There's a $1 billion windfall coming for the Washington area next year, assuming Congress approves a pending 4.8 percent annual pay increase for federal civilian workers.
It should arrive at a particularly opportune time -- just as the region's economy is beginning to slow down, experts say.
The pay increase, which appears to have clear sailing on Capitol Hill, would be the largest for federal employees since the beginning of the Clinton administration.
President Clinton's budget officials routinely trimmed federal pay increases below congressionally set maximums, so this year, Congress took the matter into its own hands, specifying the 4.8 percent gain.
Economists believe that the federal pay raise will trigger an increase in consumer spending in the Washington region that will multiply its impact.
The math goes like this.
There are about 335,000 full- and part-time federal employees in the metropolitan area who will receive close to $21 billion in wages this year, according to Labor Department and Census Bureau calculations. Tack on a 4.8 percent increase and the federal payroll in the region would swell to $22 billion in 2000.
The exact size of the increase locally won't be known until Congress passes the legislation and adjustments are made for the level of wages in major regions throughout the country. But it should be close to 4.8 percent, according to analysts.
Most of this increase would be spent, not saved, predicts Stephen S. Fuller, regional analyst at George Mason University.
As it gets circulated in the economy, flowing into restaurants, car dealerships and retail stores, it will create new jobs -- and economic gains of $160 for every $100 spent, Fuller calculates.
Mark Zandi, chief economist of RSA Dismal Sciences, a West Chester, Pa., consulting firm, puts the gains at closer to $170 per $100 spent.
So the pay increase could add more than $1.6 billion to the region's economy next year, with the potential to create at least 17,000 additional jobs, Fuller said.
Most of the new jobs will be with services firms, where the federal dollars are likely to be spent.
"This spreads the benefits more broadly around the economy and that's a plus," Fuller said.
That $1.6 billion may look puny alongside the Washington region's total economic output, which will top $220 billion next year, Fuller estimates.
But it will be a welcome addition next year, when Fuller, Zandi and other analysts expect the region's economy to slow down because of higher interest rates and a weaker stock market. Zandi estimates that the area's economic growth rate will be a strong 5 percent this year but only half that in 2000.
The pending pay increase provides another example of the crucial importance of the federal work force to the region's economy, Fuller said.
While the Washington area has about 2 percent of the nation's salaried employees, it is home to more than 12 percent of the federal work force.
Thus, the capital region was especially hard hit by the administration's government downsizing measures, and the growth in the region's overall federal payroll has not been keeping up with inflation.
That pay raise is looking bigger all the time.
Just in Time
Where 330,000 Washington area federal employees live and where a $1 billion federal pay raise would go:
Prince George's 24%
Prince William 6%
Alexandria City 4%
Other No. Virginia 1%
Assuming federal workers receive a 4.8 percent raise in Jan. 2000, now before Congress.