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by Phil Stott | March 13, 2017


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If you work for the federal government, happen to be in the market for a job with the federal government, or you live and/or own a home in the DC area, the Trump administration may have some bad news on the horizon for you.

According to the Washington Post, the proposed federal budget—due to be unveiled Thursday—is set to slash funding for most government departments not related to the military and homeland security. That includes "housing, foreign assistance, environmental programs, public broadcasting and research."

While spokespeople for the administration insist that the cuts will be necessary if President Trump is to follow through on his campaign promises—items that include a border wall and a greatly enhanced level of spending on the military—the restructuring could be set to have a major impact on life in the DC area.

As Moody's chief economist Mark Zandi notes in the article, "the reductions outlined so far by Trump's advisors would reduce employment in the region by 1.8 percent and personal income by 3.5 percent, and lower home prices by 1.9 percent."

Here's what those percentages mean in terms of real numbers:

According to the BLS, there are around 373,000 employees in Washington, DC. A 1.8% reduction in that force—which would include not just government employees, but those in service jobs that cater to those employees—comes to around 6,700 jobs. Not a huge amount in a country that added more than a quarter of a million positions last month, but somewhere between 6 and 8 times the number that were saved in the much-heralded Carrier deal in December.

And consider, also, that not all of the jobs in the region are confined to the city of DC proper. The population of the area commonly understood to be "inside the Beltway" has been estimated at around 1.7 million—close to three times the population of the city alone. Assuming similar labor force participation and employment rates apply across the region, Zandi's numbers mean that we could be looking at more like 18,000 to 20,000 jobs affected—without considering that areas with lots of federal employees such as Quantico are outside even that zone.

On wages, meanwhile, the median household in DC makes around $93,000—the highest median income in the country. A 3.5% reduction across the region, as Zandi predicts, would see that fall to around $89,700, the first decrease in the region since the financial crisis.

Finally, according to Zillow, the median home price in DC is $540,000. A 1.9% decrease there comes out to almost $11,000—the kind of fall that can push homeowners under water on their mortgages and drive down labor mobility.

Of course, the flip side is that the administration may well end up achieving its goals of reducing the size of the federal government while also saving money and inadvertently creating opportunities for new buyers to establish a foothold on the housing ladder in one of the most expensive markets in the country. But, for anyone currently employed by the government, or whose business or job relies on the ability of government employees to spend money, the next few days, weeks and months are likely to be the source of some considerable stress.


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