained a net of 31,000 jobs during the 12-month period ending in November, down from its long-term average of 45,000 since 1990.

Some analysts said they expect the job gains to disappear in the first half of 2009 and the unemployment rate to reach 5 percent by the end of the year.

Barbara B. Lang, executive director of the D.C. Chamber of Commerce and former chairman of a workforce development group, said the city's unemployment rate typically is double that of the region because the District has a large proportion of residents who are unprepared for the job market. Many, she said, can only qualify for entry-level jobs at small businesses, which have been hit harder in the slowing economy.

"Small and mid-size businesses can't get credit and they're laying off people," Lang said. If nothing is done to prepare that population for better jobs, the city's unemployment rate "is going to go up tremendously." Indeed, D.C. officials projected that the city's jobless rate could reach 9.8 percent in 2010, the highest level since the early 1980s.

The recession is widening the gap between haves and have-nots. Higher-skilled jobs with salaries averaging $75,000 are being created in sectors such as contracting, while lower-skilled jobs averaging $28,000 are being lost, some for good, experts say.

Moreover, the pool looking for work is filled with educated people who are applying for positions for which they are overqualified.

"There's been a 30-40 percent increase in the number of people coming into our one-stop employment centers. More are educated and there's a lot more competition for jobs," said Eric M. Seleznow, executive director of the Maryland Governor's Workforce Investment Board. "The folks on the lower end are struggling. That's where a lot of the jobs are being cut."

During the downturn of the 1990s, the federal government was ramping down. But the Obama administration is planning at least $800 billion in new spending, which analysts said could revive the Washington area economy.

Accompanying new employees will be "plenty of churn, which will be a boon to the real estate market," said Anirban Basu, chairman and chief executive of Sage Policy Group, a Baltimore economic and policy consulting firm.

Others said they expect the net job loss, projected to occur by the second quarter, will reverse by the end of the year.

"My feeling is that we will finish the year with new jobs," said Gregory H. Leisch, chief executive of Delta Associates, a real estate and economic research firm in Alexandria. "I'm calling 23,000 as the number for the year."

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