By Brian Trompeter
The Washington region’s economy is not doing horribly, but isn’t performing anywhere near as well as it could, according to retired George Mason University economist Stephen Fuller.
Attendees of the 2023 Regional Leadership Awards Luncheon, hosted Dec. 8 by the Regional Elected Leaders Initiative at Mason’s Arlington campus, just were tucking into their cilantro chicken and salmon when keynote speaker Fuller delivered his verdict.
“I’m worried,” Fuller said during an on-stage interview with Washington Business Journal publisher Alex Orfinger. “We have a really good thing here and it’s not living up to its potential.”
The Washington region’s economy used to be one of the country’s strongest, growing from ninth place in 1950 to fourth in 2017. Since then, the area has dropped to sixth and has among the nation’s slowest-growing economies, Fuller said.
“The Washington area isn’t what it used to be,” he said. “Over the last 10 years, only one year has the Washington economy outperformed the national economy.”
While enjoying reasonably good job growth and low unemployment, the nature of that employment has been shifting, said Fuller, former director of GMU’s Center for Regional Analysis.
“It’s not just the number of jobs, but the kind of jobs and the value they create,” he said.
About one-third of the region’s net job growth has come from state and local government, Fuller said. Federal jobs, which create four times the economic value of ones in the hospitality sector, are down, he said.
Another worrisome factor: The region’s population experienced almost no growth last year and over the last decade has seen 65,000 more people move out of the area than into it, Fuller said.
The biggest cohort in that domestic out-migration consisted of workers ages 25 to 44 – people in the prime of their working lives. Housing unaffordability likely was a major impetus behind those departures, he said.
Housing costs eat up about 30 percent of household income and restrictions imposed by local governments add roughly 10 percent to the price of new housing, Fuller said. He suggested the paucity of affordably priced housing could be addressed by building smaller homes on smaller lots and permitting construction of more townhouses and stacked apartments.
Stimulating economic growth will require more than merely keeping up the status quo, Fuller said. For example, efforts to maintain transportation infrastructure such as Metrorail are vital, but expanding the system’s capacity is essential. Maintenance efforts “just keep us in the game,” he said.
Fuller called on the area’s public- and private-sector leaders to convene and bring a regional focus to problem-solving and economic competitiveness. The Metropolitan Washington Council of Governments performs some of this work, but only on the public-sector side, he added.
“We don’t have a single voice across the region. Somebody has to get this ball rolling,” Fuller said, adding, “Our brand has been tarnished. We have so much to offer here and we’re not telling our story. It has to be regional.”
Fuller applauded Virginia’s obtaining $729 million in federal funds for the future Long Bridge replacement, which will allow MARC trains to enter Virginia and Virginia Railway Express trains to travel into the District of Columbia and Maryland, thus providing more options for commuters. His beef? The new, higher-capacity bridge is needed now and the region will be “losing ground” while the project, due to be finished in 2030, is under construction.
Fuller also was unhappy with the area workforce’s laggardly return to the office following the pandemic – both from the aspect of lost productivity and loss of in-person collaboration.
“The workers not in the office are losing out,” he said. “There’s very little mentoring that goes on by Zoom.”
Fuller departed before the awards ceremony to catch a flight back to Maine, so he didn’t get to hear feedback on his speech from one of the honorees, retiring state Sen. Richard Saslaw (D-Fairfax).
By Saslaw’s estimation, Northern Virginia’s economy is performing solidly. The region must be doing something right, seeing as it reeled in Amazon’s second corporate headquarters despite bidding only one-tenth of Maryland’s $8 billion offer, he said.
“The region is doing better than some people want to give us credit for,” Saslaw said.
