DC labor market over the last 5 years: many more jobs for residents, modest cut in unemployment

According to the US Bureau of Labor Statistics, from December 2009 to December 2014, the period of recovery from the Great Recession and subsequent expansion, the number of employed D.C. residents increased by 49,166—that is 16.1 percent. The percentage increase is quite remarkable—two-and-a-half times the rate across the US as a whole (6.4 percent) and the D.C. suburbs (6.5 percent), and even greater than in the resident employment growth in North Dakota (15.6 percent), an energy boom state, with many new jobs attracting a lot of new residents.image002What accounts for the increase in resident employment? It is not reduction in unemployment. From 2009 to 2014, D.C. resident employment grew by 49,166 while unemployment declined by only 4,776. This is a modest decline: For every 10 additional D.C. residents who got jobs since 2009, the number of unemployed residents went down by only one. The relatively loose relationship between resident employment and unemployment contrasts with the suburbs and the entire US, where for every gain of 10 in employed residents, the declines in unemployment were an average of 2.6 and 6.8, respectively.

Here is another way to look at it: Over the past five years, the District reversed only about third of the increase in unemployment caused by the recession. The suburbs reversed nearly half of it and the US reversed nearly 80 percent.

image004The most likely explanation for why resident employment rose so rapidly and unemployment fell so slowly is the growth of DC population. From 2009 to 2014, DC’s population increased by 65,400. This 10.9 percent increase in population growth did not directly cause either the 13.1 percent increase in DC’s labor force or the 16.1 percent increase in DC’s resident employment.

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Some of the increase may well have come from the existing population reentering the labor force; however, these two labor market indicators could not have grown as they did in the absence of more population. The opportunities for employment in both DC and the suburbs (reachable from DC by commute) appear to have attracted additional people to the city. The March trend report coming out this week has much more on this topic.

We will write more on the relationship between population, resident employment, or unemployment in another post.

What exactly is this data? Labor market data is from the Bureau of Labor Statistics. BLS develops these statistics with the assistance of models, with inputs that include population numbers from Census, unemployment insurance statistics, the American Community Survey, and the Current Population Survey administered by the Department of Labor for and in cooperation with Census. BLS revises data as more information becomes available. The data used here reflect the comprehensive revisions released on March 4, 2015 to take account of population and other changes; these revisions were not just to the most recent year, but also to the entire data series.

Labor market data is the seasonally unadjusted quarterly average for the December quarter for the years shown. The data for the DC suburbs is calculated by subtracting amounts for the District of Columbia from the totals for the Washington Metropolitan Area.

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