We generally talk about the commuter bite—income earned in the District by non-residents, which the District cannot tax—but rarely about the District residents who work in the suburbs and pay income taxes in the District. Let us call them reverse commuters.
Reverse commuters were thought to be residents who cannot find work in the District and therefore go to the suburbs, especially Maryland, to work jobs in retail, construction, or building and grounds maintenance. We have been seeing strong income growth among District residents, while job growth and wage growth in the District has been stagnant. This made us suspect that the nature of reverse commuters is changing.
We looked at data from the American Communities Survey and found the following:
- A quarter of the District residents who are employed work in the suburbs. This share has been relatively stable, varying between 24 percent and 27 percent since 2000.
- Personal earnings of reverse commuters have been increasing. Until 2011, reverse commuters earned less than District residents with jobs in the District. Since 2011, reverse commuters, on average, earn more. This change would have come earlier had it not been for the federal stimulus after the great recession, and the consequent ramp up in federal hiring between 2009 and 2011.
- Personal earnings of reverse commuters is higher because they now hold higher paying jobs. In 2001, only one in five reverse commuters held jobs in the professional and business services area. In 2013, this share was almost one in three. The growth is coming from higher paying jobs in professional services such as lawyers, managers, scientists, or architects and not from lower paying jobs in business services such as buildings maintenance, travel agencies, or administrative support.
- A smaller share of reverse commuters work in retail, construction, and health sector jobs in Maryland or Virginia while the share of such jobs held in the District by D.C. residents did not change since 2001. Finance sector jobs declined everywhere, but even more so in the District, suggesting that some of the reverse commuters successfully held on to such jobs in the suburbs.
What exactly is this data? We used data from American Communities Survey between 2000 and 2001, looking at the place of work and personal earnings of DC residents who are employed. We focused on jobs in DC, MD, and VA. Some DC residents hold jobs in other states but it is not easy to make a reliable estimate about them. Their size in the sample is too small. We also looked at the industries DC residents hold jobs in, again focusing on DC, MD and VA. Detailed breakdowns of jobs are, once again, not reliable, given the small sample size. So we reported on broader industry areas, sticking to what we think are reliable estimates.