A hard look at Washington, DC’s economic boom

In light of the recent fiscal cliff showdown, Annie Lowery at the New York Times writes a long profile on “Washington’s Economic Boom, Financed by You“:

Billions in federal spending, largely a result of two foreign wars, were pouring into the local economy by the early 2000s. Then came the housing bubble. But after it burst, a remarkable inversion occurred: as the country withered, Washington bloomed. Since 2007, the regional economy has expanded about three times as much as the overall country’s. By some measures, the Washington area has become the richest region in the country. It is now home to the three highest-income counties in the United States, and seven out of the Top 10.

The growth has arrived in something like concentric circles. Increased government spending has bumped up the region’s human capital, drawing other businesses, from technology to medicine to hospitality. Restaurants and bars and yoga studios have cropped up to feed and clothe and stretch all those workers, and people like [developer] Jim Abdo have been there to provide the population — which grew by 650,000 between 2000 and 2010 — with two-bedrooms with Wolf ranges.

Despite its recent success, however, the article suggests that “Peak Washington” is already here, that there is nowhere to go but down:

And yet there is a sense that the capital is headed for a slowdown. Among the Pentagon’s plans to cut nearly $500 billion over the next decade could be reductions not only in materiel but also to all manner of support staff. The homeland-security budgets look certain to see significant reductions, too. One recent estimate noted that more than two million jobs would be at stake if the sequester comes into effect.

Lowery suggests that a tempering of expectations in metro DC would, on balance, be a good thing:

There’s something unsavory about having a capital city doing outrageously well while the rest of the country is limping along — especially when its economy is premised in part on capturing wealth rather than creating it.

To the extent that DC’s economy is indeed “premised in part on capturing wealth rather than creating it,” I agree.  Nevertheless, Lowery cites plenty of evidence that “creative” (as opposed to “capturing”) work is being done in metro DC (“Google has opened an outpost….LivingSocial owns a huge, hiply decorated space….Audi, Intelsat, Hilton Worldwide and dozens of other firms have opened up offices or moved their headquarters to the region”).  Presumably, every urban area “captures” some of its wealth and “creates” some.  How much “capture” is too much, thus making a whole region “unsavory”?

Along these lines, I’m also intrigued by the quote from Virginia Congressman Jim Moran (D), who observes that “Maryland got the life sciences [centered around the National Institutes of Health in Bethesda, MD], and Virginia got the death sciences [centered around the Pentagon in Arlington, VA]….Of course, NoVa [Northern Virginia], given the two wars, it’s done even better than suburban Maryland.”  Does this suggest that DC’s Maryland suburbs are less “unsavory” than DC’s Virginia suburbs?  Or does it only matter that the National Institutes of Health and the Pentagon both spend tax revenue, making them equally offending because they “capture” the country’s wealth?

Car free in DC

Washington, DC is seeing fewer cars these days, at least on a per-person basis:

Car registrations in the District have hovered around 275,000 over the last decade, according to D.C. Department of Motor Vehicles Director Lucinda Babers, even as the city’s population ballooned by more than 40,000 people in that time.

Experts say two forces are driving the change. There are more ways to get around the city without a car, and the down economy has everyone looking for ways to cut costs, like getting rid of that second vehicle.

As new residents of the DC area, my wife and I are part of this trend (though our location in the suburbs a few miles beyond the District’s boundary line means that we’re technically not part of this cited statistic).  There are indeed plenty of ways to get around the metro area without owning a car.  My wife’s office is a 10-minute bus ride away from our apartment (it would be 8 minutes by car), and I work mostly from home.  It’s hard to imagine that paying ~$600/month (i.e., conservatively, $200 car payment and/or maintenance, $200 insurance for two, $200 gas) vs. ~$60 for her bus fares is worth the extra 4 minutes a day.

To be sure, we are fortunate to have such great transit options available for our work (short bus ride and telecommuting, respectively).  But what really makes our situation workable is that we can (and do) still use cars quite often.  For short weekly trips (e.g., grocery shopping, doctor’s appointments, etc.), we use Zipcar (~$10/hour all inclusive, including rental, insurance, and gas).  For more special occasions (e.g., weekend getaways), we hire a vehicle from a traditional rental car company (e.g., Hertz, Budget, Enterprise).

Moreover, not owning a car has had a surprising, unforeseen side effect:  I actually like driving again.  I used to commute 1.5 hours/day through the Chicago suburbs, and I detested driving.  Now, I drive a handful of times throughout each month, and every drive feels like I’m zooming through car-commercial-world, fused with the open road.

All in all, our monthly transportation budget is considerably more than the $60 “minimum” needed for my wife’s bus commute.  It is also far less than the $600/month it would cost us to own (and use) our own car.  And there are plenty of intangible benefits of not sitting in traffic every day.  Down economy or not, it doesn’t always make sense to own a car.