In the 1940s, "government girls" came to Washington, D.C., to work as spies, code breakers, and clerks. Temporary government buildings were put up around the Lincoln Memorial reflecting pool to accommodate the influx of workers. Inflated by government activity during World War II, the population of the capital swelled in 1943 to a record 900,000, according to Census data. This was as large as the city would grow. In the years following, D.C. slowly lost residents until its population reached a low of 519,000 in 1999.
Today the U.S. capital is again undergoing somewhat of a revival. While many other cities have seen residents move elsewhere in search of work opportunities, D.C. has been growing, due in no small measure to the jobs added by the Federal government. The district's population, which has consistently increased since 2003, reached just under 600,000 in last year's Census estimates.
The surrounding areas also grew. The greater metro area—which includes such nearby cities as Arlington, Alexandria, and Reston in Virginia; and Bethesda, Rockville, Frederick, and Gaithersburg in Maryland—saw its population reach nearly 5.5 million in 2009, from 4.8 million in 2000, according to Census data.
"The most fundamental point is, when the private sector declines in terms of the level of output and employment, generally the federal government keeps going," says Joseph J. Minarik, senior vice-president and director of research at the Committee for Economic Development, a D.C. think tank. Despite concerns about spending and debt, the federal government in a downturn, he says, "is the flywheel that maintains the economic system."
Strength in Government Jobs
With a combination of employer optimism, a low unemployment rate of 6.2 percent in August, and job creation, the D.C. metro area took first place in a new ranking by Businessweek.com of best places to start over, followed by Raleigh-Cary, N.C., and San Antonio.The D.C.metro area has consistently ranked among the strongest job markets this year in Manpower's (MAN) quarterly Employment Outlook Survey, which asks employers about their hiring plans in the coming quarter.
Until last year, the D.C. metro area had negative domestic migration—more people were moving to other parts of the country than coming in—yet the total population still increased slightly due to international immigration, Census data show. For example, the city lost 44,950 residents to domestic migration in 2006, but 37,826 foreign immigrants entered.
"Immigration is a huge part of the story for growing populations everywhere," says Harriet Tregoning, the director of the D.C. Office of Planning.
Last year marked a turning point: the D.C. metro area gained about 32,000 international immigrants, as well as 19,000 new domestic residents—it was the first year the region recorded positive domestic migration since 2002.
Tregoning says the population increase is related to job creation, as well as local improvements in the schools and reduced crime. The government alone added more than 20,000 new jobs in the district since 2007, according to the U.S.Bureau of Labor Statistics.
Business Plays a Role
The private sector also created jobs. Take management consultant Accenture (ACN), which hired more than 1,000 people in the D.C. area during the 12 months through last August. Also, Deloitte & Touche's federal practice has hired more than 2,200 people in the D.C. area since May 2009, with plans to hire about 160 per month through the end of May 2011, according to the company.
The boost from the government also provides a foundation on which other industries in the greater D.C. area (which includes counties in Virginia and Maryland) can expand. The region, which has consistently increased in population over the past few decades, has a number of large businesses, including Volkswagen and Nissan—and more are coming.
Aerospace company Northrop Grumman (NOC) recently announced plans to move its headquarters to Falls Church, Va., from Los Angeles in 2011 due to "facility considerations, proximity to our customers, and overall economics," according to a company release. Last year, hotel giant Hilton Worldwide also announced plans to move its headquarters from Beverly Hills to McLean, Va.
From Defense to Biotech
The Greater Washington Initiative—an economic development organization that represents the D.C. area as well as several neighboring counties—aims to make the area into more than a hub for government by developing such sectors as defense, communication technology, biotech, and energy. "We're not just a sleepy government town," says Matt S. Erskine, GWI's executive director.
According data from the organization, the greater Washington area led the nation in professional and business employment growth from 2000 to 2009, adding 118,000 new jobs and beating such business centers as New York and Dallas-Fort Worth.
The organization adds that the area also has more than 50 federal labs and institutes, more than any other region, focusing on such areas as advanced engineering, biotech, life sciences, and information and communication technology.
Erskine's group is not alone in pursuing a scientific and high-tech future for the area. In addition to such tech hubs as Boston, Raleigh-Cary, and Austin, Tex., many other places on Businessweek.com's list of best places to start over—Grand Rapids, Mich., and Buffalo and Syracuse in New York, for instance—are also targeting emerging industries, such as life sciences and cleantech, as a strategy for economic development.
CED's Minarik says manufacturing will continue to be important to the U.S. economy. As low-cost manufacturing has moved to other countries, American manufacturers will gradually shift to more high-skilled, high-wage sectors, such as medical devices and photovoltaic cells. The question, he says, is whether the U.S. will continue to lead on the tech frontier.
Importance of Mobility
As the economy slowly rebounds and regional economic development offices pursue new businesses, another challenge will be bringing in talent—both locally and from other parts of the country—to support these new or expanding operations.
A new report on workforce mobility by the Brookings Institution states: "Fully recovering from the Great Recession will require that some people move from high-unemployment areas to low-unemployment areas." The report adds that college degree holders who take the risk and move after losing a job have significantly higher reemployment rates than non-movers do.
Such barriers as moving expenses, the complication of having to sell a house in a down market (if applicable), and limited access to credit, however, have reduced the number of movers. In 2008-09, 37.1 million people moved their residency in the U.S., a drop from 38.7 million in 2006-07, according to Census data.
Despite the decline, the data show that the number of people who moved to look for work (both nearby and to other counties) actually increased 55 percent, to more than 1 million, and the number of people who moved for cheaper housing increased 33.5 percent, to 4.1 million.
"The opportunity to move is important," says Minarik. "It may very well be more important at a time like now, when people find that for whatever reason, the economic worth of where they are living has fallen dramatically."
So while places such as D.C. may offer opportunities for people to get a fresh start, in some cases getting there will be half the battle.
Click here to see the 20 best places in the U.S. to start over.