Let’s say you work for the General Services Administration. You live in Virginia, ride the Metro to L’Enfant Plaza, and dine regularly at DC and Arlington restaurants. You pay property taxes on a brick Colonial home valued somewhere close to $1 million. You share your employer—the federal government—with around 375,000 other residents of our region.
Your life is, of course, not unusual in DC area. And if you received an email offering a buyout on Tuesday, it may have just been upended.
According to Terry Clower, who monitors the local economy at George Mason University’s Center for Regional Analysis, that could be a disaster for the region.
For all of the IT, education, healthcare, and service industry activity in the DMV, Clower says, the region’s economy is still starkly dominated by the federal government, its contractors, and the jobs they create. Massive reductions in federal jobs could hit DC like the closure of steel mills hit Midwestern company towns.
“Forty percent of our economy is based one way or another on the federal government,” Clower says. “We are not a diversified economy.”
The pace of Trump’s executive orders, like proclamations from a private company with a new owner cleaning house, makes them hard to process. It’s still unclear whether the buyout offers from the Office of Personnel Management are legal, and on Wednesday the administration rescinded its freeze of federal grants and loan payments, which caused widespread confusion and had been temporarily halted by a judge. But these orders, along with a return-to-office mandate and the ideologically driven shuttering of offices and programs, all seem calculated to shrink Washington’s federal workforce.
Clower says all this activity could put a dent in the region’s tax base and overall income, ultimately lowering the standard of living for DC-area residents. It might take years for the indirect effects to be felt and fully understood, he says. Government jobs also translate to jobs for contractors based in the DC suburbs like Lockheed Martin, Leidos, and General Dynamics. Their relatively high salaries also keep the service industry and real estate market thriving.
“A federal job means more than just a federal job,” Clower says. “On average, for every job in the federal government, you explain two to three jobs in the regional economy.”
Some federal employees could find jobs at private companies. Virginia’s Republican governor Glenn Youngkin said last year that the state’s federal employees shouldn’t be afraid to lose their jobs because there are “fabulous opportunities” in the private sector. Virginia does have plenty of tech and IT jobs, and a growing crop of data centers in Loudoun and Prince William counties. But it’s not clear that many of the federal employees looking for new jobs would have anything to do with that industry.
“I went through the exercise of asking, ‘What are the occupations in the federal government, and then what are the job titles of the open positions across Virginia,” Clower says. “And there’s not much overlap.”
Many federal workers who resign are likely to leave the region, which could hasten some already worrying trends, Clower suggests. For at least the past decade, the DC area’s economic growth has been outpaced by the national average. Even the growth of federal jobs has been concentrated elsewhere— last year, the region only saw about 600 net federal jobs. DC lost around 300.
The effects of these shifts will be uncertain for some time, in part because they’re unprecedented. Beginning in the Reagan administration and accelerating into the Clinton years, government spending on private contractors climbed sharply. But that trend didn’t lead to a loss of jobs in the region, just a proportional gain in the private sector, Clower says.
“Nobody’s come close to this,” Clower says. “There hasn’t been this kind of a direct threat in modern history to the Washington region economy.”
