A scarcity of workers in virtually all occupations may soon start constricting economic growth in the Washington suburbs, according to economists, recruiting professionals and company officials.
The latest unemployment numbers, released this week, document the strength of the suburban economy and its reverse side, a worsening shortage of workers. The jobless rate in the area fell to 2.3 percent in April, the lowest in the decade, down from 2.6 percent in March.
In the suburbs, the rate was 1.9 percent -- the first time that it has fallen below 2 percent, according to the D.C. Department of Employment Services. The March figure for the suburbs was 2.1 percent. Even in the District, where unemployment has been far above the suburban rate, an economic revival has pushed the jobless level down to 6.3 percent in April, not counting seasonal work force changes, or 6.8 percent, seasonally adjusted.
The signs of strain from the worker shortage are showing up in varied places: a nationwide paging company based in Alexandria; a Falls Church firm that recruits health care technicians; a Bethesda janitorial services company; a nursery in Loudoun County; and a Fairfax technology consulting firm.
"I think we've just run into the wall," said Betty Peebles, president of Team Placement in Falls Church, a temporary-help firm specializing in medical and research technicians. "This week it hit me that the college kids are out and there was almost no relief."
The number of metro area residents listed as unemployed fell to 61,285 in April, compared with 76,168 in April 1998 and 86,235 in 1997.
Job growth, the handle that cranks the region's economic engine, remained strong in April, but not as robust as in the first three months of this year. The worker shortage is a key reason economists are predicting slower economic growth ahead.
Stephen S. Fuller, a regional analyst at George Mason University, recently forecast that the region's economic growth rate will decline to 2 percent in 2000 from 3.5 percent last year. Such a slowdown would mean $3 billion less in spending in the region's $200 billion economy, said Fuller -- equal to the combined revenue of Potomac Electric Power Co. and Washington Gas Light Co. last year.
In some cases, the shortages are causing work to go elsewhere.
Metrocall Inc., the nation's second-largest paging and wireless messaging company, will shift some of its call center work from its Alexandria operations center to Pensacola, Fla., and Seattle, said Senior Vice President Mike Scanlon.
For the same reason Electronic Data Systems Corp., with a government group in Fairfax that is one of the region's largest federal technology contractors, has been moving some work from the Washington area to San Antonio, Indianapolis and Camp Hill, Md., spokesman Randy Dove said.
The tight labor market has been a boon to many workers, said economist Roy Pearson at the College of William and Mary. Personal income rose 4.9 percent per person in Virginia last year, for example, the highest annual increase in the decade. But wage increases in Northern Virginia didn't match state levels, in part because companies facing outside competition can't pay much more without losing business, he said.
Whether higher wages or more job training would significantly ease the worker shortage is hard to answer. In some lower-skill occupations, wage levels are kept down by undocumented immigrant workers who have no real bargaining power with employers, recruiting experts said. But in the health care field, some skilled positions seem impossible to fill, even when wages are raised, Peebles said.
Mike Burke, president of Overbrook Nursery in Loudoun County, said some small landscaping firms he supplies are turning down business because of the shortages.
"The guys that come up from Mexico [to work for landscape firms], some of them are making $9 or $10 an hour, not $5, as it used to be." Lately, he adds, "you can't find the labor for whatever fee you want to pay."
Staff writer Sarah Schafer contributed to this report.
The Washington Area: A Robust Economy
Unemployment rates and percent change in unemployment rate from March 1997 to March 1999 by county
KEY: Jurisdiction unemployment rate/percent change in unemployment