WASHINGTON – The Washington area was a magnet for young professionals in the early years of the nation’s economic recovery, as federal spending insulated the region from cutbacks elsewhere.
But in recent years that surge has cooled off. The influx of new workers here has slowed dramatically, and the region is adding job seekers more slowly than almost every other major metropolitan region in the nation, according to separate analyses by the George Mason University Center for Regional Analysis and the economic research consultancy Sage Policy Group.
The region’s labor force, which includes both the gainfully employed and those looking for work, grew by only half a percentage point in the year ending in July, according to government data released Aug. 31. Only Minneapolis and New York grew at a slower pace.
The decline mirrors what’s happening nationally, a phenomenon that has alarmed politicians and confounded economy watchers. Economists disagree over whether this is a result of an aging generation of workers or, perhaps more worrisome, evidence that the young and unemployed are giving up their search en masse.
The slowdown comes as other economic indicators suggest the local economy is healthy. The unemployment rate for the metropolitan area sits at 4 percent. Local firms are consistently adding jobs at a faster rate than the nation as a whole, and they are doing so in sectors that tend to pay well.
One possible answer is that ever-increasing living expenses are discouraging some young professionals from moving here to look for a job. Rents have skyrocketed in the District and its periphery since the recession.
“There are fewer job seekers [coming to the D.C. area] because the cost of living is prohibitively high for most people, including recent graduates,” said Anirban Basu, an economist with Sage Policy Group.
If more unemployed college graduates moved here looking for work, not all of them would find a job immediately. That might push the unemployment rate upward, Basu says, but an influx of skilled young professionals would enrich the region’s business community in other ways.
Perhaps bolstering Basu’s theory, famously expensive cities such as New York, San Francisco and Miami showed weak or negative labor force growth in the past year, while labor market growth in cheaper hubs such as Atlanta and Dallas topped three percentage points.