Fairfax County is Continuing to Suffer Job Losses

This is a brief paper on the economic situation in Fairfax County and, indirectly, in the Washington Metropolitan area. Stimulated by a recent Washington Post article, this paper looks at recent job losses in the critical high-value Professional and Business Services industry in Fairfax County and its basic causes. It suggests that the next few years at least will look very much like the last few with one percent or less growth in the local economy and jobs as the national economy continues to improve slowly and Congress keeps a lid on local federal spending largely as a result of gridlock. As a result, there will be a need for higher property taxes in Fairfax County (probably from higher tax rates as property values stagnate) and/or major program cuts, and--if the slow growth continues beyond the end of the decade--an impact on the County's borrowing.
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  1 A look atFairfax County’sjob losses, especially high-value ones,theircauses,the outlook,andsomeimplications. Terry Maynard 1 November7, 2014 Summary:A Washington Post reportthat Virginia is losing jobs faster than Maryland,especially high-value jobs,is corroborated by BLS data that shows a steep drop in Fairfax County employmentsince the middle of 2012, particularlyinthedominantand importantProfessional and Business Services industry.The job losses are attributable tothe after effects of the Great Recession andcontinuinggrossCongressionaldysfunction,resulting in reduced local federal spending.There is little reason to believe this situationwill change in the next few years atleast; average annual job growth will likely be about the same as it has been since the recession ended, less than one percent per year.The job lossesand theircauses bode ill for significantCounty economic growth in thenext  few yearsand increase the likelihood thatbothproperty taxes and property tax rates will go uptosustainCounty services--andservices maystillneed tobe cut, evenduring next year’slocalelectionperiod.If slow growthcontinueslonger term,itcouldalsoaffect County borrowing. Arecentarticle in the Washington Post(Virginia shed 7,400 jobs in September, while the District andMaryland added workers)caught our attention, especially parts of the article focused on NorthernVirginia and Fairfax County. Here is part of what the articlesays aboutour area:“The numbers are pretty discouraging,” said Stephen Fuller, an economist and director of theCenter for Regional Analysis at George Mason University. He pointed out that the professionalservices and government jobs that the state is losing are among the most valuable in terms of their contributions to the economy.“While the cutbacks haven’t been as steep this year, the growth we are seeing is in lower-value-added jobs and the shrinkage has been in the higher-value-added jobs,” Fuller said. . . “We’re in last place here,” Fuller said in comparing the Washington area’s economic recoveryto that of other regions. “And that doesn’t show any real signs of changing.” So we thought we’d take a look at what is going on in Fairfax County, especially in comparison with theWashington area and the nation given the County’s dependence on growth to feed its huge tax revenueneeds. And the picture is uglier than we thought: Not only is the Washington area lagging, but FairfaxCounty leads that lagsince the bottom of the Great Recession in 2010. Fairfax County’s employmenthas grown at about half the rate of theWashington Area and less than 40% of the job growth 1 Terry Maynard is a retired CIA and intelligence community executive who spent most of his career addressingglobal economic issues. In recent years, he has been a member of the Reston Citizens Association Board of Directors and Co-Chairman of its community planning committee, Reston 2020. He received a Fairfax CountyFederation of Citizens Associations Citation of Merit for his work on communityplanningissues in 2011.  2experienced nationwide. (Methodological note: Since March2014data is the latestBLSavailable onFairfax County, we have made our comparisons based on that month. All data is from the BLS Current Economic Series (CES)or Quarterly Census of Employment and Wages (QCEW)unless otherwise stated.) The results above are much different than Fairfax County had experienced before the Great Recession.In fact, Fairfax County both led the area and the nation in annual employment growth inmost of thefirst half of the last decade.In fact, the BLS QCEW preliminary employment figures for each of the first three months of 2014 show County employment down nearly10,000 jobs from the year before,a1.7%reduction in jobs between March 2013 and March 2014—the only trackedWashington area jurisdiction to show a job loss since the end of the Great Recession.  3A more focused look at “covered employment” (that covered by unemployment insurance, generallyexcluding small and single-person businesses) since January 2012 shows that County employmentpeaked in December 2012 and reached its nadir in February 2014 resulting in a loss of nearly 23,000 jobs, many of them seasonal retail jobs over the winter holidays. 2 A more representative comparisonmay be the January data for each of the years presented here, which shows a smaller but still significantchange in covered employment: YearEmployment January 2012580,150January 2013585,342January 2014575,977Moreover, as Dr. Fuller points out, the job losses have generally been in the high-value jobs. Inparticular, the Professional and Business Servicesindustryemployment, mainlyemployees of corporations doing businesswith the US government,comprises more thanone-third(37% in 2013)of Fairfax County jobsandhas shown an especially steep decline in the County in the last year. 2 The employment figures are influenced by seasonal hiring during the winter holiday period and the summerbreak accorded school teachers, the latter resulting in steep July-August job drops.  4A just-released GMU CRA report on the growth of Gross Regional Product (GRP) in the Washingtonmetropolitanareasince 2001highlights the impact of therecentdownturn inProfessional and BusinessServices employment on the region’s economy. As shown in the graphic below from that report,growth in the contribution of Professional and Business Services employment (shown in red) tracksclosely with the total growth of theregion’s economy (shown in yellow)in any specific year. Incontrast, the changes in Total Government employment, most notably the increase in 2009 as a result of the economic stimulus act, had little impact on the region’s growth in any year.
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