Since 9/11, as federal defense spending has increased, the Washington D.C. region has grown to become a global business hub with thriving technology, biotech and communications industries. A third of the region’s gross regional product now comes from federal spending and this year, with more than $80 billion in federal dollars flowing into the region this year, up from $4.2 billion in 1980.
However, the boom time for the region is expected to slow due to a recent $1 trillion debt reduction package approved earlier this month by Congress and President Obama. Plus, in the coming months, a bipartisan “supercommittee” will be looking for another $1.5 trillion in savings.
Federal spending has been “the major catalyst for economic growth in the last 30 years,” said Rep. Gerald E. Connolly (D-Va.), former chairman of the board of supervisors in Fairfax County, where companies receive more federal contracting dollars than anywhere else in the country. “Clearly that [federal] presence and that pattern of investment has transformed the economy.”
C-level executives and rank-and-file employees for Washington D.C.-based contracting companies all have benefited. In a recent survey by ClearanceJobs.com, area contractors with security clearances earned an average salary of $98,221, or 18 percent more than those doing similar jobs in the government. High-wage workers in D.C. and Virginia make more than five times as much as those that make lower wages, which is the second and third-highest disparity ratio in the country, according to a recent study by the Commonwealth Institute for Fiscal Analysis in Richmond.
The Washington area is the wealthiest and most educated region in the nation, according to census data that reflect five years of relative prosperity compared with the rest of the country. During that period, Fairfax and Loudoun were the only two U.S. counties with median household incomes surpassing $100,000. The small area of Falls Church, which is an independent city and counted separately, had the same median income.
In 2001, revenues for U.S. defense contractors totaled $217 billion, but by 2010, revenues grew to $386 billion, according to a data compiled by Capital IQ. Profits grow more than twice as fast, from $6.7 billion in 2001 to $24.8 billion in 2010.
Yet that could be changing. After years of rising spending and a booming federal economy, Congress and the White House are expected to slice and dice the federal budget, targeting expensive programs and the federal contracting market.
