Private Sector Booming in Fairfax County

Job Creation Outpaces Federal Government's in Metro

John McClain, Senior Fellow and Deputy Director of the Center for Regional Analysis at George Mason University, was online Tuesday, Jan. 30, at 3 p.m. ET to discuss Fairfax County's emergence as a jobs powerhouse thanks to extensive private-sector development.

Fairfax Shines In Jobs Report (Post, Jan. 30)

The transcript follows.

McClain has spent 25 years analyzing the D.C. region's economy, including 15 years planning and forecasting for the Metropolitan Washington Council of Governments.

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John McClain: Hello. My name is John McClain and I am a Senior Fellow at the Center for Regional Analysis, School of Public Policy, George Mason University. The Center conducts research and analytical studies on economic, fiscal, demographic, social and policy issues related to the current and future growth of the Virginia, Maryland, and District of Columbia areas. Our Web site is www.cra-gmu.org and we post a lot of our work there. I am pleased to participate in today's forum.

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Reston, Va.: The article mentions that Fairfax County's growth has been going strong for 15 years. How much credit does Tom Davis deserve for this economic expansion from his time as Chairman of the County Board in the early 1990s, as this growth was just starting?

John McClain: Tom was a factor in helping Fairfax County promote an image of a business-friendly government, but there were many other local leaders involved in positioning Fairfax for what it has achieved regarding the Bureau of Labor Statistics report. There are a lot of other factors as well, including geographic position and proximity to airports and the Pentagon. The county also has an excellent school system. And the Fairfax County Economic Development Authority has played an important role (and long has been supported by Tom).

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Arlington, Va.: Do you have any idea why Fairfax (and other suburban localities) have had little luck in wooing major law firms from Washington (there are only a few major law firms with satellite offices in Northern Virginia as far as I can tell)? At my law firm in Washington (and others people I know work for) the majority of lawyers and staff live in either Virginia or Maryland. Are the localities not trying to obtain these businesses?

John McClain: In the height of the tech boom (1998-2000), several law firms opened branches in the suburbs, especially Tysons, for intellectual property work. Then came the dot-com bust. I think the prestige of a Washington address is important in the legal arena, and the big firms want to be there, but we may see them locating more "back-office" operations in the suburbs as Washington office rents continue to go up.

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Herndon, Va.: Hi John. Thanks in advance for answering my question. Facts support that the job market is stronger than ever in Fairfax County. Facts also support that housing is more unaffordable than ever for first-time home buyers. What gives? Are employees not bargaining enough with their employers for the salaries they deserve? Job-hopping has been frowned upon in the past, but with job-seekers in the driver's seat, shouldn't people be job-hopping more often so they can actually own a single-family home within 45 minutes of their place of work someday? Thoughts?

John McClain: The housing affordability problem has become a crisis in my view with what has happened to prices in 2002-2005. For example, in 2000 a median income household could afford 64 percent of the houses for sale in Fairfax County -- in 2005 median income household only could afford 7 percent of the units on the market. This has contributed to people looking further out for housing, exacerbating the commuting/traffic congestion problem. We've gotten into a situation in the whole region that we are going to have to build more housing closer to jobs, and they are going to have to be at higher density and smaller lots and units in order to have some degree of affordability. Employers already are having difficulty in recruiting and retaining workers, and it's a good thing the housing market has cooled off..

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Reston, Va.: What will Reston and Tysons Corner look like 10-15 years from now?

John McClain: Reston-Tysons is one of the hottest development corridors in the country. The article cites Fairfax County, but a lot of the county's growth is in that corridor. In 10-15 years, if the local economy remains healthy, Tysons-Reston will get rail, more housing will be built to be close to the jobs, and densities will be higher.

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Fairfax, Va.: Great, so we're a powerhouse. That and a few bucks will get you a cup of coffee. Isn't Richmond at risk of killing this golden goose by failing to address our transportation issues? How long can we be a powerhouse if we can't even get to work?

John McClain: Good question. Over the past 10 years Northern Virginia has accounted for 60 percent of all job growth in the state, and over the past five years, 73 percent. Makes Northern Virginia the engine of the state's economic health. I think the Legislature has to recognize that if the traffic congestion continues to worsen -- caused by a healthy economy and a lack of adequate infrastructure additions -- this will lead to economic stagnation. Companies, frustrated with worker productivity lessened by the commute, etc., will consider other locations -- and not necessarily elsewhere Virginia.

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Vienna, Va.: The CIA is building a huge campus across Route 28 from the Air and Space Museum in Chantilly. I can't believe all the offices going up in the Centreville (Westfields) area and all along 28 and the toll roads. How will they urbanize Tysons with all these jobs going further west?

John McClain: There still will be a lot of companies that would prefer the closer-in location. Tysons has a lot of amenities in terms of restaurants, shopping, etc. that are attractive to potential employees and therefore companies. Also it's convenient to both Dulles and National Airports.

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Pennsylvania Avenue N.W.: I am confused as to why these findings are so shocking. It is no secret that the federal government has been contracting jobs out to the private sector in an increasingly aggressive fashion. Your study just confirms this. When Fairfax -- or any other part of the region -- becomes a center for banking, finance, manufacturing, or entertainment, let me know.

John McClain: Well, the findings weren't shocking to us either, but we follow the economy as you apparently do. We give many presentations on the region's economy, and I am amazed at times of how much some of what is going on does not seem to be well-known.

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McLean, Va.: John, can you tell me why the county needs an economic development agency? Obviously things are going quite well with businesses locating here. Why do the taxpayers need to fund the EDA when that money could be used for other governmental programs?

John McClain: You can look at what's happened in Fairfax's job growth in the past 15 years and see the success that the Economic Development Authority has helped. All the jobs that have come to the county also mean tax revenues to fund new schools and other needs of residents. When job growth stops, revenues will cause community services to suffer and the area will stagnate. There needs to be a level of economic growth for a community to prosper.

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Washington, D.C.: Job growth has a direct effect on transportation issues, and it's usually negative. Take for example the planned growth in Tyson's Corner. Even with the expansion of Metro, it's only going to get worse for everybody, and it's bad enough now. How can this be justified?

John McClain: The overall effects of growth are best when we develop jobs and housing close together. Tysons already has significant infrastructure and adding rail will improve things greatly there, provided the county has the right land use and densities. Look at the Rosslyn-Ballston corridor in Arlington: good highway access with I-66 and the parallel Metro corridor, and the County adopting plans long ago to put lots of development around the Metro stations and keep the existing low-density residential neighborhoods. What was a crumbling commercial corridor in 1975 is now a vibrant office/residential/shopping corridor. It took vision, planning and the right infrastructure. It could be done in Tysons too, certainly better than it is now.

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Fairfax, Va.: How great an effect do you think United Airlines' direct link with Beijing can have on the Northern Virginia economy?

John McClain: We did a study for the Airports Authority that said that a new non-stop has significant economic impact, depending on the sizes of the economies being connected. Our estimate is that the Dulles-Beijing route could mean approximately $300 million to our economy. Perhaps more important -- and incalculable -- is linking the capital regions of the two largest country economies in the world (in the geopolitical sense).

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washingtonpost.com: The National Capital Region's Economy: International Strengths and Links to China (Center for Regional Analysis, Sept. 2006)

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Washington, D.C.: Although housing has become unaffordable based on median household income, isn't it true that the same factors driving the job growth in Fairfax County also are behind a major part of the increase in house prices -- i.e. competition for limited land/existing housing and a lot more folks earning relatively or a lot more money all wanting to buy that limited supply of housing? Hasn't the market simply risen to its natural equilibrium ... so that the correct market forces now will be in place to build a much more urban environment befitting the metro area's ascendancy into that league of cities that previously have dominated the world's economy (i.e. London, New York, Paris, etc.)?

John McClain: There is something to what you say, although house price increases have way-outstripped income increases in the last several years. We think the market is now approaching stabilization and over the next couple of years gradually will get back to the long-term sustainable rate of about 7 percent/year price growth. But in the ramp-up in '02-'06, many workers and households have been effectively closed out of hopes for home ownership. And, yes, I think Washington is becoming more cosmopolitan ... we will see increased densities and more urban neighborhoods -- more Bethesdas, Clarendons, Silver Springs -- and that's where today's younger workforce are moving to.

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Alexandria, Va.: The solution to the housing affordability problem is that people are moving west and commuting east to Fairfax County.

John McClain: In the past five years, 28,000 households have moved from Fairfax to Loudoun, 30,000 to Prince William, and 6,300 to Stafford/Spotsylvania.

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Annapolis, Md.: What do you think makes Fairfax County, Virginia, more attractive to private-sector businesses than Montgomery County, Maryland?

John McClain: Part of it is the state tax/regulatory differences (Virginia is the most northern right-to-work state), and a big part is how friendly the local government policies and image are regarding new job growth. About 15 years ago when General Dynamics was considering a move to this region, the Montgomery County Executive at the time wrote them a letter that effectively said "don't come to Montgomery." Their headquarters now are in Fairfax.

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Fairfax, Va.: John, you talked about the Dulles-Beijing direct flight -- how about a direct Dulles-New Delhi flight? With U.S.-India relations reaching a new high, this should be explored -- what do you think?

John McClain: Good idea, but we'll have to see what the bilateral agreement is between U.S.-India -- and then if a new flight is allowed, it's up for grabs as to where. This was the Dulles-Beijing process.

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Alexandria, Va.: What opponents of growth fail to realize is that in an area like Fairfax County, growth is going to happen whether it's promoted and managed or not. Yes the traffic is bad, but what's the alternative -- banning all growth? Forcing people to move to get back to 1970s levels? It ain't gonna happen. Though there always are unpleasant growing pains and tradeoffs, growth generally is a good thing and should be encouraged. I'm a lifelong resident of Fairfax County and am glad to see it doing so well.

John McClain: I agree with you -- and I'm glad there was job growth a few years ago when my kids finished college and wanted to work here.

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Tysons Corner : The Labor Department study mentioned the "dual economic core" of the region of Washington and Fairfax. Is that really unusual? Seems like a lot of metro areas have strong cities and suburbs. Thanks very much.

John McClain: I agree. I thought that was just a little academia/article fluff.

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Northwest Washington, D.C.: I live in Washington but have worked in Fairfax County. I myself will not move to the suburbs because traffic is horrendous. Why didn't Fairfax County invest in Metro the way Montgomery County did years ago? Are there plans to expand Metro out to Centreville and Gainesville? Or perhaps are there plans to move Metro out south? That leads me to this question. Why did businesses choose to locate far from public transportation?

John McClain: Yes -- there is a long-term study and possibility of Metro to Manassas/Gainesville. One reason companies have moved further out is to follow their workforce, and it is happening.

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Fairfax, Va.: John, the Fairfax EDA has five international offices as an outreach, including one in Bangalore. What is the outcome of having those centers? Is there a way to quantify the outcome?

John McClain: Not sure it's quantifiable, but we should ask them.

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Vienna, Va.: Is a high density in Tysons and Reston (and more urbanization of Fairfax County in general) really what is best for the county? I feel like a lot of people moved there for the nice home surrounded by a lot of grass in a cul-de-sac -- somewhere quiet for the kids. If we push those people out to Loudoun by building more and more dense places and keep having no affordable homes in the County then I feel like many of the qualities about Fairfax that made its school system thrive will fall apart.

Making it so there is no viable middle class in Fairfax County probably will lead to the school system and whatnot becoming more like Washington. If things are not handled appropriately with the affordable housing then I could see the county becoming where you work and Loudoun and Prince William where most live (i.e. Fairfax becoming just like Washington.)

John McClain: Fairfax is already a net in-commuter of workers -- like Washington and Arlington -- and the trend is going up. And Fairfax gets the benefit of those business tax revenues and doesn't have to build new schools for the children of the workers.

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John McClain: Thanks for the discussion. I've enjoyed the questions and your thoughts. Sorry I don't have specific answers for those asking about where to get a job. Our web site is www.cra-gmu.org for those of you who may be interested in our research. So long. John.

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