In the debate over problems associated with explosive growth in metropolitan Washington, very little is being said about a fairly significant trend in the area's labor market. A continuation of this trend for another two or three years could limit growth, possibly rendering much of the debate academic.
Signs of a continuing economic boom notwithstanding, the rate of job growth in metropolitan Washington has been steadily declining for at least two years. It hit a peak of 6.8 percent in December 1984, but has declined steadily since then. New jobs were created at a rate of only 4.9 percent between October 1984 and April 1987, according to the D.C. Department of Employment Services (DCDES). The rate declined even further between April 1986 and April 1987, dropping to 3.5 percent.
If the figures appear to be inconsistent with indications of a continuing boom in the area's economy, then consider this from the latest edition of the Virginia Business Report, published monthly by the College of William and Mary's school of business administration: Northern Virginia's job growth rate in the first quarter of the year slowed "far more dramatically than the state's."
Certainly Northern Virginia's job growth in recent years has been substantially higher than levels recorded in other parts of the state. Nonetheless, the rate of increase in jobs in Northern Virginia fell from 9.4 percent during the first quarter of 1986 to 5 percent during the first quarter of 1987, according to the bureau of business research at William and Mary.
Meanwhile, the DCDES conducted a 30-month study of the job growth rate in all of metropolitan Washington and found the rate was lowest between April 1986 and April 1987. According to DCDES, new jobs created in the area declined from 105,200 between April 1984 and April 1985 to 69,000 between April 1986 and April 1987.
Reasons for the decline vary, but economists and labor market experts seem to be in general agreement on two things: a slowdown in the national economy is having an effect on job growth here, and metropolitan Washington is easing into what is being called a normal growth pattern.
Adding 100,000 jobs a year to the local economy "was not a sustainable rate," according to Philip M. Dearborn, vice president of the Greater Washington Research Center. "We simply don't have the labor supply to fill 100,000 jobs a year on a continuing basis."
Al King, professor of management and marketing at Christopher Newport College in Newport News, Va., recently completed a similar study of job growth in Virginia. Like the DCDES, King viewed the situation in Northern Virginia in the broader context of a trend that apparently has developed in all of metropolitan Washington. King says the Washington area is "experiencing a change in the mix of employment, and that mix is less dependent on government now." A large segment of the private sector, he adds, consists of firms locating in the Washington suburbs, and their businesses are "more cyclical than the government."
A third factor possibly contributing to the decline in job creation, according to King, is employment in the area's high-technology industry. "You had a high degree of high-tech startups and the death rate or shakeout in that industry is tremendous."
Part of the decline in job growth can be traced to the much-discussed shortage of workers in the area, particularly at the lower level of occupational skills, said Richard Groner, director of the division of labor market information and research at DCDES. Several firms, Groner added, are deferring expansion plans because they can't find clerical workers or other employes to fill a wide range of service industry jobs. Indeed, says Groner, the excess labor in both the District and the suburbs has been absorbed.
Notwithstanding the decline in the rate of job growth here, the local economy continues to add jobs at a faster pace than does the nation as a whole. The area's labor market is making an expected adjustment, however, forcing employers to make greater adjustments, Groner suggested.
More adjustments may have to be made, Dearborn said, as the federal government spends less for procurement in the area. Federal employment, while still a major factor in the areas's economy, continues to decline. State and local government employment increased nearly 6 percent from April 1986 to April 1987 while federal employment declined nearly 1 percent.
Still, the trend in declining job rates is no cause for alarm, say the experts. "I don't see this as a permanent thing," said King. "I see it as a plateau. Every company goes through this and I think communities go through this, too."
"I don't think anything bad is occurring," Dearborn agrees. "I think this is good for us."
Earlier in the year Dearborn made a telling observation which probably had the ring of heresy in some quarters. While the area has prospered during the boom of the last four years, he wrote in the research center's newsletter in April, "It might be better served in the future if growth slowed to a more historically normal 40,000 to 50,000 jobs a year, or about half the annual growth of the latest four years."
The current trend suggests that Dearborn's observation may be more prophetic than it appeared. It further suggests that a self-correcting factor in the four-year boom may be more effective than local officials have been in managing growth.