The Washington area's economy is undergoing some fundamental changes. No longer can it depend on continuing growth of the federal work force.
Economic development programs are no longer simply issues or uncoodinated and awkward competition between jurisdictions.
Dreams of downtown progress and modern, fixed-rail service are no longer just subjects of mere political and budgetary haggling. The Metro system, the redevelopment of the Pennsylvania Avenue corridor, the construction of a major urban convention center and new shopping facilities are now a reality in parts of the city that were partically stagnant economically.
But in 1980 and in the years to come, the Washington area, according to most experts, no longer will be a pocket of growth and prosperity virtually immune from the trends that can alter the nation's economic face.
"Over the next couple of years, the region and the metropolitan area will feel the adverse impact of the recession," Andrew Brimmer, a former member of the Federal Reserve Board and now an economic consultant, said in a recent interview. "In other words, Washington is not recession-proof.
"Of course, Washington is less exposed to variations in economic activity than the large industrial areas of the country. But, unlike 10 years ago, Washington now has a very large private economic base."
In criticizing the federal government's efforts to raise interest rates, developer Oliver Carr, the outgoing president of the Greater Washington Board of Trade, also suggested in November that the area no longer is an island in the nation's fluctuating economy.
"The theory that the Washington area is recession-proof is long gone, and even the recession-resistant notion is coming into question," Carr said. "It's important that the Federal Reserve Board and the federal government as a whole recognize that even an economy appearing to be as insulated as ours is beginning to feel the pinch."
No longer are the leaders of the public and private sectors here hiding the region's economic difficulties behind retail success stories and the growth of areas like K Street NW and Friendship Heights.
"The region's overall economic health, however, masks pockets of economic deprivation and deterioration," said the Metropolitan Washington Council of Governments in an economic policy statement last year. "This is reflected in high unemployment levels in parts of the District of Columbia and suburban jurisdictions, in declining retail sales in many older commerical and industrial areas throughout the region and by the low income levels of some of the area's population.
"Despite growth and prosperity in the region's economy, there are still segments of the area's population -- including minorities, women and youth -- which have not shared equally in the economic opportunities of the region."
Further, the Greater Washington Board of Trade, long a great booster of the area's economic fortunes, has recognized that the area's problems -- including an unemployment rate for black youth approaching 25 percent, about five times the area jobless rate -- cannot be ignored by a business community that admits it has done little to deal with the problems of the disadvantaged.
Noting an intense competition for skilled labor and jobs between Washington and Baltimore, the board said in a recent report that the continuing concentration of unskilled labor in the city "could lead to social unrest, higher cost of services and a poor business climate. The situation could encourage a further exodus of businesses from the central area to the close-in suburbs."
And no one thinks the plight of the unemployed in the area is about to improve. Asked about the area's unemployed youth, Brimmer, for example, thinks there is "no reason for them to feel optimistic."
That pessemism seems well-founded, considering the growth of the job market in the area's distant suburbs, the inadequacy of transportation from the city to those employment sites and the growing pool of young workers in the suburban jurisdictions.
"It is hard to derive any hope for the unemployed youth, especially unemployed male black youth in the Disctrict," wrote Atlee E. Shidler of the Center for Municipal and Metropolitan Research in a study of area trends.
In fact, between 1970 and 1977, the District lost to the suburbs 108 companies of 20 employes or more, firms offering more than 15,000 jobs with a payroll of about $180 million a year.
Area governments and the private sector are increasingly of the belief that if the plight of the city's poor is to change, a joint business-government partnership will have to provide the impetus. For the first time, area governments, in conjunction with the business community are starting to work together to solve the economic problems of the region. For too long, Washington leaders say, the area's economic policy making was conducted haphazardly and without the coordination that leads to balanced development.
"While many economic development activities are currently under way within the cities and counties of the metropolitan area, opportunities which will benefit the region as a whole are sometimes missed due to the fragmented manner in which many of these activities occur," said Arrington Dixon, City Council member and president of the Council of Governments.
The Council of Governments, for one, is attempting to put together a statement of growth policies in an effort to coordinate the area's growth patterns. That statement, reflecting Metrorail's bonds among the communities of the D.C. area, attempts to turn once-ignored concepts of growth into actual planning.
And, increasingly, the gap that separates the Baltimore area, with its urban renaissance and first-rate shipping and air facilities, and the Washington area will disintegrate as area planners and business representatives realize the strength of a joint economy marketed as one.
Those patterns include the declining importance of the federal work force, which has dropped by 10,000 jobs since 1970, reflecting primarily a relocation of military personnel.
Between 1970 and 1978, nonmilitary federal employment has risen by only 12 percent, while the service sector has grown by about 47 percent, state and local governments by 27 percent and the financial industry by 23 percent. Although only 28 percent of the metropolitan area's jobs were in the professional, technical, administrative and managerial class in 1960, that figure is estimated to be more than 40 percent today.
But when considering the area's economy in 1980, some things appear clear. The area boasts of a series of strong individual companies, firms such as Marriott Corp., Fairchild Industries Inc. and Woodward & Lothrop Inc.
The spiraling growth of business dependent on the federal presence such as trade associations and law firms will continue unabated. "The national, international and foreign activities that are already in Washington in order to be close to the federal government and to each other seem certain to enlarge their presence here through expansion," the Center for Municiapal and Metropolitan Reserch said. "And there are still other such activities around the United States and the world that will find it desirable to be here."
The area's tourist industry, depending both on family and business trade, can only continue to grow as new hotels in the city and suburbs keep springing up and ground breaking nears for the city's long-awaited convention center. Although an increasing share of the area's hotel rooms are in the suburbs, the center itself will be a boost to the area east of 14th Street NW that has yet to experience the city's commerical boom. In fact, the center is expected to bring close to 400,000 more visitors to the city when it is completed in a few years. With that growth, new lower-scale jobs could become available to help alleviate the city's unemployment problems.
In areas of the city where investiment had been virtually nil, shopping areas are beginning to grow. The $13.3 million Hechinger Mall will bring 40 new stores and the neighborhood's first modern shopping area to North-first modern shopping area to North-east Washington when it opens next year. The O Street Market at 9th and O Streets NW now boasts a new Giant Foods supermarket, which is jointly owned by Giant, residents of the Shaw community and a nonprofit city-funded corporation.
By all accounts, the area's banks and other organizations will gain an increasing share of national and international financial business, due to the location here of not only the federal structure, but also powerful institutions such as the World Bank and the International Monetary Fund. Construction of a new trade center near Dulles Airport that will provide up to 6,000 jobs should further enhance the area's international status.
Foreigners are looking increasingly to the Washington area as a valuable place to invest their dollars. A strong case can be made that foreign pension funds and private investors can find no better place to finance the construction or development of office and residental space than in booming downtown Washington.
All of the area's jurisdictions, including the District, now also can point to considerable local governmental efforts to maintain and attract businesses.
The District government has won the pledge of $23 million in funds from the federal Economic Development Administration to stimulate business projects. That money is available if the city government can find worthy projects to support. City officials hope to bring light industry to the city's limited industrial space and feel that the area's underdeveloped space along the Potomac and Anacostia rivers could be among the sites of that growth.
Virginia and Maryland also can cite aggressive programs to attrat new business. Maryland is spending $1.1 million just to promote its image as a good place for business to migrate. In the first six months of 1979, Maryland officials say they attracted $487.8 million in private capital investment compared with $262 million for all of the previous year. Across the river in Virginia, state officials say they have added 9,600 jobs to the state economy in each of the past three years through an aggressive marketing of business tax breaks.
Light industries such as publishing companies will continue to come to the area.
With all this growth, housing availability in the area is tight, to say the least. Rental space is at a minimum. With high interest rates, the building industry may well be in a holding pattern. Carr said recently that one local firm with a downtown high-rise project is delaying ground breaking until the spring "in hopes of an upswing." In Prince George's County, the number of housing starts in 1980 is expected to only be 70 percent of the 1979 total, if that. Some planners worry that a lack of sewer capacity could bar economic growth in parts of the area.
Even the decreasing availability and the accompanying high costs of gasoline is unlikely to curtail dramatically the city's outward growth, although it is taking new forms. New employment centers could begin to spring up closer to where workers reside. Growth here is expected to center on development to the south and west of the city, experts say.
But the threat of recession faces the metropolitan area. Experts beleive the city's retail sales will grow more slowly and actually could decline despite the late jump in area retail sales right before Christmas. Home building and, therefore, furniture sales will lag.
The rate of inflation, although not as steep here as in many other cities, will continue to climb, limiting spending power even for consumers in this region, considered by many yardsticks the nation's most prosperous.