DC's economic challenges - an annotated briefing
Population Trends and Demography

There are significant changes in the population and demography of the nation's capital city. Its population has dropped nearly 100,000 people, the majority of whom were black, and a very large number of whom were children. There has been virtually no loss in the elderly in 30 years! More subtle perhaps is that the fraction of black adults is lower than the shares of black elderly and kids. And among the black adults, there are significantly more women than men, while that is not true among non-blacks (whites, Asians, and Hispanics). In the elderly cohort, of course, women outnumber men in every race.

But the net upshot of what is likely to be a continuing trend is that young black couples are leaving the city for greener pastures in the suburbs, while those who are flowing in are more likely to be non-black (or non-white for that matter) and with significantly smaller families. The net outflow may have almost bottomed out, but a renewed inflow will depend in substantial measure on the availability of suitable housing--currently in very short supply. But there should be a gradual reduction in the services required for the poor and the young.

The charts here do not emphasize that the total number of those leaving and those arriving is quite substantial in a city with many relatively transient jobs. This is discussed elsewhere, and also gives rise to some NARPAC suspicions that the current count of residents may be somewhat low. The current census will provide welcome new data points.

For further details see:
population trends
racial trends

Trends in Households

There are significant long-term trends in the composition of DC's households which NARPAC suspects will continue to evolve in urban areas. The four bar charts on this graphic show data for 1970, 1980, and 1990--and sorely miss equivalent numbers for 2000! Nevertheless, they have significant implications for the future:

First, the number of family households is dropping more than the number of non-family households, and the number of individuals in the households follows the same trend;

Among the dwindling family households, the number of marrieds is declining, and the number of single-head families (more likely to be poor) is not. Among the growing non- family households, the number with two or more people is rising a bit, but remains a small fraction of those living alone.

NARPAC gleans from this that urban dwellers are increasingly likely to have no kids, and in fact, no permanent ties to their housemates, if any. This suggests changes in required services, and probably in preferred living accommodations (houses vs. apartments, etc.. There is also a slow trend towards more home owners (condos?) and less renters. This speaks to a natural trend towards higher density living, more focus on adult life-styles, and less demands on the public school system.

For further details see:
DC's changing resident population

People Productivity and Job Types

Jobs in the DC and surrounding metro area are not typical of other US cities and metro areas. As is shown on the left, there is a very substantial number of public sector jobs which pay substantially better than elsewhere in the US, and significantly more than their private sector counterparts.

The vast majority of the private sector jobs are in the suburbs, as are the preponderance of non-service sector jobs. In both the white collar and blue collar sectors, the suburbs have the majority of the work force.

NARPAC tends to believe that the public sector is less 'competitive' than the private sector, and that the non-service-related jobs tend to be more 'entrepreneurial' than those in the growing services industries, many of which are relatively low paying, entry- level positions. This could well lead to a more growth-oriented culture in the suburbs compared to a more status-quo-oriented culture in the central city.

It should also be noted that the lawyers and computer services bring about $1400 in revenues to DC's coffers per employee. Real estate, hotels, and retail trade bring in almost five times as much, on average, $6900. The majority of the 'softer' service businesses are in DC, while most of the 'harder' businesses are in the suburbs Based on the budget allocations and demographic distributions of earlier charts, it is also possible to project DC's 'people productivity' on a per capita basis, showing the allocation of both revenues and expenditures for those 50,000 persons with high income, 300,000 with middle incomes, and 180,000 with low incomes. The federal payments can also be separated from the locally raised revenues.

The differences of course, are stark--more than expected. The few rich use very little in city services ($1400) while producing revenues of $17,900. The middle income majority produce about $5600 in revenues, but use perhaps $2400 in city services. The poor on the other hand are estimated to produce about $600 in revenues per capita, but to consume $12,100 in local expenditures, and another $9100 in federal aid. To get ahead of the story, the chances of solving the city's financial needs with middle income families is likely to be a difficult and residential land-intensive way to go. Redistributing the poor throughout the metro area is clearly the objective analyst's theoretical--if heartless--preference.

For further details see:
DC's high cost of poverty
the face of contemporary poverty

Welfare Trends in DC and Metro Area

The city's poverty burden is large, and still growing relative to the suburbs. The number of DC residents has declined only slight since 1990--less than the drop in population. By comparison, the number of welfare cases outside the inner city dropped almost 40% in six years from 1990 to 1996. With less than 15% of the working population, DC has over 40% of the unemployed and over 50% of all those in poverty.

The basic problem of course, is not simply how many of the area's poor live in DC, but how many of the area's taxpayers live here to pay for them. And here, the lower left- hand chart tells the story. At best DC can claim only 2.6 workers per person in poverty while Arlington, VA can count over 10, and Montgomery County, MD, a bit over 20. To NARPAC, this is the essence of the total lack of sharing of the burdens of poverty within the region.

For further details see:
disparity between DC's rich and poor
the slow pace of DC's welfare reform

Trade-Offs in Population

Taking the current demographic balance within DC (Case 1), the four tables on this page explore differing options for solving the city's financial burdens--represented by the need to pay $8742 per capita to maintain a balanced budget. If the number of middle class residents (taxpayers) is reduced by 100,000 the per capita costs for the remaining residents rises to $10,200. If just the number of poor is reduced by 100,000 the per capita costs drops to $5820 for those who remain. If the poor are kept, and the middle income population is increased by 100,000, the per capita burden remains high at $7745. Conversely, if 100,000 poor are replaced by 100,000 middle income people, then the per capita burden drops to $5186.

In all likelihood, changing the financial burdens by trading off various elements of the resident population may be somewhat helpful but not a panacea. It is more likely that a trade-off between low-density residential and high-density commercial would provide the most beneficial way to improve DC's per capita economic outlook.

For further details see:
the impact of income mix
the impact of housing on poverty sharing

This page was updated on Oct 5, 2000




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