- The Washington Times - Wednesday, February 21, 2007

The Washington area had three of the top 10 jurisdictions with the highest wages in the United States last year — the District of Columbia, and Arlington and Fairfax counties — setting it apart from most of the rest of the country where wages have stagnated this decade.

The average weekly wage of $1,335 in Arlington and $1,300 in the District in the spring quarter of last year was surpassed only by wages several dozen dollars higher in New York City and Santa Clara County in California’s Silicon Valley, according to the Bureau of Labor Statistics.

Fairfax County wages, which ranked ninth in the nation, trailed somewhat at $1,209, while Montgomery County wages, at $1,037, ranked 18th but far surpassed the national average of $784.

The survey provides more evidence that the largess of the federal government — particularly spending on defense, homeland security and intelligence — has been a big generator of wealth and jobs for the Washington area. While high-paid federal jobs are concentrated in the District and Arlington, Fairfax’s ascendance as a rich job haven, first reported in The Washington Times Jan. 27, mostly reflects the benefits of federal contracting work.

“This area keeps looking better and better as we’ve moved through the decade,” said Stephen Fuller, business professor at George Mason University, noting that the Washington area has added more jobs than any other metropolitan area since 2000. “The reason for that shift is largely the dramatic increase in federal procurement spending since 9/11.”

The federal spending spigot on contracts and jobs nearly doubled locally to $52.4 billion in 2005 from $28 billion in 2000, with about half of that contracts for intelligence, technology and other services from the Pentagon, he said. Homeland security spending has more than quadrupled locally to $4 billion a year since 2001, and about 10 agencies now spend more than $1 billion a year here.

The Washington area houses the “brains” of the federal government, with local federal workers on average earning more than $100,000 a year, while the technical functions the government outsources here also require highly trained and highly paid professionals who earn high wages.

“The Washington, D.C., area has one of the best employment nexuses in the country,” said Mark Vitner, economist at Wachovia Securities. “A lot of federal contractors have technical-type jobs and they tend to pay very well. Some remnants of the telecom industry are coming back, and a little bit of it is the army of lawyers trying to influence the lawmakers.”

Mr. Vitner noted that Washington’s revival in the 2000s has been a “stealth boom” compared with the Internet and technology-driven boom of the 1990s, when internationally famous companies like AOL, WorldCom and PSINet were leading the economy but fell hard or went belly up after the tech bust.

In contrast to the headline-grabbing hot new products and stock offerings of the 1990s, Washington’s work force of the 2000s is engaged in “a lot of hush-hush work” on items such as tracking terrorists, preparing civil defenses against biohazards, and making war strategies, he said.

“Finding ways to mine the telephone lines” can be high-paying work, he joked, and it spurs work for civil liberties lawyers as well.

The New York and San Francisco areas stand out in the top 10 rankings for different reasons than Washington — because of their concentration of high-paying financial and technology jobs, respectively.

The disproportionate role of federal spending in boosting Washington’s fortunes — the area receives 16 cents of every $1 of federal spending — has the potential to prompt resentment around the country, where workers’ wages have not fared as well this decade, Mr. Vitner said.

One reason no backlash has developed is the government hasn’t raised taxes to fund the more than doubling of defense spending to an estimated $750 billion this year from $300 billion in 2000. Mr. Vitner noted the defense buildup has been financed with debt rather than taxes, and while taxpayers are paying the interest on the debt, low interest rates so far this decade have prevented that from being a big burden.

“That’s the key. If it doesn’t show up in the form of higher taxation, then folks aren’t going to complain,” he said. “If increased federal borrowing pushed up interest rates, folks might begin to question it.”

Mr. Fuller noted that the federal trend toward outsourcing since the 1980s — particularly computer and communications jobs — has pushed up wages as the shrinking number of federal workers left in government tend to be the most senior and highly paid.

While contractors may not receive the benefits of nearly guaranteed employment, unions, pensions and other protections for federal workers, they are more highly paid on the whole, he said.

“The mix of what is done now locally is higher wages. The lower-wage work is outsourced beyond this region — the back-office stuff isn’t done here anymore,” Mr. Fuller said, noting that the FBI, for example, manages its fingerprint files in West Virginia, where wages are lower.

Even people in low-skilled jobs in Washington like store clerks, office clerks, food preparers and repairmen earn more than the national average, perhaps because the high concentration of Ph.D.s and college graduates has left a scarcity of such lower-skilled staff, he said.

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