As part of her $12.9 billion budget request, Mayor Bowser proposed to raise the District’s sales tax rate by 0.25%. That bump would have raised $22 million in FY 2016 or about 0.17% of the total budget.
The mayor also proposed a 4 percentage point increase (from 18% to 22%) in the the parking tax that would have raised $9.9 million in 2016, or 0.07% of the total budget.
Neither tax increase would have a material impact on revenue nor the economy, other than to offer a small encouragement to shop and park less, so why was it important for the DC Council to reject them? In a word — stability.
Tax rates effect the behavior of every District resident and every business. A stable tax system allows families and small business owners to plan more than twelve months in advance.
Rejecting this tiny tax increase sends a giant message to the people who make investment, hiring and spending decisions in DC. It will increase the confidence of businesses and consumers, clearing the way increased capital spending and consumption.
Chairman Mendelson and the Council should be congratulated for using some foresight. It’s not something governments are known for.
Just a side note on the budget: DC approved a $12.9 billion budget. The District has 658,893 residents. New York City, with a population of 8,406,000, passed a $78.5 billion budget. That equates to per capita government spending in DC of $19,578. New York, a city of similar political disposition with about the same level of services, will spend $9,338 per person. Where, exactly, does our tax money go?
To no one’s surprise, poverty is not spread evenly throughout the District of Columbia. Only six percent of the District’s white residents live in poverty. For Hispanics, the rate is 23% and for African-American District residents it’s 39%.
The most important statistic in all of the poverty debate is this one: according to Dr. Harry Holzer of the McCourt School of Public Policy at Georgetown University, of the 88,773 people over the age of 16 living in poverty in DC, only 1.9% had a full-time job at some point throughout the year, while 64% did not work at all.
The District doesn’t have a “poverty” problem, per se. It has an unemployment and underemployment problem, of which poverty is a symptom.
The elusive “solution” to poverty is actually pretty obvious: work — meaningful, decent, and full-time work to be sure, but work itself is how poverty ends.
Our public discourse tends to trend towards who’s to blame for the existing state of affairs, but the causes are many, varied and ultimately irrelevant. The only thing that matters is how it gets fixed.
Our answer comes in three parts that are not a mystery:
1) The District’s economy grew at a rate of 1.55% in 2014. While better than the 0.61% contraction that took place in 2013, it’s not fast enough to take on the District’s high level of unemployment. The number one task of the new administration, and the thing that most requires their attention is implementing a policy framework that permits the private sector to grow faster. This can and should be fixed in the short-term. Improvements in tax policy, regulatory policy, more flexible labor laws and even the facilitation of the birth of new industries are within reach. Aggressive moves in each area are required to jump-start the creation of jobs at all skill levels.
2) Too many District residents lack the skills required to acquire and maintain a full-time, middle-skill, middle-wage job. This is a medium-term project, but the best tool we have for transmitting the skills that District residents need to command a middle-class job is our long neglected workforce development system. It is frankly the best anti-poverty tool we have.
Some improvements in the system have been made over the last four years, but we need to move farther, faster. Instead of complaining that the workforce is unskilled, the corporate sector needs to drive the design of, supervise, facilitate, and to some degree, fund an improved job training system. As the pace of job creation increases in the short-term it places a higher premium on residents with competitive skills.
3) As a longer-term proposition, we need a more radical reconstruction of our K-12 education system. Dating back to Mayor Fenty’s takeover of the schools and the tenure of Michelle Rhee, the energy required for dramatic improvement has been there, but the results have not. According to Ken Archer of Greater Greater Washington, if you take a closer look at the city’s test scores, you see, “stagnant or downward trajectory for black, Hispanic, low-income, English language learner, and special education students in the last five years.”
This is a recipe for the perpetuation of inter-generational poverty. Until the city grapples with this reality and commits to more drastic action, the long-term trajectory of poverty will not change. By the time a faster growing economy is producing more jobs,and an improved workforce system is producing higher-skilled District residents, we must graduate 100% of our high school students and they must be ready for post-secondary training/education and a productive career.
Throwing more money at a broken system is the definition of insanity. We need a fundamental shift in the way we approach poverty. Work, work-readiness and work supports represent the future of our anti-poverty efforts.
The chart above illustrates the District’s economy in real chained dollars. That’s economist speak for dollars that have been adjusted for inflation. It and the chart below reflect the fact that the District’s growth has been slow and uneven over most of the last decade.
The economy grew from $103.41 billion to $105.02 billion in 2014. That represents a rate of growth of 1.55%. That’s better than the 0.61% contraction that took place in 2013, and better than the 1.28% average annual growth rate since 2006, but it’s well below what is considered healthy by most economists. And it’s certainly not fast enough to make a dent in the District’s high unemployment and growing rate of poverty.
In addition, the BEA used fuller and more precise measurements of the economy to go back and revise downward the size of the District’s economy in prior years. Yes, the economy has returned to growth, but it’s marginally smaller than we thought it was last year.
Interestingly, the District did outperform both Maryland (0.83% growth), and Virginia (0.02% growth). In fact, Terry McAuliffe’s Virginia is about twenty bucks away from a recession.
Click here to see the statistics on what the District has missed out on during the last decade of slow/no growth in terms of jobs and income. Hint — it adds up to approximately 51,000 private sector jobs, 7,000 District government jobs, and $4 billion in lost annual income for DC residents.
It is within the District government’s power to shift its economy into a higher gear, but it will require intense focus and smarter policy. The work of the tax revision commission should be the beginning of tax reform, not the end, and we need to add to it a vigorous overhaul of the way the District regulates almost everything.
Additionally, our labor markets have become more rigid and inflexible over the last decade. It’s become more difficult, more expensive, and more risky to hire anyone. Our labor market is ripe for reform and modernization. Those aren’t the only necessary steps, but they’re a start.
Should this “lost decade” continue, here’s what the average District resident can expect:
Many fewer good jobs
Less affordable housing
Less housing, period
Fewer new restaurants
Fewer new retail stores
Fewer new companies created in the District
Fewer companies moving to the District
A less dynamic District
More income inequality
Less economic inclusion
Less tax revenue
A corresponding reduction in social services
Less upward mobility
Less opportunity for promotion and advancement
Less of the Streetcar project
Fewer improvements to Metro
Fewer new bus routes
Bye bye budget surpluses
More violent crime
Fewer new parks and green space
Fewer small retail businesses
Slower population growth or contraction
Lower graduation rates
As Jimmy Carter would say, a general malaise
There are sure to be more. Let us know what we’ve missed at firstname.lastname@example.org
Today we published an annual report of our activities from this past year as well as a look ahead at the initiatives and priorities we intend to focus on in 2015-2016. The report is 120 pages, so please do not try to read the whole thing. It was designed to be flipped through until you come to a topic of interest. We want to thank all of those individuals and organizations who have supported Economic Growth DC and the Foundation this past year. We look forward to continuing our relationship in the future.
“The District’s economy needs to grow at a significantly faster rate in order to create the number and kinds of jobs we’ll need over the next generation. Faster growth is required to increase the incomes of District residents, and we need it to produce the amount of tax revenue we’ll need to do the things the District says it wants to do in areas like affordable housing, homelessness and Medicaid. The research, programs, and initiatives we undertake are short, medium, and long term efforts to facilitate faster economic growth and the job creation that comes with it.” — Dave Oberting, Executive Director
Our current priorities are:
Economic Growth DC
Regulatory Reform – Reducing the cost and increasing the ease of doing business in the District of Columbia are two of Economic Growth DC’s primary goals. Both the cost and the ease of doing business are products primarily of the regulatory process. Reducing the complexity of our regulatory system and reducing the cost of compliance would provide an immediate boost to economic growth. We will take advantage of every opportunity to move towards a simpler, smarter regulatory architecture.
Regulatory Review & Amendment Act – This bill, as proposed by Economic Growth DC, would require the District government to calculate and weigh the costs and benefits of all regulations expected to have an economic impact in excess of a certain amount. It will add much needed transparency to the regulatory process as many regulations act as a hidden tax on consumers who ultimately bear the burden of those regulations.
Tax Reform — A Tax Revision Commission organized by Mayor Vincent Gray and led by former Mayor Anthony Williams conducted a comprehensive review of the District’s tax framework over the past 18 months. They recommended a number of changes to the tax code that were subsequently adopted into legislation championed by Council Chairman Phil Mendelson. The most important of these changes lowered income tax rates on moderate to middle income DC residents. We believe this should be the beginning of the tax revision process, not the end. Our basic tax philosophy is we should incentivize work by lowering the tax on it. We will advocate in the coming year for more progress on our tax code.
District of Columbia National Disaster Insurance Protection Act – If passed, this federal legislation would empower the District to compete with off-shore jurisdictions to keep insurance company catastrophe reserves in the U.S. by providing tax incentives for such funds to be maintained in the District of Columbia. This legislation would open the door to the creation of thousands of high-paying jobs in the region and billions of dollars in new economic activity.
Economic Fact Sheet – Many business owners and managers have made it clear to Economic Growth DC that they often feel misunderstood and unappreciated by the DC government and residents alike. We believe this is because the business community at-large has not done a good job of articulating the contribution that it makes to the the well-being of District residents. Economic Growth DC created an economic fact sheet for the District that details the contributions that are made annually by the District’s 21,592 private businesses. Click here to view: DC Economic Fact Sheet
Economic Impact Analysis – Chairman Phil Mendelson included in the council rules a provision for the conduct of an economic impact analysis on pending legislation. It is to be performed by the Council’s budget office. This is an excellent first step, but this analysis should be codified into law for both legislation and regulations. Having a better understanding of what individual laws and regulations cost the economy in terms of lost economic activity and slower job growth is the foundation of a good legislative and rule making process. We have proposed a Regulatory Review Act that would require the Chief Financial Officer to conduct an economic analysis on any proposed regulation over a certain dollar value that would calculate the cost that a particular regulation would impose on the private economy. It would also allow for a retrospective review and amendment process for older regulations. This law could easily be expanded to include legislation.
Labor Law Changes — The District’s labor laws contain perverse incentives that encourage District businesses to relocate to the suburbs upon reaching a certain size and a certain number of employees. We’d like to work with the Council to reform our labor law system to make it more competitive with Virginia and other parts of the country. These reforms will be especially important as the technology start-ups the District has invested so much in begin to mature and start hiring serious numbers of people. These changes can be made at very little cost to the District and without sacrificing important employee protections.
Land Transfers — The District should seek out more opportunities to acquire unproductive federal lands, develop them, and reap the tax benefits of increased economic activity.
Reforming Telecommunications Regulation – Telcom, IT and the internet industry represent the most dynamic part of our economy, and yet they suffer from some of the most outdated local regulations imaginable. There is more competition in telecommunications than there’s ever been in the District — Verizon, Comcast, Time Warner Cable, Cricket, RCN, AT&T, MagicJack, and Vonage just to name a few — but they are still regulated like a rotary dial monopoly. The Public Service Commission should move to modernize the telecommunications regulatory architecture this year.
Fostering Micro-Manufacturing — The District has historically been locked out of the manufacturing industry due to high real estate costs and lack of space. There is a new industry taking shape that would allow the District to become a specialty manufacturing center in its own right. Micro-manufacturing, using 3D printers, is the fastest growing form of manufacturing in the country. They are largely small businesses who’ve used this amazing technology to make a wide variety of products. We’d like to propose legislation that would clear out some of the regulatory and zoning barriers that would enable this industry to take root and prosper in the District. 3D printer technicians do not need a college degree and the jobs generally pay $15-20 per hour. We should be moving quickly to establish a legal and a streamlined regulatory framework for fostering the growth of this industry.
Science and Engineering Campus – The District intends to become the premier technology center on the east coast. If you look at the other tech hotbeds around the country — Silicon Valley, Boston, and Austin — the one thing they all have in common is a massive research institution like Stanford, MIT, and the University of Texas. These institutions produce not just the technology graduates that start companies, but the technology itself that can be commercialized. The City of New York and Cornell University have partnered to build a massive technology campus on Roosevelt Island in NYC. Mayor Michael Bloomberg called it easily the best tool NY will have for accelerating future economic growth. A smaller version of idea has been proposed for St. Elizabeth’s, but the District should think bigger. It should involve a name-brand research partner like Stanford, Carnegie-Mellon or Georgia Tech.
Crowdfunding — This technology provides important access to capital for District start-ups and small businesses. The District has proposed rules to govern crowdsourcing transactions. We’ll work to see these rules implemented as quickly as possible.
Attract Venture Capital Firms — Increasing the amount of venture capital funding that flows into the District is key to our long-term growth. The District is actively fostering early stage technology firms with investments in things like 1776. Our startup community is moving towards a critical mass of invest-able companies, but we won’t attract significantly more venture funding if the people who make those investments are not physically in the District. We’ll be proposing an incentive package to entice the largest venture firms like Kleiner Perkins, Andresssen Horiwitz, Sequoia and Graylock to set up shop in the District proper.
Anacostia River — We support the efforts of the United for a Healthy Anacostia River Coalition — Lack of development on the banks of the Anacostia is the most visible effect of the deadly chemicals that have been poured into the Anacostia for decades. We consider the cleanup of the Anacostia to be an important economic initiative. We will help the Coalition wherever we can.
Economic Growth DC Foundation
Code4Life — Is an after-school program created in partnership with technology giant Accenture that teaches DCPS and charter school middle-school students basic computer programming. The program is designed to put District students on a pathway to a high-wage occupation that does not necessarily require a college degree. The program launched successfully at KIPP NE Academy this fall. We are currently planning our expansion to three additional schools in February.
Re-entry Job Placement Program — The Foundation is working on the development and implementation of an ex-offender job placement program similar to one that was originally developed in Newark, NJ through a partnership between Mayor Corey Boooker and the Manhattan Institute. The Newark program has experienced real success with its rapid attachment to work job placement model designed to get returning citizens into the workforce quickly. They have experienced a much higher employment and retention rate than typical ex-offender efforts, as well as lower rates of recidivism. At his point, it looks like the program will require substantial private funding.
Decriminalization – The District decriminalized marijuana in 2014. That action should be the beginning of a sustained campaign to reduce the over-criminalization of DC’s civil society. We will advocate for the formation of a commission which will be responsible for making recommendations for the reduction of certain felonies to misdemeanors, and misdemeanors to civil infractions. Over-criminalization is not unique to the District. At the federal level, there are over 3,000 criminal offenses, and over 300,000 regulations that carry criminal penalties. This is a phenomenon at both the local and national levels that should be rolled back.
Modern Entrepreneurship Program – This program is essentially a venture capital fund for minority micro-entrepreneurs. The twist is experienced business professionals associated with two U.S. AID contractors with considerable development experience overseas will embed with these entrepreneurs for up to a year. The intensive management assistance is designed to lower the risk profile of these investments. This program also requires private funding.
Leadership Development Training Class — In partnership with the DC Leadership Development Council, the Foundation seeks to launch a high-school level leadership development training class for high-potential students at DCPS high schools. This class is scheduled to begin in the fall of 2014. The Foundation will administer and underwrite the program. The DC Leadership Devel0pment Council will assemble the curriculum and and provide the instructors.
Job Placement Coordinator Training – The District provides the bulk of its job training and youth development programs through non-profit social service providers. Each of those providers has at least one person that is responsible for placing their program’s graduates into jobs upon completion of that training. The Foundation uses its private sector job placement expertise to offer free instruction to any of these placement coordinators interested in professional development. This training helps placement coordinators become more effective at what they do, thereby increasing the number of people who are placed into jobs at the conclusion of their training.
Research – We are currently seeking a Director of Education Policy. This individual will be responsible for organizing and analyzing education policy research that is of interest to EGDCF, as well as conducting original research focused on blended learning and improving educational outcomes. If you would be interested in being considered, please forward your resume to email@example.com.
Apprenticeships – The Foundation is working with several partners, including organized labor, to implement a much broader use of apprenticeships. Germany is an excellent example of how to use apprenticeships aggressively to provide higher levels of skill. Apprenticeships are not just for the construction trades. There are dozens of professions ripe for the use of apprenticeships.
Office of Military Preparedness — The military is an excellent career opportunity for District youth. We will be encouraging DCPS to open an Office of Military Preparedness to coordinate the efforts of the various junior ROTC programs, as well as with the various military recruiting commands. The military should be given greater access to students and guidance counselors.
Why the District government should focus on the reform of its regulatory system is straightforward: as a famous economist recently said, “Regulatory burdens do not exist in isolation. Someone must eventually bear the cost, either through reduced wages, lower profits, or higher prices for every consumer.”
Where to start reform is the simple part. The specifics on how you go about it are not so simple. The underlying goal must be to change the incentives that require regulators to write ever more regulations in order to justify their existence.
The classic quip, “regulators regulate” is classic because it’s true. The job of a regulator is to write rules and enforce them. That’s how they’re paid. That’s how they’re measured. That’s how they’re evaluated.
With the current set of incentives, a regulator must be in perpetual motion — constantly writing new rules and revising/expanding older ones. Constantly looking for new problems that can be solved with a clever rule.
But what if we changed the way regulators are compensated, measured and reviewed?
Another way of looking at the financial crisis is that we had too many regulators at the SEC, the Federal Reserve and the Treasury writing new rules and not enough of them enforcing the rules already written. The mortgage crisis was a massive regulatory failure, but it wasn’t because there weren’t enough rules.
On the contrary, there were too many rules that were so complex as to make them easy for smart lawyers to pervert, evade or exploit.
What if we transitioned some regulatory personnel from promulgating new rules to the enforcement of a radically revised, reshaped and simplified regulatory scheme?
Instead of being compensated for every new rule you write, what if you were compensated for every piece of red tape you cut, the number of rules you reform and how you reduce the costs of compliance without jeopardizing consumer protections.
We hope you’ll read this seminal article on the fatal flaws of hyper-regulation. There is a smart middle-ground between the Wild West and insanely burdensome regulatory overreach. We’ve got to find it fast.
Here is the proposition that underlies all that we do at Economic Growth DC: the right to a decent full-time job is the most basic and fundamental entitlement of them all. It is the cornerstone of social justice. It is the foundation of human dignity.
We often forget that the full name of Dr. King’s pilgrimage to the nation’s capital in 1963 was the “March on Washington For Jobs and Freedom.” Was it simply a typo that Dr. King put jobs before freedom in the title of his speech, or was it a conscious ranking of his priorities?
What would Dr. King think if he found out that 50 years have passed, and in the city where his march was held, 88,773 people (out of a population of 658,000) over the age of 16 still live in poverty? And how would he feel if he heard that only 1.6% of them had the opportunity to hold a full-time job at some point in the last year.
Every day that goes by that a District resident doesn’t have the opportunity to work full-time is another day that our local government has failed that resident.
For it is the District government that bears responsibility when the economy slows, and job growth sputters. Our elected officials hold the keys to the legal and regulatory structures that permit an economy to function. When that architecture fails, it is not the fault of the man on the corner searching for the means to feed his family.
We’ll work every day, with every tool at our disposal, to bring you a faster growing economy capable of creating a full-time job for every working-age District resident.
We’ll work every day to radically improve our job training system so that it imparts the skills that District residents need to command the high-wage jobs of the next generation.
We’ll work every day to urgently and dramatically improve our K-12 education system so that by graduation every District student can think critically, solve problems, communicate effectively, and collaborate as part of a team.
And we’ll work every day to make sure that every 12th-grader is prepared for a four-year college program, a technical training program, an apprenticeship, or in special cases, a good-paying job in the local economy.
Established in 2001 by the Center on Budget and Policy Priorities, the DC Fiscal Policy Institute plays an important role in the District of Columbia. It provides a voice in the budget and tax policy debate for low and moderate income District residents who are otherwise without representation on these issues.
Economic Growth DC has supported the Fiscal Policy Institute financially in the past and intends to do so again in the future. We support most of the proposals laid out in their initial analysis of the mayor’s budget.
However, their call to increase taxes “if necessary” less than a year after a major tax overhaul is tax policy schizophrenia that does real harm to what is an already fragile business climate by making it impossible to plan for investment and hiring for any period longer than a fiscal year.
Most businesses attempt to plan at least three to five years in advance. They attempt to predict a variety of different costs and risks.Tax rates are central to that planning process. If future tax rates are subject to change every year, that hugely complicates the planning process and leads business owners to be more cautious. Caution means less risk taking, and nothing is more risky than hiring a new employee.
One of Economic Growth DC’s Principles of Sound Tax Policy is reliability. “A high-quality tax system should be stable, providing certainty in taxation, revenue flows, and financial planning for individuals and businesses.”
Saying that a tax system is reliable is just another way of saying that it doesn’t change every five minutes.
FPI’s executive director, Ed Lazere, was a key member of the Tax Revision Commission which reached consensus on a new framework for the District’s tax system just last year. Calling for tax increases less than twelve months later renders the commission’s work obsolete.
The Council should make it clear, by rejecting any changes to the District’s new tax structure, that it understands the importance of a stable tax system.
By far the best way to increase tax receipts is to have an economy that grows faster. Tax reliability and predictability encourage risk taking and are key to faster growth.
Slow/no growth hits low income District residents much harder than anyone else in the form of a dearth of good jobs and wage stagnation. There are several ways to help, such as improved job training, but a better performing economy has to come first.
We’re also disappointed in the way FPI has rationalized the regressive nature of a sales tax increase.
As the chart below indicates, the sales tax has a huge impact on District residents at the lowest end of the income distribution, and almost no effect on high-income earners.
To claim, as it does in its analysis, that low income District residents will suffer no ill effects from a sales tax increase because they will have an offsetting income tax cut misses the point of tax reform.
The point was to provide tax relief to low and moderate income residents. The idea was to put more money in their pocket. Under the mayor’s FPI approved proposal, you’re simply putting money in one pocket of a low income resident and taking it out of the other. It defeats the purpose of the reform.
The council should find savings in other parts of the budget and leave this imperfect, but newly reformed tax system alone.
Code4Life is a first of its kind after school program developed by our charitable arm, the Economic Growth DC Foundation, in partnership with Accenture. It teaches basic computer programming skills to middle-school and (eventually) high school boys and girls in the District of Columbia public and charter school systems.
The program was in design and development from the latter part of 2013 through the first half of 2014. It launched successfully in the fall of 2014 at the new KIPP NE Academy in Trinidad and has since expanded to three additional schools.
In addition to the KIPP, the program currently operates at Eliot-Hine Middle School on Capitol Hill, Francis-Stevens Middle School close to the campus of George Washington University, and at Girls Inc., an after-school program on the campus of Howard University.
Accenture volunteers teach Module One at KIPP NE Academy
The class meets for two hours after school, one day per week, for 8 consecutive weeks. Our current trajectory has us teaching one eight week module per semester. If resources permit, we would be interested in teaching two 8 week modules per semester for a total of 64 hours of instruction time per student, per school year.
The program is designed for students to remain with us working on progressively more complex programming through their senior year of high school. Code4Life participates in the “District of Learning” digital badging program. If a student remains in the program through high school, they can receive a minimum of 14 digital badges which will be used as credentialing tool for help in obtaining scholarships and employment.
Technical staff at Accenture developed the curriculum for Module One based on a programming language developed at the University of California at Berkeley called SNAP. It’s a visually oriented entry-level programming language perfect for introducing middle-school students to programming for the first time.
Module Two is an HTML and CSS class that was developed by IT staff at George Washington University. Module Three, which is currently under development, will be an Introduction to Big Data and Data Analytics.
Accenture provided most of the volunteer instructors for Module One. This past semester’s volunteers came from Accenture, George Washington University, Georgetown University, Catholic University, and Howard University. We had 65 students and over 50 volunteers in the program last semester.
In the fall, we’re expanding to 8 classrooms and over 100 students. We’ll need to continue to expand our volunteer base. As the local technology industry stands to be the biggest beneficiary of Code4Life, we intend to attract more volunteers from the District’s startup and technology communities.
A Code4Life student presents her final project
While volunteers donate their time in a variety of ways, the most critical service they provide is in-classroom instruction. Classroom instructors become part of a 3-5 person team that is responsible for teaching each of the three existing modules in the 8 classrooms at our four schools. A team teaching approach that focuses on individualized instruction is used.
The total time commitment for a classroom volunteer is about 17 hours for a semester. That includes an online instructor training session, and the 16 hours of class-time spread evenly over a two month period.
Volunteers have told us that Code4Life makes for such a good volunteer opportunity because it is not an open-ended commitment. A volunteer commits to the 17 hours over the 8 week period and then you’re done. If you find it enjoyable, we’ll certainly ask you to volunteer again next semester, but there is no obligation. For more information on volunteering, email us at firstname.lastname@example.org, or call our executive director Dave Oberting at 202.670.4403.
If you are interested in supporting the program financially, visit the Economic Growth DC Foundation website. The Foundation is a registered 501(c)(3) public charity. Your contribution is fully tax-deductible as a charitable gift.
Click below to see Code4Life featured on the Harris’ Heroes segment of a recent ABC7 broadcast:
In an otherwise excellent article in the Washington City Paper about the District’s homelessness crisis, Aaron Wiener perpetuated a noxious myth. He wrote:
“There are things the city can do to manage the front door [entry into the city’s homelessness system], but there are also factors out of its control, primarily the lack of affordable housing, and of decent-paying jobs for residents without a college degree.”
We should disavow District policymakers of the notion that the creation of large numbers of middle-skill, middle-income jobs is outside of their control.
The truth is the lack of decent-paying jobs for residents without a college degree stems from a set of policy choices the District has made over the past decade that have been very much under its control and that remain under its control to this day.
The District has opted for a highly and clumsily regulated slow/no growth economy. That’s why it doesn’t create the number and kinds of jobs we need.
We complain a lot about Congressional interference, and indeed, most of it is unwarranted, but Congress has deferred to the District on matters of local taxation and regulation. We own that. Local policy also defines the business climate. We own that too.
Job creation is the most helpful byproduct of economic growth. When there is no growth, there are no jobs. When growth is robust, jobs at all skill levels become plentiful.
The overly colorful chart below tells the story of the last eight years. Real GDP is adjusted for inflation. In 2012 and again in 2013, the District’s economy shrunk by about 0.5%.
It is no coincidence this contraction coincides exactly with the the two-year spike in family homelessness. Homelessness is a symptom of a stagnant economy.
It would be interesting to know how many of the District’s homeless residents work full-time. We would venture to guess it’s close to zero. Ending homelessness requires a faster growing economy and a workforce more skilled and ready the jobs of the 21st century.
Our homelessness crisis will not end with the economy on its current path.