Is the Washington Economy Really Recession Proof?

There are many signs that the Washington economy has experienced a resurgence. Unemployent is below the national average. Housing prices are better than they have been in recent years. Foreclosures here are happening at much lower rates than places like Baltimore, Las Vegas, South Florida and Phoenix. It’s a wonder with all the good economic news that we do such brisk business in career coaching in Northern Virginia.

Some of our clients include high school, college students and college graduates trying to find where their aptitudes and interests align with their purpose and passion. Some of our clients include those returning to the workforce, like the stay-at-home dad re-entered as a budget analyst at a large government agency. Others are doing financially well but don’t have passion for their work, like the high-paid government contractor who was a rising star at his company who left to work as an entrepreneur in a gym business.

But we have recently been seeing two new types of clients: the recently unemployed and those who fear they will soon be unemployed.

One example was a government contractor who recently came in and asked to see a career coach because he feared that his company’s contract with the Marine Corps would not be renewed, and if it was, it would be at such a low level that drastic cuts would be inevitable. He feared that he did not have the skills to stay on or easily find other work.

Another example is a client of the practice who was laid off in January as a personnel security official at major government contractor. In her job, she was responsible for managing the clearance process for people obtaining Secret and Top Secret clearances in the Defense Department, the Intelligence Community and other agencies. She says her company anticipates a 30 percent reduction in government contracting over the next three years – and that especially with her high salary compared to those entering the workforce, she was no longer needed.

“It’s all I’ve ever known,” she said recently about the world of facility and personnel security. “I don’t know what I am going to do.”

There is little likelihood that the federal government's dominance in the area will go away or that there will not be jobs in the future. But what Washington could be experiencing soon is a bit akin to the well-known picture of a Star Wars storm trooper on a New York City subway with the caption that reads, "Unemployment. Sucks when your job gets blown up."

Despite all the signs that the Washington economy is strong, our career transition business has been brisk. Some of it could be psychological – individual fears and companies concerned about the federal economy. But some of reality is challenging the notion that the Washington, D.C. area economy is recession proof. After all, as the rest of the nation faced the early recession, Washington, D.C. area unemployment grew with the creation of the Department of Homeland Security and the nearly doubling of the budgets of the Central Intelligence Agency, the National Security Agency, the National Geospatial Agency and other agencies.

A couple of things have happened to change that. Among them, the exodus of federal jobs to other metropolitan areas, such as Denver. A second fact is that the Defense Department has made clear that it will do its part to help reduce the national deficit, announcing $7.8 billion in cuts in January and a plan to eliminate 10 percent of its contractors over the next three years (translate that to at least 8,000 jobs). I can't imagine that some of those won't come from the increases in Langley, Fort Meade, Reston, Springfield and Chantilly. In addition, there are concerns on Wall Street that the problems with the federal economy will have a negative rating on the local governments supported by it.

A recent article in the Leesburg Today highlighted the Moody’s Investor Service rating agency’s quick turnabout on the outlook for the Loudoun County economy (the ratings will affect the costs of boring for the county, which could lead to layoffs as the county pays off interest at higher rates).

“The ratings of these local governments, particular those with high economic dependence on federal government activity, would be vulnerable to a downgrade of the U.S. government,” Matt Jones, senior vice president for U.S. Public Finance at Moody’s, said in a statement printed in the paper.

Higher borrowing costs means more money going to interest payments and less for public works, government contracts and employees. Then you’d have to throw less tax revenue, from fewer federal and government contracting jobs, and the picture starts to get uglier for teachers, police officers, firefighters, social workers and others.

While employment austerity leads those with the most versatile (the utility infielders of corporate or government work) or recession-proof skills (accountants and psychiatrists will always have a broad base of clients), to move down a peg in terms of their income, it forces many others into unemployment at a bad time – when federal unemployment extension benefits are about to disappear.

It all provides a case for career change and re-training programs, both for those who are looking for their passion and purpose and those who are trying to retool to the new Washington, D.C. economy that appears to be not-to-far in front of our collective windshield.

Jayson Blair is a certified life coach at Goose Creek Consulting.

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