Washington Area Compensation and Benefits Association February 21, 2013 Uncertain Economic Times: Impacts on Local DC, MD and VA Employers and Employees Stephen S. Fuller, Ph.D. Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis George Mason University

The U.S. Economy Recent Trends and Outlook

Quarters After Trough % Change in GDP Recession Recovery Patterns of GDP Past Four Recessions Sources: Bureau of Economic Analysis, GMU Center for Regional Analysis

Components of Post Recession Recoveries Average Growth After 14 Quarters Source: Bureau of Economic Analysis Avg % Chg

ISM Manufacturing and Non-Manufacturing Indices Source: Institute for Supply Management

Annual Change in Payroll Jobs – US Month-Over-Year (000s) Jan = M Source: Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

U.S. Payroll Job Change by Sector Jan 2012 – Jan 2013 (000s) Total = 2,016 Ranked by Size in 2011 Source: Bureau of Labor Statistics (Seasonally Adjusted), GMU Center for Regional Analysis

Initial Claims for Unemployment 4-Week Moving Average Feb Source: Department of Labor (000s)

Source: Department of Labor Initial Claims for Unemployment 2011-Present 4-Week Moving Average Feb (000s)

U.S. Unemployment Rate Source: Bureau of Labor Statistics (Seasonally Adjusted), IHS Global Insight Feb Jan = 7.9 % GI FCST 12 – – – – – – – 5.7

Consumer Prices Forecast > > > > > % Source: Bureau of Labor Statistics, IHS Global Insight Jan. 7, 2013

100 Consumer Confidence Source: The Conference Board, GMU Center for Regional Analysis Expectations Current Situation

Existing (Left Axis) New (Right Axis) U.S. New and Existing Home Sales (000s) Source: National Association of Home Builders (New), National Association of Realtors (Existing)

U.S. Gross Domestic Product Quarterly Change: 2007 – 2014 % Forecast > > > > > Source: Bureau of Economic Analysis, Global Insight Feb

How did the recession change the Washington area economy?

US GDP and Washington GRP % Washington GRP US GDP

Annual Change in Jobs Washington Metro Area 1,000s Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis

Wash MSA Payroll Job Change: Private Sector The Great Recession and Recovery To December 2012 (000s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis Total -193Total 132

Washington Area Job Changes By Sector, (through Dec) (in thousands) SECTORWashington Metro Area D.C.Suburban MD Northern Virginia Professional, Business Services Government Health, Educ. Svcs Other Services Hospitality All Other TOTAL Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change Washington MSA, (000s) Annual Data Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

16 Large Job Markets Job Change: Dec 2011 – Dec 2012 (000s) Washington + 30,200 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by Sector Dec 2011 – Dec 2012 Washington MSA (000s) Total = 30,200 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by Sector Nov 2012 – Dec 2012 Washington MSA (000s) Total = -1,300 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change District of Columbia, (000s) Annual Data Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by Sector Dec 2011 – Dec 2012 District of Columbia (000s) Total 1,400 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change Suburban Maryland, (000s) Annual Data Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by Sector Dec 2011 – Dec 2012 Suburban Maryland (000s) Total 12,600 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Annual Job Change Northern Virginia, (000s) Annual Data Annual Month over Year Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Job Change by Sector Dec 2011 – Dec 2012 Northern Virginia (000s) Total 20,600 Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

8.6 – DC 7.8 – U.S. 5.7 – SMD 5.2 – MSA NVA Unemployment Rates in the WMSA By Sub-State Area, Source: US Bureau of Labor Statistics (Region - Not Seasonally Adjusted, US – Seasonally Adjusted)

Metro Area Comparisons Job Change Dec 2010 – Dec Largest Metro Areas (000s) Source: US Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis WASHINGTON

Key Conditions Shaping the Future Washington Area Economy: Declining Federal Spending Wage and Salary Compression Population Change

Federal Procurement in the Washington Metro Area, $ Billions | | TOTAL = $1,023.5 Billion Source: US Census, Consolidated Federal Funds Report 2011 $80.0 B $75.6 B 2012

Federal Government Washington MSA (000s) Annual Data Annual Month over Year Source: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted), GMU Center for Regional Analysis

Summary for Federal Spending Trends in the Washington Metropolitan Area, Federal Procurement Outlays declined 8.4% between FY 2010 and FY Federal employment has declined since peaking in July 2010, losing 8,700 jobs or 2.25%. Federal payroll declined by 0.6% between FY 2010 and FY 2011 and will continue to decline as the workforce shrinks and older workers retire and are replaced by younger workers.

Sources: Reuters, GMU Center for Regional Analysis Average Income Levels In the Washington Metropolitan Area, 1990 % of Workers

Sources: Reuters, GMU Center for Regional Analysis Average Income Levels In the Washington Metropolitan Area, 2010 % of Workers

The Changing Income Pattern in the Washington Area, 1990 and 2010 (percent share, inflation adjusted $s) Income Range $10K-$50K 44% 44% $50K-$70K 31% 14% $70K-$90K 20% 2% $90K and above 4% 39% Source: Reuters, GMU Center for Regional Analysis

Changing Job and Income Patterns In the Washington Metropolitan Area Source: US Bureau of Labor Statistics, GMU Center for Regional Analysis $ 2011 Avg. Annual Pay $92.2K $50.7K

Early Signs of Income Compression Washington MSA Source: US Bureau of Economic Analysis, GMU Center for Regional Analysis (in thousands)(in thousands, 2011 dollars) Jobs Earnings Per Employee

The Washington Metropolitan Area Population Is Aging (percent share, total population in millions) Age Group Change Less than 25 years 32.7% 32.0% 31.5% 17.2% 25 to 44 years old % 45 to 64 years old % 65 years old %12.7% 15.7% 82.4% Totals % Source: IHS Global Insight, GMU Center for Regional Analysis

The Outlook for the Washington Area Economy:

Job Growth in the Washington Area By Sector, (in thousands) Sector Change Percent Prof. & Bus. Ser Federal Gov’t Education/Health S & L Gov’t Hospitality Retail Trade Other Services Financial Services Construction Information Ser Other Sectors (3) Total Jobs 3, ,

Major Sources of Job Growth in the Washington Area, (in thousands) Growth Sectors Change Percent Prof. & Bus. Ser Education/Health Construction Sub-Totals1, , % Total _________ Totals3, , Sources: IHS Global Insight; GMU Center for Regional Analysis

GRP Per Job in the Washington Area By Sector (in 2005 dollars) Sector % Change Prof. & Bus. Services$134,750$154, % Federal Gov’t 138, , Education/Health 59,730 57, S & L Gov’t 60,975 56, Hospitality 42,883 42, Retail Trade 60,807 64, Other Services 70,339 69, Financial Services 543, , Construction 98,824 82, Information Services 349, , Other Sectors 147, , GRP per Job$130,653$138,

GRP Per Job in the Washington Area By Sector (in 2005 dollars) High Job Growth % Change Prof. & Bus. Svs. (20.6%) $134,750$154, Education/Health (10.2%) 59,730 57, Construction (37.8%) 98,824 82, Other High Value-Added Sectors Information Services (8.7%) 349, , Financial Services (3.1%) 543, , Federal (-5.8%) 138, , Wholesale Trade (8.9%) 183, , Transport/Warehsg (16.1%) 138, , GRP per Job$130,653$138,

Indicator Change GRP Growth$450.9$ % Net Job Growth3,915.34, % Replacement Job Growth % Resident Workforce 3,203.13, % GRP, Job and Workforce Growth in the Washington Metropolitan Area, 2012 – 2017 (in billions of current $s, jobs in thousands)

Occupation Total Openings % of Total % Change Sales Occupations 92, Business and Financial 89, Office Admin Support 85, Food Prep & Serving 60, Management Occupations 59, Computer, Math and Sci 55, Health Care (all) 53, Education & Training 42, Personal Care Occup. 42, Totals 580, Washington Metropolitan Area: Major Sources of Workforce Growth

Occupation Net New % of Total % Change Business and Financial 52, Computer, Math and Sci 33, Health Care (all) 31, Office Admin Support 30, Sales & Related Occup. 29, Personal Care Occup. 23, Management Occupations 22, Education & Training 21, Totals 224, Source: EMSI Inc., GMU Center for Regional Analysis Washington Metropolitan Area: Major Sources of Net New Jobs

Educational Level All JobsNet New Replace ment Bachelor’s or more 34.1% 278, % 144, % 133,645 Associate’s 4.3% 35, % 18, % 17,117 HS/Voc. Ed. GED/OJT 61.4% 500, % 192, % 307,546 Educational Levels of Net New and Replacement Jobs in the Washington Metropolitan Area, 2012 – 2017

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