Washington’s unemployment rate remained constant at 5.5 percent in March compared with the same time last year, according to a Labor Department report released Wednesday. But though the region also gained some jobs, losses in professional and business services have some analysts worried.
The region had added 36,600 jobs in the 12-month period that ended in March, mainly in the leisure and hospitality and health sectors. Analysts say the gains were bolstered by the housing recovery and spring tourism season.
But declines in professional and business services (down 1,500 jobs) may signal a coming crunch in government contracting, they said, because of uncertainty over government spending.
“It’s a change because what normally are our strong sectors, like professional and business services, are not showing much strength,” said John McClain, deputy director of the Center for Regional Analysis at George Mason University. “It’s a sector that’s been growing for the past few years.”
McClain said gains in state and local government and consumer spending also helped fuel the region’s job growth. “Property values have stopped declining, so local government revenues have stopped declining,” McClain said.
The job market was uneven across industries. Leisure and hospitality added 12,300 jobs, which was likely buoyed by Washington’s reputation as a spring tourism destination.
“As we get out from the winter months, there is a tendency for people to travel more often, dine more often and go to hotels more often,” said Anirban Basu, chief executive of Sage Policy Group, a Baltimore consulting firm. “D.C. attracts more travelers than most markets, even adjusting for population,” Basu said, “so when travel expands, the Washington region disproportionately benefits.”
Job growth was also reported in construction, up 6,300 positions; financial activities, up 4,600; and education and health, up 15,300.
Experts attributed the outsize gains in education and health to the aging population The increase in the number of retirees might have spurred demand for assisted living, nursing homes and other elderly care. The health care market as a whole has continued to expand, adding workers throughout the recession.
“We are consistently hiring individuals, but in other sectors there have been more layoffs,” said Veronica Damesyn, executive director of the District of Columbia Health Care Association. “It’s partly due to the aging of the population.”
Job losses were reported in retail, down 3,400 positions; manufacturing, down 1,400; information, which includes media, down 700; and federal government, down 2,400.
McClain attributed those declines to cuts in government contracting, which has hung in the balance of Congressional inaction on the federal budget. Last summer policymakers agreed that, unless they reduce the deficit through other means, automatic cuts in federal spending would begin next January.
“Those automatic cuts would be pretty dramatic for this area,” McClain said. “That’s why most contractors are being cautious.”
Basu said he believes that if the government continues to cut spending, Washington may lose its place among the nation’s top job-creating metropolitan areas.
“The federal government is likely to become one of the fastest-shrinking sectors of the economy,” he said. “Washington may go from being a leader to laggard, and already it has shifted from being a leader to middling performer. Much will depend on how the federal government adjusts to fiscal realities.”
Despite declines at the federal level, the overall government sector, which includes state and local government, gained 4,300 jobs in the past year.
The Labor Department reports on the unemployment rates in its 372 metropolitan areas every month. The Washington metropolitan area contains the District and the nearly 20 counties and jurisdictions in Northern Virginia and suburban Maryland that surround the city. In a separate release that typically comes two weeks afterward, the Labor Department issues a report on unemployment rates in each of the 50 states and the District.
The region’s unemployment level is well below the nation’s jobless rate of 8.2 percent for March. Unemployment dropped in 342 of the 372 metropolitan areas across the country, rose in 16 and remained steady in 14.
The region surrounding El Centro, Calif., with a 26.2 percent rate, had the highest unemployment level in the nation. The region surrounding Bismarck, N.D., had the lowest level — 3.5 percent.