12 years of change in D.C. economy, yet some residents remain excluded from employment booms

A recent blog post noted that in the five years after the Great Recession, DC resident employment increased rapidly, but unemployment went down only slowly.

The loose connection in D.C. between resident employment and unemployment is not new, but remains cause for concern. From 2009 to 2014, DC unemployment went down by only one for every increase of ten in employed residents.

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In the 2002 to 2007 pre-recession period, however, the comparable impact of resident employment gain on unemployment was even less. Then the decline was only one-half of an unemployed person for every ten additional employed residents (that is, reduction in the number of unemployed DC residents, 1,041, was only 5 percent as much as the 23,652 increase in resident employment). The strong growth in labor force and resident employment relative to the population overpowers the relationship between unemployment and resident employment in the chart below:

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The relationship between resident employment and unemployment in D.C. was also quite loose in the recession years. From 2007 to 2009, unemployment rose by 15,829, but there was only a decline of 1,920 in employed residents. That is, unemployment rose 8 times faster than the resident employment. In the U.S. the relation was closer to one-to-one, and in the suburbs, less than 1 to 2.image005

Situations in which an increase in employed residents is associated with a relatively small decrease in the number of unemployed are not unique to D.C., but they seem to occur where job growth occurs and the unemployment rate is already quite low.  For example, in the U.S. from 2002 to 2007, the decrease in the number of unemployed was about 10 percent of the growth in resident employment, but the U.S. was starting from a 5.6 percent unemployment rate, close to what some thought at the time was a full employment number. In the DC suburbs, over the 2002 to 2007 period, the reduction in unemployment was about 7 percent of the growth in employed residents, but the suburban unemployment rate in 2002 was 3.4 percent. In North Dakota, as the energy sector expanded from 2009 to 2014, the decline in the number of unemployed was 5 percent of the gain in resident employment, but in 2009 the unemployment rate there was 3.6 percent. These are all instances where the booming economy and a tight labor market invites new working adults to join the labor force.

In D.C.’s case, the unemployment rate in 2009 was 10.0 percent and the bump up in resident employment over the next five years did not translate into more jobs for the existing unemployed.  Even when plenty of people were unemployed in the District, they did not benefit from the economic expansion or found jobs.

The BLS labor force and Census population numbers are summary data snapshots at two points in time. These snapshots, as important as they are, do not give a very good picture of the degree to which changes may be occurring in the composition of the labor force and population that have a bearing on the connection between resident employment and unemployment. But these snapshots do suggest some significant changes have occurred in the dynamics of the DC market over the past 12 years.

This can be seen most clearly in the pre-recession period from 2002 to 2007. DC’s labor force went up by 22,611 over those years while the population increased by only 2,575. Where did the additional labor force come from? Some no doubt came from the existing population as the falling unemployment rate encouraged more people to seek and obtain work. But to get such a large increase from the existing population seems questionable when the 1,041 decrease in unemployment that occurred was such a small percentage of the growth in resident jobs. The most likely explanation is that the growth in the labor force was largely the result of migration patterns, the churn in the city’s population. With little change in the overall level of population, the net result of who moved in and who moved out could easily have produced an increase in persons who were in the labor force and employed.

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Summary labor market and population statistics do not give information on who the unemployed are and how the composition of unemployment may have changed over the last 12 years, but such details are important for understanding current labor market dynamics in D.C. and when considering policy remedies. From numerous studies that have been done in D.C. and elsewhere it would be expected that a large share of the unemployed in D.C. are people lacking job skills and work experience. Beyond that, however, other matters to consider are the degree of turnover among the unemployed, how important the discouraged worker phenomenon is in the composition of measured unemployment in D.C., whether migration patterns that have increased the labor force also contribute in some way to D.C. unemployment, how long unemployed persons have lived in D.C., and whether the operation of the District’s unemployment insurance system has any particular effect on measured unemployment. It would also be useful to know more about how the relationship between resident employment and unemployment described here for DC compares with that of other cities.

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 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.

Population numbers for the December quarter are taken from Moody’s Analytics (Economy.com), which derives quarterly estimates from annual Census Bureau population numbers.

Sources of income change by income levels, tax filing status, age and ward

The composition of income for DC taxpayers changes significantly as income, filing status, age and ward of residence changes.

Wages and salaries become a smaller part of total income as income increases.  In tax year 2011, salaries and wages made up about 80 percent of adjusted gross income (AGI) for DC taxpayers with annual reported income below $250,000. For those with AGI exceeding $500,000, wages and salaries made up less than 50 percent of their total income. Rental income averaged about 30 percent of total income for taxpayers making between $0.5 million – $5 million.  For taxpayers with AGI over $5 million, capital gains made up more than half of their total AGI, and non-wage and non-retirement income, including business income, rental income, capital gains, interest, and dividends — accounted for almost three quarters of AGI.

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Married couples and domestic partners are more likely to collect income from capital gains, business income and rents and royalties.  Wages and Salaries made more than 80 percent of AGI for single filers and 85 percent for tax filers who claimed head of household filing status.  As for married couples or domestic partners, wages and salaries accounted for only about 60 percent of reported income.

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As taxpayers grow older, wages and salaries account for less and less of their income. For taxpayers younger than 45 years old, the share of wages and salaries ranged between 81 percent and 92 percent of their 2011 total income. For taxpayers between 45 and 55 years old, wages and salaries were about 71 percent of their AGI. The percentage dropped to roughly 53 percent for taxpayers between 55 and 65, just before retirement age, and rental income, capital gains and retirement income each accounted for about 12 percent of their income. As taxpayers entered retirement, pensions, annuities, IRA distributions, and Social Security became the most important sources of income, making up about 49 percent of income for taxpayers over 75.

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Taxpayers in Wards 2 and 3, who are generally higher income earners, receive a significant amount of non-wage and non-retirement income. Taxpayers in Ward 3, for example, received 52 percent of their income from wages and salaries, while wages and salaries contributed more than 80 percent of total income for taxpayers living in Ward 1 and Wards 5 through 8. Taxpayers living east of Anacostia River, in Wards 7 and 8 had virtually no business, capital gains, interest and dividends or rental income, according to the 2011 tax returns.

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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.

Irish Ancestry of District Residents

March is Irish-American history month (see the President’s proclamation here), and with St. Patrick’s Day upon us, we looked to the American Community Survey to see how many people in the District are estimated to have Irish ancestry.

In 2013, the District was estimated to have 42,268, a figure which may include the most famous District resident with Irish ancestry, the President himself. The estimate has been fairly steady the last five years. sixyearreporting

Among the states, however, the District has the third lowest percentage of the population estimated to have Irish ancestry in 2013 at 6.5 percent. Only Utah and Hawaii have fewer (percentage of) Irish.

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What exactly is this data? We used the 1-year estimates of the U.S. Census Bureau, American Community Survey (ACS). Specifically, we looked at the variable “total ancestry reported”, which includes a tally of people with one or more ancestry categories reported. Although the ACS produces demographic estimates, it is the Census Bureau’s Population Estimates Program that produces and disseminates the official estimates of the population.

D.C. high school graduation rates: how does your school compare?

Kevin Lang contributed to this post.

Last Friday the Office of the State Superintendent of Education (OSSE) announced the 2014 graduation rates for the District’s public schools. Among OSSE’s findings were that DCPS’s graduation rate increased two percentage points from last year while charter schools’ rate dropped by almost 7 percentage points.

To get a clearer picture of how graduation rates vary by school, we made two interactive graphs for you. The first, below, compares schools’ 2014 graduation rates for all students and subgroups of students, like those who are low-income or receive special education services. It shows that the schools with the five highest graduation rates are all DCPS schools with competitive admissions. For special education students, though, four of the top five schools are charters. Other interesting patterns emerge when you look at different subgroups of students. SEED Public Charter School, for instance, is one of three schools that has a 100% graduation rate for girls. Click on the graph below to see the graduation rates for different student populations.  Note that graduation rates are displayed only for schools with 10 or more students scheduled to graduate in a given category.

Click here for an interactive version of the graph below

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The second interactive graph we made shows how individual schools’ graduation rates have changed since 2011 for different types of students. As you can see, there can be a lot of variation within a school. At Wilson High School, for instance, the graduation rate for black students has increased but it’s dropped for special education students. Click on the graph below to see school-by-school graduation rates.

Click here for an interactive version of the graph below

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What exactly is this data? These are the four-year adjusted cohort graduation rates from the D.C. Office of the State Superintendent of Education. You can download the data here.

Correction: A previous version of this post said that schools with fewer than 25 students in a given category (white, LEP, etc) would not show up in the interactive graphs. In fact, schools with fewer than 10 students in a category don’t appear. These thresholds refer to the number of students scheduled to graduate, not the number of students in the entire school.

District residents who live east of the river have the lowest effective real property taxes

District residents who own their homes do not generally pay taxes on the full value of their properties.  If your District property is your primary residence,  the amount you get taxed on will be different from your assessment.  First, you are exempt from taxes on the first $70,400 of your house value (this is called homestead deduction, and it is adjusted every year for inflation).  Second, you are protected from the tax implications of large upswings in home values by the assessment cap. Your taxable assessment, which is what you pay taxes on after the homestead deduction, cannot grow by more than 10 percent each year.  (These two tax relief policies are not unique to the District; more on this will come this week).  The two policies combined reduce the taxable assessments for all District homesteads, but their combined effects vary by home values and neighborhoods. (In addition, seniors with incomes below $127,100 get a 50 percent reduction on their final tax bills).

The homestead deduction is more valuable in low-value houses. Because it is a flat amount ($70,400 this year), the homestead deduction produces a relatively bigger tax break for properties that have lower assessed values.  If the tax office assessed your home’s value at $300,000, you would be taxed on $229,600, or 77 percent of your home’s market value.  If your assessed value were $1.3 million, your would pay taxes on $1.23 million, or 94 percent of your home’s market value.

The 10 percent cap on tax assessments is more valuable in neighborhoods with rapid growth.  Going back to our example, a homestead property of $300,000 would be taxable over $229,600.  At 85 cents for each $100 value, the tax would be $1,951.  Let’s say the assessed value of this property grew by 33 percent to $400,000 in one year.  If there were no caps, the new taxable assessment  would have been $329,600.  The cap, however, limits the taxable assessment growth by 10 percent, thus the owner would only pay taxes over roughly $252,560 ($229,600 times 110 percent).  The cap is removed once the house is sold to a new owner.

Looking at the District residential properties that are eligible for homestead deduction and assessment caps, we find the following:

  • More than half the District properties are eligible for homestead deduction, and potentially, the taxable assessment cap. Of the 178,300 residential properties, approximately 95,876 are homesteads eligible. (This figure is only for properties that are purely residential such as single family homes, row houses, apartments and coops.  It excludes mixed-use developments).
  • Among these homestead properties, the two tax  provisions reduce taxable assessments by about $10 billion, or down 28 percent. In Tax Year 2015, the total assessed value of homestead properties was $53.8 billion; only $44.2 billion of this amount was taxed. In Tax Year 2016, the comparable numbers are $57.3 billion and $47.3 billion (the 2016 data could change since people have a chance to appeal).
  • In the absence of these deductions, the real property taxes would have been $72 million higher every year.  Given the $10 billion difference, the number is indeed lower than the 85-cent rate would bring. This is because seniors, who own 19,200 properties in the District, are eligible for a 50 percent tax reduction.
  • The divergence between full and taxable assessments is greatest among lower valued homes. Among properties assessed below $300,000, the taxable assessments are 65 percent of full assessments–that is, homeowners only pay taxes on 65 cents out of each dollar of assessed value.  Among mid-valued properties (assessed between $300,000 and $750,000), the taxable assessment are 78 percent of full assessments.  Among properties valued over $750,000, the comparable ratio is 92 percent.

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  • Finally, the divergence between full and taxable assessments is greatest in east of the river neighborhoods and in neighborhoods that have been growing rapidly. In the Congress Heights neighborhood, for example, the taxable assessments are only 56 percent of the market assessments.  In neighborhoods where values are growing fast, such as Eckington and Riggs Park, the taxable assessments are at about 67 to 68 percent of market assessments.  In the northwest quadrant, especially west of Rock Creek Park, taxable assessments are closest to market assessments.  This is because the housing values in these neighborhoods are very high, and they grow at much slower rates (3 to 4 percent annually). The 10 percent cap does not bind forever, since taxpayers eventually catch up for previous tax reductions until their taxable assessment is exactly $70,200 lower than their market assessment.  Such is the case in neighborhoods west of the Rock Creek Park.

Here is a map of District’s neighborhoods by the ratio of taxable assessments to market assessments.  Darker colored neighborhoods have market and taxable assessments closer to each other.

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What exactly is this data? We use current and proposed market and taxable assessment data from District’s real property tax database as extracted on 29th of February this year. The data only covers homestead properties and properties that receive senior tax reduction.  It also only focuses on non-mixed use properties.

Diverging Trends from the Nation in DC’s Population aged 18-34.

A recent article in the Washington Post “A wave of mostly white voters is reshaping the politics of D.C.,”  highlighted the changing landscape brought about by sweeping demographic shifts in the District and the implication on local politics. As noted in the article, the changes are most significant in the population aged 34 and under. Some of the trends seen in the District for this younger segment of the population are markedly different from the nation as a whole. These differences are evidenced in recent data from the U.S. Census and the Minnesota Population Center.

Here are some key diverging trends:

Young people in the District are increasingly made up of white non-Hispanics. This is in sharp contrast to the nation where the young are increasingly non-white. Whites in this age group could soon be a minority in the U.S., the opposite is occurring in the District.

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The median earnings for full time workers in this is age group in the District increased significantly from 1980 to 2013 growing from almost $38,000 in 1980 to over $54,000 in 2013. In contrast, earnings for this age group in the U.S. declined from $36,000 to $34,000 over the same period. It is important to note, however, that poverty rates for those without jobs remained high.

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Other measures of economic well-being also increased . The share of the District’s younger residents who live with their parents has decreased since 1980. The trend in the nation is the opposite—the share of boomerang kids is at all-time high at 30 percent.

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Finally yet another measure that increasingly separates DC’s 18-34 year olds from the rest of the nation is how they commute to work. Thirty one percent of DC residents commute by car. This is down from 40 percent in 1980. In the U.S., the share has held consistently above 80 percent.

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 What exactly is the data?  Data in this blog has been provided by the U.S. Census and the Minnesota Center for Population and is available by clicking on the following link.   The site is designed and developed by Social Explorer. Check out the site for more interesting statistics and to compare DC to other areas.