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.


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.

Reverse commuters now hold higher paying jobs

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.image002
  • 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.image004
  • 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.image006
  • 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.

Nonprofit sector payroll and wages in the District

Today’s post on the District’s labor market prompted one question on the nonprofit sector in the District.  The Economic Census gives us a full picture of the tax-exempt organizations, their employers, and their payroll, but the data are bit dated.  The census is conducted every five years.  The 2012 Economic Census is now complete but data release is not (all we have for DC is manufacturing data); we have to wait a year or so more to get the full picture.  Therefore, we look at the 2007 Census to get a sense of the lay of the nonprofit land in the District.

In 2007, the total payroll of the entities that were exempted from federal income taxes was about $16 billion.  Over 10,000 entities in the District employed nearly 214,000 people.  The sector payroll show us that professional, scientific, and technical services, and health care and social assistance organizations accounted for three quarters of total payroll.


How much does the nonprofit sector pay?  Taking the estimated weekly pay for 2007 and inflating it by the GDP deflator shows us that except in the areas of professional, scientific, and technical services, non-profit wages were below the DC average. Those working in nonprofits in education, healthcare, social assistance and arts earned even below the private sector average wages. This assumes that wages in the sector are growing at par with the economy.  We will know more about how the sector did relative to the economy once the 2012 data is fully released.


Our changing labor market

Stephen Fuller has been telling us for a while that the labor markets in the District and the metropolitan area have not fully recovered from the great recession. Is our labor market changing? The data from the labor department (collected with the help of our own Department of Employment Services), say yes.

  • Total wage growth in the District has fallen behind the nation. Total wages earned in the District (residents and nonresidents combined) held steady between 2013 and 2014, whereas total wages earned across the nation increased by 4 percent.


  • The main cause of this change appears to be the decline in average wages. The District has the highest average weekly wage among all states–our workers on average earn $1,569 a week compared to the national average of $940–but the the growth in average wages has been sluggish since 2011. Preliminary estimates show that the average weekly wages declined between the second quarter of 2013 and second quarter of 2014.


  • The average weekly wage is declining because a larger share of the people who work in the District have shifted to the private sector where wages are lower. In 2014, the number of employees hired by the federal government was only 2 percent above the level ten years ago—the levels are 192,650 back in 2004 versus 197,000 today. In contrast, the private sector employs nearly 70,000 more people today compared to ten years ago, when private employment was around 429,000.


  • Those who shift to the private sector, on average, earn $500 less per week. In the second quarter of 2014, average weekly wages paid by the federal government was $1,938 and that in the private sector was $1,432. In fact since 2004, the private wages have grown slower than federal wages, and now stand at about 73 percent of federal level compared to 77 percent in 2004.


Half of those on unemployment insurance in the District exhaust their benefits

The District’s unemployment rate is higher than that of all other states: the preliminary number for December is 7.3 percent compared to, for example,  4.8 percent in Virginia and 5.5 percent in Maryland. This is not very unusual given that we are an entirely urban jurisdiction. Perhaps for this reason, the demands on the District’s unemployment insurance program are higher than most other states’ programs.

We looked at the data on the District’s unemployment program and found the following:

  • The District’s civilian labor force is 378,000 (data from the third quarter of 2014) but its unemployment insurance program covers 522,000 workers. This is because unemployment benefits are paid at the place of employment.  Employers pay into the unemployment insurance fund of the state where they are located.  And a commuter who works in the District is paid by the District’s unemployment insurance program if he loses his job, even though he is not a District resident.
  • Some workers covered by the District’s unemployment insurance program have a hard time finding a job.  In the District, unemployed workers receive benefits for 19 weeks on average compared to the national average of 16.6 weeks. In only two other the states the average duration of unemployment benefits is longer: Delaware and Kentucky.
  • A larger share of the unemployed in the District exhaust their benefits because they are still unemployed 26 weeks after losing their jobs. Nearly half of those who receive unemployment benefits exhaust them while the average exhaustion rate in the nation is 38 percent.

Source: US Department of Labor

Why is this? While the unemployment in the District is high, the rate in the metropolitan area is low at 4.4 percent. Shouldn’t these workers be able to find work elsewhere in the region? This suggests that some workers in the District have skills that may not be needed in the metropolitan area, or have hard time getting to places in the metro area where their skills are valued.

Who are the biggest employers in the District?

The District’s FY 2014 Comprehensive Annual Financial Report is now out, and it is filled with lots of interesting information.

Here is one bit:  The top fifteen private employers in the District account for 11.3 percent of the employment. You see on the top of the list hospitals and universities–the same employers we saw in similar positions ten years ago. However, two entities in today’s top ten were nowhere near the top back in 2004. Booz Allen & Hamilton, Inc., which occupies the ninth place on the list, was ranked 113th in 2004. Allied Barton Security Services, LLC, which is in the tenth place, was not even ranked back then.