Washington, D.C.: Economy

Major Industries and Commercial Activity

A 2004 report by the D.C. Chamber of Commerce characterized the local economy as diversifying and growing, though still narrowly specialized and externally driven. The Washington area ranks first among all national metropolitan areas in federal procurement dollars. Taking advantage of that influx of capital, as well as the city's advantage as the center of all national capital functions, will be key to the D.C. area's future economic vitality and job growth. The Washington area is expected to achieve a 58 percent increase (inflation adjusted) in its economic activity between 2000 and 2015, with the job base growing 29 percent and the resident population increasing 21 percent. Key sectors driving the economy will continue to be the federal government, technology, construction, international business, and hospitality. Manufacturing has never been a strong suit; only 3.9 percent of area jobs were in manufacturing, and that figure is expected to fall to 2.8 percent by 2015.

Indeed, people often think of Washington, D.C. as a "company town" where most people work for the federal government. However, in the early twenty-first century, only one of six workers in the area was on the government payroll. That figure is down from one in four in 1977. By contrast, there has been a great deal of growth in the private service sector, which now accounts for one of every three jobs. Still, many of these employees work for companies who rely on government contracts. As the largest consumer of technological equipment and service in the world, the federal government stimulates business through purchases, research and development funding, and grant and loan programs. As a result, Washington is a magnet for growth industries, such as paper products, telecommunications, information and computer firms, and many service industries, especially tourism and hospitality firms. Nearly 50 of the major Fortune 500 companies have offices in the district, which is also the location of leading world, national, and regional financial institutions.

There are more than 500 publishing and printing companies in the district to produce the vast array of documents generated by the federal government. In addition, the city houses more than 1,000 national associations' headquarters and lobby groups who need a presence in the district to attempt to shape and influence the legislation process on their own behalf.

The Capital City has an inventory of nearly 100 million square feet of office space. A key to office development has been the growth of the Metrorail subway stations. Commercial projects have typically followed the opening of new subway stops. Many of the new buildings are connected directly to the stations through underground tunnels that also serve retail stores and restaurants. Major residential projects on Pennsylvania Avenue N.W. and at Market Square include residential housing units mixed with other types of retail, office, and commercial uses.

Items and goods produced: printed and published documents; telecommunications equipment

Incentive Programs—New and Existing Companies

Local programs

Because of its recent economic resurgence, Washington, D.C. can offer numerous financial incentives to attract and retain businesses and associations. The New E-conomy Transformation Act of 2000 (NET 2000), effective January 1, 2001, provides certain credits, exemptions and other benefits for a Qualified High Technology Company. These incentives include resources to develop their workforce, secure affordable facilities for their business and benefit from reduced real estate, personal property, sales and income taxes.

State programs

Federal incentives designed to tap the investment and employment potential of the Enterprise Zone include three types of wage credits, an additional expensing allowance, a zero federal capital gains tax rate on certain investments and tax-exempt bond financing. The District's Revenue Bond Program offers below market interest rate loans to qualified private enterprises that are located in the Enterprise Zone as well as non-profit and manufacturing organizations citywide.

Job training programs

The D.C. Department of Employment Services contracts with private companies to provide customized training programs through the D.C. Private Industry Council, the federal Workforce Investment Act (WIA) (formerly Job Training Partnership Act), the Youth Employment Act, the Training and Retraining for Employment Program, the On-The-Job Training program, and through the One-Stop Career Center approach now in effect in several states and supported in part by the Department of Labor. Contracts have encompassed such areas as shop training, technical training, basic education areas, office skills, legal research, food service, tourism, art-related occupations, industrial maintenance, mail handling, bank tellering, health care, child care, truck driving, construction industry retraining, and brick and masonry training.

Development Projects

The $650 million Washington Convention Center opened in 2004 to rave reviews for its design and state-of-the-art facilities. With more than 700,000 square feet of convention space, the Center had more than one million visitors in its first year and generated $426 million in local delegate spending. It was also named Best New Convention Center by Meetings East magazine. The new center also made way for further downtown development by making the older facility redundant—it was imploded in 2004. In Dec. 2004, D.C. and Major League Baseball agreed to a financing package for a $400 million publicly financed baseball stadium to allow the former Montreal Expos (now the Washington Nationals) to move to D.C. Play at the new stadium, to be located at South Capitol and N Streets, SE, is projected to begin in 2008. Until that time, the Nationals will play at existing RFK Stadium, former home of the Washington Redskins.

Economic Development Information: Director, Washington, D.C. Marketing Center, D.C. Chamber of Commerce, 1710 H. Street, NW, 11th Floor, Washington, D.C. 20006; telephone (202)638-7333; fax (202)833-2693; email dchristian@dcchamber.org

Commercial Shipping

Ronald Reagan Washington National Airport, Dulles International Airport, and Baltimore-Washington International Airport handle the bulk of air freight in the area. For shipping, Washington, D.C. has its own port at the Anacostia and Potomac Rivers but mainly utilizes larger port facilities in Baltimore, Maryland, and in both Alexandria and Norfolk, Virginia.

Labor Force and Employment Outlook

The D.C. Department of Labor Services issued a report identifying high demand and emerging occupations for the years 2000-2010. Key white collar sectors included business management and financial services, lawyers, computer and technical specialists, and public relations. Blue collar and non-skilled growth areas include office clerks, secretaries, legal secretaries, laborers and movers, janitors and food service workers, and police officers. While government employment continues to shrink due to downsizing and streamlining, private-sector jobs have increased dramatically in the last decade, especially in the services sector. All sectors of the hospitality industry, the city's second strongest industry after the federal government, have reported strong growth due to the city's high number of tourists and travelers on government business. The new Convention Center, opened in 2004, will likely attract a vigorous convention business and stimulate new hotels, restaurants, and spending downtown.

The following is a summary of data regarding the Washington, D.C. metropolitan area labor force for December 2004 (annual average figures unavailable).

Size of nonagricultural labor force: 673,800

Number of workers employed in . . .

construction and mining: 12,000

manufacturing: 2,500

trade, transportation, and utilities: 28,800

information: 23,100

financial activities: 30,400

professional and business services: 143,800

educational and health services: 93,700

leisure and hospitality: 51,800

other services: 59,200

government: 230,900

Average hourly earnings of production workers employed in manufacturing: $16.73

Unemployment rate: 8.8% (December 2004)

Largest employers ranked by number of employees (2002):

George Washington University, Howard University, Washington Hospital Center, Georgetown University, Georgetown University Hospital, Children's National Medical Center, Fannie Mae, Howard University Hospital, American University.

Cost of Living

A 2004 ACCRA study cited Washington, D.C. as the third highest metropolitan area in terms of cost of living in the United States, behind only New York and Los Angeles. Housing costs in Washington, D.C. are higher than U.S. averages due primarily to the fact that approximately two-thirds of all land is either owned or controlled by the federal government, foreign embassies, and other non-profit organizations, which renders that land and property tax-exempt. Housing prices range from $90,000 to well over $1 million. The cost of living for food and other essentials is more in line with nationwide standards. The city levies a 10 percent sales tax on restaurant meals, 14.5 percent tax on hotel rooms, and a 12 percent tax on motor vehicle parking in private garages.

The following is a summary of data regarding several key cost of living factors for the Washington, D.C. area.

2004 (3rd Quarter) ACCRA Average House Price: $505,428

2004 (3rd Quarter) ACCRA Cost of Living Index: 140.0 (U.S. average = 100.0)

Local income tax rate: Ranges from 5.0% to 9.5%

Local sales tax rate: 5.75%

Property tax rate: $0.96 per $100 of assessed valuation; assessed at 100% (2005)

Economic Information: Washington, D.C. Marketing Center, D.C. Chamber of Commerce, 1710 H. Street, NW, 11th Floor, Washington, D.C. 20006; telephone (202)638-7333; fax (202)833-2693; email dchristian@dcchamber.org