Why D.C.? Here are five reasons. First, D.C. has always been pretty well-off, thanks to the nation's highest concentration of college degrees and lawyers. Second, federal employees (who account for about one-sixth of the city) make a cool $126,000 in typical compensation, which seems appropriate since many of them are skimmed from the top of numerous high-paying industries, like finance, regulation, law, and strategic communications. Third, the federal government was the only major part of the economy that grew during the recession, and the region's contractors and employees benefited. (State capitals around the country tended to experience shallower recession for a similar reason: stimulus money flowed from the federal capital through state capitals.) Fourth, despite the president's goals, D.C. is still a hotbed of rich finance and health care lobbyists jockeying for favor in the president's agenda, and they push up the typical salary. Fifth, D.C. is a small city bracketed by two very rich, very well-educated suburban regions that have grown, with the help of government spending (NIH in Maryland; IT in northern Virginia) into economic powerhouses.
I'd be willing to bet that D.C. and San Jose will switch places again next year. The Bloomberg survey looks at 2010 data. In 2011, Republicans have pressed Congress to control spending, and the region has suffered. Since April, the number of employed people in the District has dropped by 9,000, according to the Federal Reserve Bank of Richmond. "The deterioration in the labor market since April is greater than the deterioration over any five-month period during the recent recession," the report found. Even so, Washington, D.C., is much healthier than almost any other metro area in the country precisely because so much business revolves around the nearly recession-immune federal government, as opposed to the real estate and manufacturing industries, which expand and contract based on uncertain demand rather than guaranteed services.
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