Job growth in the Washington area, largely affected by federal decisions pertaining to domestic and defense spending, increased more than twice as fast as the national rate between 1979 and 1984, but there was virtually no growth in the District during that period, according to a labor market study from the D.C. Department of Employment Services.
The DCDES said the job market in the District might have been worse during the period in question, but a decline in federal employment was offset by a gain of more than 25,000 private-sector jobs. The District's private sector actually outperformed its national counterpart in job creation, by 1.5 percent, the study shows.
But that statistic is overshadowed by the massive job growth in the private sector in Maryland and Northern Virginia, where the gains were significantly greater than in the District. In absolute terms, new private-sector jobs totaled 86,000 in Maryland and 111,000 in Northern Virginia.
"Clearly, the federal government's policy, designed to reduce domestic spending and expand defense spending, has had a demonstrative impact on the industrial structure of the regional economy, especially in the District and Northern Virginia," the employment services agency concluded.
The DCDES compiles and interprets labor market data for the District and other jurisdictions in the Washington region.
In a separate study of private- and public-sector performances in the area's economy, the Greater Washington Research Center found that private-sector earnings soared 75 percent in five years, increasing from $15.2 billion in 1978, to $26.4 billion in 1983.
Federal civilian earnings grew only 37 percent over the same period, from $7.8 billion in 1978, to $10.7 billion in 1983.
"The record clearly indicates that the Washington area not only cannot rely on the federal government for growth of the local economy, but, in fact, that federal employment and pay policies are retarding real growth," the research center said in its current issue of Marketrends, a monthly newsletter devoted to the area's economy.
The research center is a nonprofit, independent, nonpartisan membership organization that is primarily engaged in research and interpretation of information about changes in the region's economic, demographic and fiscal profile.
It described the contrast in growth rates between the District and the rest of the area between 1978 and 1983 as "startling."
But the overall earnings-trends picture clearly explains why housing, retailing and office development are booming, particularly in suburban areas, the center noted.
It added, however, that there is no evidence that the vigor of private-sector growth is abating, although it's likely that the present growth rate cannot be sustained over the long term. On the other hand, federal civilian earnings probably will not continue to decline in real dollars over the long term, the research center concluded.
Although there were two recessions during the five-year period covered in the DCDES study, the principal causes of negative growth in the District (down 0.2 percent) were cutbacks in federal employment and programs, the agency said in a labor market update titled "Job Growth '79-'84".
The decline in government employment accounted for 4 percent of the city's work force.
The study shows that the District lost 20,400 federal jobs and 6,000 D.C. government jobs between 1979 and 1984.
If growth in federal jobs in the District had kept pace with increases in the same sector elsewhere in the country, the rate in the District would have exceeded that in the national job market, the DCDES said.
"A case could be made that in the District, the federal government has been a 'declining industry' with a similar impact on the local economy as declines in basic steel have had on Pittsburgh and Youngstown [Ohio], or autos in Detroit," the agency asserted in the report which was developed in its division of labor market information, research and analysis.
As a result of the decline in federal employment, the District lost its historic position as the area's principal source of new jobs.
The DCDES estimates that Northern Virginia produced 3 percent of all new jobs in the United States and 60 percent of all job growth in the Washington area between 1979 and 1984. Given this magnitude, the DCDES noted, "It is not surpising that [Northern Virginia] now registers very low levels of unemployment and rather extensive labor shortages."
Rapid employment growth in Northern Virginia during the five-year period was fueled by expansion in the services industry which produced more than 50,000 of the 126,000 new private- and public-sector jobs. The other big gainers, according to the study, were retail trade, government and manufacturing.
But, unlike the District, Northern Virginia benefitted greatly from federal spending policies, the department of employment services emphasized. Defense related agencies tend to be located in suburban Virginia, thus federal employment "made a strong contribution to job growth across the Potomac" and "acted as a catalyst to the expansion of private-sector firms supporting defense activities," such as high-tech firms in communications, manufacturing and business service, the DCDES said.
In Maryland, meanwhile, the greatest growth occurred in the services sector which accounted for 42,000 jobs, or six of every 10. The retail trade area added nearly 20,000 jobs but the most impressive gain -- 58 percent -- was recorded in the hotel industry, according to the DCDES. Jobs in the printing and publishing, transportation and wholesale trade industries grew at a rate of more than 6 percent annually during the 1979-84 period.
Looking beyond the period covered in the five-year study, the DCDES projects a "positive" job outlook for the entire region in the near term, "provided that the national economy remains healthy." In the meantime, it is unlikely that suburban growth will continue at the same high rates unless labor shortages are resolved, the department concluded.