D.C.'s Wealth Boom Projected to Get Boom-ier
I wrote a column last month about how Washington, D.C. is not only largely escaping the recession, the D.C. metro area has become the wealthiest region in the country—a troubling development, given that the largest employer and chief industry here is government.
Business Week reports that it's only going to get worse.
In fact, Moody's Economy.com estimates that metro Washington's economy will actually grow 2.5% from mid-2008 through mid-2010. New York's economy is expected to shrink 4.2%…
Washington is getting a boost from government spending to fight the recession and fix the financial system, as well as the ongoing expenses of fighting wars in Iraq and Afghanistan and promoting homeland security. While President Barack Obama pointedly left Washington for Denver to sign the $787 billion stimulus package on Feb. 17, locals expect the metro area to garner a big share of the dollars.
The cost of course goes beyond the price tag of the bailout. All of the money spent lobbying for a cut of the largess is also money sent to Washington that could have been spent actually creating wealth. The article also points to a looming brain drain, as the country's best and brightest no longer fan out across the country to innovate and thrive in the private sector, they're going where the money is. Which means they're converging on D.C. for lucrative jobs with government contractors.
Job-seeking Wall Streeters who jump on Amtrak's Acela to Washington may be dismayed to find that the maximum pay for an FDIC bank review examiner is close to $180,000. That's great for most folks, but paltry next to the bonus-swelled compensation many bankers are used to. The pay can be a lot better, though, at the Beltway Bandit consulting firms that are ramping up to assist the FDIC, Treasury Dept., and others. Consulting jobs for senior specialists in finance "can pay north of $200 an hour," says Andrew Reina, a practice director for risk consultant Ajilon Solutions.
Companies such as Computer Sciences Corp., Science Applications International Corp., or SAIC, and Booz Allen Hamilton employ tens of thousands of people in the Washington area and continue to expand. Even before the current crisis, professional and business services, which include private-sector lawyers, accountants, engineers, and consultants, made up 21% of metro Washington's annual economic output, even more than the 20% made up by government itself, according to a BusinessWeek estimate based on government data. The financial crisis "creates opportunities for companies like ours" to provide expert assistance, says David Booth, Computer Sciences Corp.'s president of global sales and marketing…
According to George Mason University's Center for Regional Analysis, metro Washington leads the nation in the share of jobs that are in high-tech and the share of workers with advanced degrees.
The problem of course is that all of that money and talent isn't being harnessed to produce goods and services consumers actually want. It's being used to fulfill the wish lists of the politicians who hand out the checks.