ADVERTISING SUPPLEMENT                                       2011: Another Year                                           ...
ADVERTISING SUPPLEMENTExecutive Summary                                                                                Und...
ADVERTISING SUPPLEMENTAccording to the Data:                                                                              ...
ADVERTISING SUPPLEMENTExhibit 5. Median Household Income and Per Capita Income, District of Columbia vs.                  ...
ADVERTISING SUPPLEMENTThe District: An Educated American City                                                      The Dis...
ADVERTISING SUPPLEMENTBecause of the large number of government and government contracting jobs, employ-                  ...
ADVERTISING SUPPLEMENTCan the District Adjust to Emerging Fiscal                                                          ...
ADVERTISING SUPPLEMENTAfter facing steep declines in attendance during the late years of the last decade,                 ...
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  1. 1. ADVERTISING SUPPLEMENT 2011: Another Year of Progress in Washington, DCThe DC Chamber of Commerce 2011 Business Progress Report Submitted by: Sage Policy Group May 2012
  2. 2. ADVERTISING SUPPLEMENTExecutive Summary Undoubtedly, in any strategy developed on behalf of the city, hospitality will emerge as one of the most important economic drivers. In 2011, as the national and worldLast year represented another year of progress in the District of Columbia. economies slowly rebounded from the global financial crisis, tourism in the DistrictThe city’s population growth led the nation, unemployment fell, average incomes increased. With the U.S. and global economies expected to expand in 2012, the Districtincreased and tourism rebounded. This report summarizes data regarding recent is positioned for additional growth in visitation, triggering additional employment gainsDistrict of Columbia economic performance and also briefly identifies and discusses and tourism-related tax revenues.opportunities for improvement and strategic planning. Given ongoing economicchallenges and the uncertain path of future federal government outlays, these op-portunities will need to be acted upon expeditiously if the District is to extend its Any strategy must also be cognizant of the lack of progress made along certainongoing renaissance. dimensions. Despite the vast progress that has been made over the past two decades, the city continues to be associated with high unemployment, particularlyPerhaps the most important indication of the District’s growing economic momentum is in Wards 5, 7 and 8. (Exhibit E3). This is part of a broader story of disparities inembodied in population statistics. The Census Bureau’s July 2011 population estimate income, educational attainment and employment. The possibility of federal seques-stood at nearly 618,000, or roughly 46,000 people more than the Census 2000 estimate. tration remains a lingering concern, with significant government spending cuts andBy attracting an additional 16,000 residents between April 2010 and July 2011, the possibly higher taxes greeting the District’s economy in 2013.District expanded its population by 2.7 percent , the fastest rate of expansion in thenation (relative to state populations). This marks the first time that the Capital has led Exhibit E3. Labor Force, Employment and Unemployment Rate by Ward, December 2011states in year-over-year population growth since the early 1940s. Some sections of the Labor Force Employment Unemployed Unemployment RateDistrict have experienced particularly rapid population growth. During the decades of Ward 1 47,549 43,410 4,139 8.7%the 2000s, population in Wards 2 and 6 expanded by 16.0 percent (+11,046) and 12.6 Ward 2 47,660 45,297 2,363 5.0%percent (+8,563), respectively. Exhibit E1 provides relevant statistical detail. Ward 3 52,177 50,810 1,367 2.6%Exhibit E1. Population: District of Columbia, 2000 – 2011 Ward 4 42,778 39,250 3,528 8.2% Ward 5 35,729 30,838 4,891 13.7% Year Population Ward 6 42,172 37,893 4,279 10.1% July 2011 Estimate 617,996 Ward 7 34,725 28,921 5,804 16.7% 2010 601,723 Ward 8 30,224 22,721 7,503 24.8% 2009 599,657 2008 590,074 Source: District of Columbia, Department of Employment Services 2007 586,409 2006 583,978 Both the challenges of broadening economic opportunity for all District residents and 2005 582,049 countervailing future federal spending cuts are associated with a common solution – 2004 579,796 continue to improve the city’s business climate in order to accelerate private investment, business formation and job creation. The responsibility to encourage positive changes 2003 577,777 in the District’s private business climate rests with the Chamber of Commerce and other 2002 579,585 stakeholders. 2001 578,042 2000 Census 572,059 Percentage Change 2010 through July 2011 2.7% Absolute Change 2000 through 2010 29,664 Percentage Change 2000 through 2010 5.2%Source: U.S. Census BureauThe District’s progress is also reflected in employment statistics. While other major Unit-ed States cities lost jobs over the past decade, the District continued to expand its labormarket. Between 2000 and 2010, the District’s economy added nearly 61,000 jobswhile other regional cities reported fewer positions. Exhibit E2 provides summary detail.Exhibit E2. Absolute Change in Annual Non-Farm Employment (Thousands), Select Cities District of Columbia (Not Seasonally Adjusted) 2008-2010 2009-2010 2000-2010 Change (000s) Change (000s) Change (000s) District of Columbia 7 9.20 60.7 New York -86.4 14.5 -10.7 Philadelphia -6.5 4.1 -39.1 Baltimore -13.3 -2 -56.2Source: Bureau of Labor StatisticsOver time, the District’s leading growth sectors have been government, education andhealth services, business and professional services and hospitality. According to theCensus Bureau, during the decade of the 2000s, government employment expanded by21,800 jobs; education and health services by 21,000 jobs; and business and profes- “ a common solution – continue to ...sional services by 14,900 jobs. improve the city’s business climate inAs discussed in detail in this report, the District cannot depend on the continuedexpansion of the federal government to drive labor force expansion. Therefore, the city order to accelerate private investment,needs to focus more intensely on other existing drivers of economic activity including:education, health, hospitality and many other industries to support future, broadly- business formation and job creation.”shared prosperity. Attention must also be given to private industries that are prevalentin the surrounding area but do not yet maintain a substantial presence in the city, likeprivate research and development. For the city to foster rapid economic diversification,the District must create a strategic plan that focuses upon key industries and associatedworkforce development requirements. 2
  3. 3. ADVERTISING SUPPLEMENTAccording to the Data: Of the eight wards in the District, only Ward 8 experienced a decline in population from 2000-2010 (-215 residents). This has long been the District’s poorest ward and suppliesThe District is a Wonderful Place to Call Home evidence of the city’s ongoing need to attract greater private investment to enhance opportunity in less stable neighborhoods. Together District businesses and govern-DC Mayor Vincent Gray recently asserted that “the District is a wonderful place to ment must identify opportunities to encourage population growth in those wards thatcall home. Based upon recent population data, a lot of people agree. According tothe United States Census Bureau, the District’s population surged past 600,000 in continue to be associated with underinvestment.2010 and increased more than five percent during the decade of the 2000s. Exhibit 1 Exhibit 2. Population Growth by District Ward, 2000 – 2010provides relevant statistical detail. 2000 Population 2010 Population % ChangeThe pace of population growth in the District has accelerated more recently, an indica- Ward 1 73,364 76,197 3.9%tion of both a recovering city economy and the city’s growing allure. The Census Bureau’s Ward 2 68,869 79,915 16.0%July 2011 estimate stood at nearly 618,000, or roughly 46,000 people more than Ward 3 73,718 77,152 4.7%the Census 2000 estimate. By expanding 2.7 percent between April 2010 and July Ward 4 75,179 75,773 0.8%2011, the District’s population growth was fastest in the nation (relative to the 50states). This marks the first time that the capital city has led states in year-over-year Ward 5 71,440 74,308 4.0%growth since the early 1940s. Ward 6 68,035 76,598 12.6% Ward 7 70,527 71,068 0.8%What’s remarkable is that this has been a slow growth period in America. The nation’s Ward 8 70,927 70,712 -0.3%population grew by approximately 3 million people during the 15 months after the District Wide 572,059 601,723 5.2%2010 Census, a growth rate of less than 1 percent. This rate represents the lowestnational rate of growth since the 1940s due to fewer births and slower immigration Source: U.S. Census Bureaufollowing the recession. The District also outpaced the surrounding area; between April2010 and July 2011 Maryland and Virginia experienced population growth of 0.9 per- Over the last decade, the District of Columbia has outpaced other major Northeasterncent and 1.2 percent, respectively. cities in terms of household population growth. Exhibit 3 provides relevant statistical detail and indicates that household population in the District increased more than 7Exhibit 1. Population: District of Columbia, 2000 – 2011 percent during the decade of the 2000s while a number of other major cities saw Year Population declines or only modest growth. July 2011 Estimate 617,996 2010 601,723 Exhibit 3. Percentage Growth: Number of Households, Select Northeastern Cities, 2000 – 2010 2009 599,657 2008 590,074 2007 586,409 2006 583,978 2005 582,049 2004 579,796 2003 577,777 2002 579,585 2001 578,042 2000 Census 572,059 Percentage Change 2010 through July 2011 2.7% Absolute Change 2000 through 2010 29,664 Percentage Change 2000 through 2010 5.2%Source: U.S. Census Bureau Source: U.S. Census Bureau; Note: New York City figure is from 2005-2010.________________________________________________________________________1 U.S. Census Bureau.2 Morello, Carol. (December 21, 2011). Census: DC adds 16,000 people. Washington Post. Available at The decision to relocate to an area is multi-factored, often including considerationshttp://www.washingtonpost.com/blogs/post_now/post/census-dc-adds-16000-people/2011/12/21/gIQARXWO9O_blog.html. such as quality of life and income opportunities. The District is positioned to provide security and cosmopolitan flair while supporting high household incomes. AccordingSome parts of the District have experienced particularly rapid population growth. In to the American Community Survey, median household and per capita incomes areWards 2 and 6, population grew by 16.0 percent (+11,046) and 12.6 percent (+8,563), higher in the District than in many other potential competitor cities. As Exhibit 4 belowrespectively. Ward 2 encompasses much of downtown DC, including the White Houseand the National Mall, as well as iconic neighborhoods such as Georgetown, Dupont reflects, median household income stood at $60,903 in 2010 and per capita incomeCircle, Logan Circle and Foggy Bottom. Ward 6 is home to a resurgent Capitol Hill, the stood at $41,240. Again, the District dominates major Northeast cities in both medianNationals Stadium and a complete rebirth of the Southwest Quadrant. household income and per capita income, thus making the decision to relocate to the District an easy choice based on income potential. Exhibit 4. Median Household Income and Per Capita Income, 2010 Source: U.S. Census Bureau, 2010 American Community Survey 3
  4. 4. ADVERTISING SUPPLEMENTExhibit 5. Median Household Income and Per Capita Income, District of Columbia vs. market stability. A recent Standard Poor’s/Case Shiller Home Price Index reported that Washington DC Metropolitan Area, 2010 the city’s home prices increased 0.5 percent from November 2010 through November 2011 – one of only two cities in the nation to report an increase (the other city was Detroit). Increased demand produced by younger households appears to have been a principal factor. ________________________________________________________________________ 3 Morello, Carol. (October 2011). Census: DC area gains young adults in recession. The Washington Post. “ ccording to the Washington Post, the A District has become a ‘capital of cool’...” Being home to so many prominent universities is another factor that helps stabilize the local economy while keeping the city young and new. Georgetown University, George Washington University, Howard University, American University, The Catholic UniversitySource: U.S. Census Bureau, 2010 American Community Survey of America and other institutions of higher education produce a continuous infusion of youth and new ideas in the city. The presence of neighborhoods with secure nightlifeExhibit 5 indicates that household size drives the income differences between District scenes, live entertainment and walkable amenities like Adams Morgan and Dupontresidents and the entire metropolitan area. While the District is associated with a Circle helps to retain this population upon graduation.significantly lower median household income than the overall Washington, DCmetropolitan area ($60,903 versus $84,523), per capita incomes are comparable. This is Exhibit 7. Select Neighborhoods by Median Agebecause household size in the District is smaller due to elevated populations of singles Median Ageand young couples without children. This is an important finding since it suggests that Adams Morgan 33gaps in median household income between the city and its suburbs are not primarily Capitol Hill 35driven by factors such as respective skills levels or educational attainment. Rather, these Dupont Circle 33gaps are driven largely by household size. Foggy Bottom 28 Georgetown 31That said, Exhibit 6 reveals that substantial income disparity persists within the District. Logan Circle 33As one would expect, higher incomes are concentrated in the city’s northwestern Source: Washington Post; Onboard Informaticsquadrant, which is associated with high levels of educational attainment, while thesouthwestern quadrant is associated with lower educational attainment and per capita That said, there is apparently room for improvement along this dimension. In 2010,incomes below $20,000. Forbes ranked Washington, DC ninth in the nation in terms of the best cities for young professionals. Rankings were based on seven factors, including: local unemploymentExhibit 6. Per Capita Income in the District rates, job growth projections, the number of small and large businesses per capita, median salaries of employed college graduates, cost of living, and percentage of population with college degrees in the area. Kiplinger’s Best Value Cities 2011, provides insight into why the District is only ranked ninth with respect to young professional attractiveness. Four of the top five cities on the Forbes list have a cost of living below the national average (100 is the baseline). The metropolitan DC area received a score of 141 for cost of living, outpacing the costs for all other cities on the Forbes Best Cities for Young Professionals List. Together, these two lists demonstrate that the amenities and desirability of living in the nation’s capital often outweigh the higher cost of living. Strategic improvements in quality of life measurements could make the District even more attractive to young professionals. ________________________________________________________________________ 4 Kiplinger’s Best Value Cities 2011. Available at http://www.kiplinger.com/tools/bestcities_sort/. Exhibit 8. Forbes Best Cities for Young Professionals, Top 15, 100 Largest U.S. Metropolitan Areas Compared to Kiplinger’s Best Value Cities 2011 Cost of Living Median Income growth Rank City State Index Income 2005-2009 1 Des Moines IA 92 57,185 7.4% 2 Raleigh NC 95 60,110 2.1% 3 Madison WI 109 58,775 4.8% 4 Salt Lake City UT 95 51,682 7.0% 5 Omaha NE 90 53,457 6.8% 6 Portland ME 113 54,431 5.6% 7 Denver CO 106 59,932 6.7% 8 Colorado Springs CO 92 56,576 6.2% 9 Washington, DC DC 141 84,424 MSA 9.5% MSASource: Justice Policy Institute; Data from DC Office of the Deputy Mayor of Planning and Economic Development 10 Minneapolis – St. Paul MN 112 65,109 4.9 11 Austin TX 93 57,109 3.0Young People are Drawn to the District 12 Boston MA 100 69,854 8.3 13 Greenville SC 92 49,689 3.3 14 Little Rock AR 94 46,120 5.2The District of Columbia is a young people magnet. According to the Washington Post, the 15 Fairfield County CT n/a n/a n/aDistrict has become a “capital of cool,” joining other popular cities such as Seattle andDenver. The consistent influx of new residents has maintained the District’s housing- Source: Forbes, Kiplinger’s.com4
  5. 5. ADVERTISING SUPPLEMENTThe District: An Educated American City The District’s Labor Market Remained Stable through Two Recessions in the Last DecadeThe District boasts a highly educated population. Data from the Census Bureau’s 2010American Community Survey indicate that more than 23 percent of residents aged 25 Thanks to a combination of federal outlays and the economic impact of a growingand older hold a bachelor’s degree as their highest level of educational attainment, population, the District’s labor market continues to be among the mostwhile nearly 27 percent have obtained a graduate or professional degree. It is no sur- stable in the nation. In 2010, employment stood at nearly 711,000 inprise that incomes are higher in a city with an overwhelmingly large percentage of the city. Between 2000 and 2010, a period that encompassed two reces-residents with post-secondary education degrees. As reflected in Exhibit 9, while Boston sions and the events of 9/11, nearly 61,000 jobs were added in the District.has a higher percentage of population with bachelor’s degrees, the city’s percentage By contrast, employment declined in New York, Baltimore and Philadelphia over thewith graduate or professional degrees is much lower than the District’s. same period. Exhibits 11 and 12 provide relevant statistical detail.Exhibit 9. Highest Level of Educational Attainment for Selected Cities, Exhibit 11. Annual Non-Farm Employment, District of Columbia, 1990-2010 (NSA) Percent of Population Aged 25 and Over, 2010 Source: Bureau of Labor Statistics Exhibit 12. Absolute Change in Annual Non-Farm Employment (in Thousands), Select Cities District of Columbia (NSA)Source: U.S. Census Bureau, 2010 American Community Survey 2008-2010 2009-2010 2000-2010 Change (’000s) Change (’000s) Change (’000s)Geographic concentrations of educational attainment align with geographic distribu- District of Columbia 7 9.20 60.7tions of income. For instance, in Ward 3, approximately 96 percent of residents have at New York -86.4 14.5 -10.7least graduated high school and 82 percent hold a bachelor’s degree or higher. In Ward Philadelphia -6.5 4.1 -39.18, just 10 percent of the adult population have a bachelor’s degree or higher. Ward 8 is Baltimore -13.3 -2 -56.2also associated with the lowest proportion of adults with a high school degree, though Source: Bureau of Labor StatisticsWards 1, 5 and 7 also lag along this dimension. For the District as a whole, 86 percentof the population age 25 years or older has at least a high school diploma and 47 per- Over time, the District’s leading growth sectors have been government, education andcent of adults have at least a bachelor’s degree. Exhibit 10 provides relevant statistical health services, business and professional services and the hospitality industry. Accord-detail. ing to the Census Bureau, during the decade of the 2000s, government employment expanded by 21,800 jobs; education and health services by 21,000 jobs; and businessExhibit 10. Educational Attainment by Ward: Percentage of Population 25 Years and Older and professional services by 14,900 jobs. This is no time for complacency, however. The District cannot depend on the continued expansion of the federal government to drive labor force expansion. More focus must be given to non-governmental segments such as education, health and hospitality to drive future growth. In addition, attention must also be given to private industries that are prevalent in the surrounding area but do not yet maintain a substantial presence in the city, like private research and development. To secure its future, the District must create a strategic plan targeting promising private industries and identifying relevant workforce development opportunities for residents. Exhibit 13. Absolute Change in Annual Employment by Industry, District of Columbia, 2000 v. 2010 (Not Seasonally Adjusted)Source: 2005-2009 American Community Survey (DC State Data Center, 2011) “o secure its future, the District must T create a strategic plan targeting promising private industries and identifying relevant workforce development opportunities for residents. “ Source: Bureau of Labor Statistics 5
  6. 6. ADVERTISING SUPPLEMENTBecause of the large number of government and government contracting jobs, employ- While employability issues are not unique to the District, current gaps in wealth, educa-ment by occupation in the District is heavily concentrated in management, office and tion and job training must be addressed to ensure the city’s progress in the decadesservice positions. An opportunity for economic diversification could be found within to come. Again, this represents another argument for ongoing improvement in thethe goods-producing and goods-moving industries (see Exhibit 14). The city’s corporate business climate. Increased private sector activity in the District can be achieved throughincome and personal property tax rates must be reduced, before manufacturing and the lowering of taxes in order to be more competitive with neighboring jurisdictionsdistribution industries are likely to locate within District boundaries in meaningful num- and to speed business formation and job creation. Job creation within the city createsbers. In addition, private industry has little incentive to locate in a jurisdiction with the greater opportunity for the people who need those jobs, thus ensuring that a maximumhighest franchise tax rates in the region. Presently, the District levies a 9.975 percent tax number of residents actually participate in the District’s story of growth and prosperity.on a company’s earnings. Maryland and Virginia’s corresponding tax rates are 7 percentand 8.25 percent, respectively. Exhibit 16. nemployment Rates: Washington DC MSA, District of Columbia and U.S., U________________________________________________________________________ January 1990 – January 20115 District of Columbia Tax Facts 2011,http://www.cfo.dc.gov/cfo/frames.asp?doc=/cfo/lib/cfo/11taxfacts.pdf, last visited March 21, 2012.Exhibit 14. Employment by Occupation, Percent (%) of Population Aged 16 and Over, District of Columbia, 2010 Occupation Percent (%) Management, Business, Science and Arts 59.2% Sales and Office 17.3% Service 15.6% Production, Transportation and Material Moving 4.9% Natural Resources, Construction and Maintenance 3.1%Source: U.S. Census Bureau, 2010 American Community SurveyExhibit 15 provides statistical detail reflecting compensation by occupation in theDistrict of Columbia and in the United States. Occupation-by-occupation, those whowork in the District earn more than the national average, a reflection of the criticalimportance often attached to District-based activities and a higher cost of living. Source: Bureau of Labor StatisticsThe exception is in the community/social services category, where District workers arepaid about $1,000 less than the national average. There are a few theories that present Exhibit 17 provides further evidence of the employability and educational disparitiespossible explanations. First, those who are classified as social workers in the District among District residents. Available data reveal that labor market performance varieslikely work for non-profits, which brings down the salary average. Secondly, many social immensely by ward. For instance, while Ward 3 was associated with an unemploymentworkers employed in non-profit settings tend to work for service organizations that are rate easily below 3 percent during the waning days of 2011, Ward 8 was associatednot able to offer full-time employment. Finally, it may be that a number of social work with an unemployment rate nearly ten times higher. In fact, of the District’s 8 wards, halfprofessionals are not classified as such in payroll records because they operate their were associated with double-digit unemployment rate as of December 2011.own firms, and therefore fall under the category of professional services. The result ofall of this is a diminished estimate of compensation for social workers in a District of Exhibit 17. Labor Force, Employment and Unemployment Rate by Ward, December 2011Columbia context. Labor Force Employment Unemployed Unemployment Rate Ward 1 47,549 43,410 4,139 8.7%Exhibit 15. Median Annual Earnings by Selected Occupation, District of Columbia and U.S., 2010 Ward 2 47,660 45,297 2,363 5.0% District of Columbia U.S. Ward 3 52,177 50,810 1,367 2.6% Legal $110,348 $70,446 Ward 4 42,778 39,250 3,528 8.2% Architecture and Engineering $81,872 $69,653 Ward 5 35,729 30,838 4,891 13.7% Management $79,858 $61,017 Ward 6 42,172 37,893 4,279 10.1% Computer and Mathematical Science $77,145 $68,672 Ward 7 34,725 28,921 5,804 16.7% Life, Physical and Social Science $70,348 $52,174 Ward 8 30,224 22,721 7,503 24.8% Business and Financial Operations $64,869 $51,729 Source: District of Columbia, Department of Employment Services Arts, Design, Entertainment, Sports and Media $61,274 $34,486 Healthcare Practitioner and Technical $60,540 $51,305 Education, Training and Library $49,208 $38,573 Community and Social Services $35,855 $36,796 All Occupations $47,210 $31,728Source: Bureau of Labor Statistics “ Increased private sector activity in theAs of February 2012, the national unemployment rate stood at 8.3 percent. In theWashington DC metropolitan area, the jobless rate is far lower, at 5.8 percent. But in District can be achieved through thethe District, the corresponding figure is 10.4 percent, which though below September2011’s cyclical peak of 11.2 percent is still associated with a level of unemployment not lowering of taxes in order to be moreexperienced since the early 1980s. competitive with neighboring jurisdictionsIn conjunction with other statistics supplied in this report, elevated unemploymentstands as a testament to one of the District’s primary economic challenges: having and to speed business formation and jobemployable residents from all wards in the city. Much of the District is associated withelevated educational attainment, high-paying and prestigious positions, combined with creation.”career satisfaction. Unfortunately, there is a significant fraction of the population lack-ing the skills necessary to meaningfully participate in the District’s economy. 6
  7. 7. ADVERTISING SUPPLEMENTCan the District Adjust to Emerging Fiscal A Likely Answer: Leisure and HospitalityRealities? To help offset the impacts of prospective federal sequestration, District leaders andFederal spending in the District expanded from roughly $22 billion ($21,912,505,000) other stakeholders will need to identify opportunities for non-federal economic growth.in FY1995 to almost $62 billion ($61,919,810,000) by FY2010, representing an in- One of those opportunities undoubtedly rests with the city’s leisure and hospitalitycrease of 183 percent. Exhibit 18 reflects this surge in spending. Presumably, much of economy. The city’s tourism industry benefits both from Washington, DC’s status as thethe significant FY2010 spending increase can be attributed to federal stimulus. nation’s capital and the ongoing globalization of the travel market.Exhibit 18. Federal Spending, Total Direct Expenditures Obligations, The District of Columbia remains strong with respect to domestic tourism, attracting District of Columbia, FY1995 – FY2010 (in $Billions) 15.54 million visitors in 2010. However, the city has the amenities and labor force necessary to improve its standing as only the seventh most popular destination for international tourists. ________________________________________________________________________ 6 District of Columbia. (December 2011). Office of the Chief Financial Officer, 2011 Revenue Report. Available at http://newsroom.dc.gov/show.aspx?agency=cfosection=2release=22837year=2011file=file.aspx%2frelease%2 f22837%2fDECEMBER%25202011%2520REVENUE%2520ESTIMATE%2520LETTER.pdf. Approximately 1.74 million overseas visitors came to the District in 2010 – almost three times the city’s population, but far short of the 8.46 million who visited New York City, only four hours away. Accelerated private investment could attract a portion of New York’s tourism to the Dis- trict. Even a small change in international market share could bring huge tax revenues and increased employment to the District. According to IHS Global Insight, internationalSource: U.S. Census Bureau, Consolidated Funds Report, FY 1995 –FY 2010 and domestic tourists collectively spent approximately $5.68 billion in the District dur- ing the year. This figure could be significantly increased over time by creating and imple-Since the District was selected to become the nation’s capital in 1790, there has been a menting the right set of public policies that encourage more private investment in thedirect correlation between the federal government and the District’s economy. The data hospitality and tourism segment.in this report tells a story of unusual economic stability, generally high incomes and higheducational attainment. But with the nation having amassed an accumulated federal Exhibit 20. Top 10 Cities Ranked by Total Number of Overseas Visitors, 2010 deficit exceeding $15 trillion and given the recent failure of the Congressional SuperCommittee to develop a plan to reduce the federal deficit, mandatory spending cuts (a Rank City 2010 Visitors (Millions) 1 New York City 8.46$1.176 trillion sequester) are on target to be imposed beginning in January 2013. One 2 Los Angeles 3.35presumes that further reductions in federal spending are forthcoming. Moreover, federal 3 Miami 3.11tax increases set to begin in 2013 would also tend to disproportionately impact the 4 Orlando 2.72District given the community’s generally high incomes. 5 San Francisco 2.64 6 Las Vegas 2.43According to the Congressional Budget Office, the $1.176 trillion sequester will re- 7 Washington, DC 1.74duce federal defense and non-defense discretionary spending by approximately 6.5 8 Honolulu/Oahu 1.63percent. To put this into local perspective, the Census Bureau reports that in 2010, the 9 Boston 1.19federal government spent $61.9 billion in the District on wages and salaries, procure- 10 Chicago 1.13ment, grants, retirement and other benefits, and other direct payments. This representedroughly 60 percent of the District’s gross city product that year. Source: Office of Travel and Tourism, Department of CommerceIn the February 2012 revenue estimate, District of Columbia Chief Financial Officer After declining in 2009, domestic visitation to the District expanded in 2010 and givenNatwar Gandhi estimated that based on the Congressional Budget Office’s analysis of the ongoing economic recovery, one presumes even greater visitation occurred lastsequestration, federal spending cuts will reduce District revenue by an estimated $24 year. It is likely that the weak value of the dollar helped encourage foreign travel tomillion in FY2013, $61 million in FY2014, and $71 million in FY2015. As shown in the United States during the global recession. Despite the global financial crisis, ExhibitExhibit 19, District tax revenue (total property, sales, income, and other tax revenue) 21 shows that international interest in the city grew year-over-year from 2006-2010.increased 4.5 percent in 2011, totaling nearly $4.9 billion. To keep the District’s tax Domestic tourism steadily increased from 2006, with a significant jump in 2008 thatrevenue stream growing, this reduction in federal spending must be offset by a corre- could be attributed to the historic inauguration of President Barack Obama.sponding increase in private sector activity. In other words, sequestration represents anopportunity for District leaders to place greater emphasis on business formation, private Exhibit 21. Total Overseas and Domestic Visitation to DC, 2006 – 2010investment and innovation.Exhibit 19. Tax Revenue Growth, District of Columbia, 2005 – 2011 Fiscal Year Total Revenue (in thousands) Percentage Growth 2005 $4,042,087 10.3% 2006 $4,238,950 4.9% 2007 $4,598,894 8.5% 2008 $4,872,027 5.9% 2009 $4,628,688 -5.0% 2010 $4,671,449 0.9% 2011 $4,880,542 4.5%Source: District of Columbia Office of the Chief Financial Officer, Revenue Reports; *Includes total property, sales, income, and other tax revenue (net dedicated taxes) Source: Destinationdc.com; Washington DC’s 2010 Visitor Statistics 7
  8. 8. ADVERTISING SUPPLEMENTAfter facing steep declines in attendance during the late years of the last decade, Exhibit 23. District of Columbia, Hotel Occupancy Rate and Average Daily Rate,the District’s professional sports teams have begun to experience a slow resurgence 2000 – August 2011in attendance. The Capitals experienced a significant increase in attendance due tothe team’s success during the regular season, its marquee talent and multiple play-off berths. As other DC professional sports teams improve, including the rebuildingWashington Wizards, crowds will inevitably develop. The District is also experienc-ing growing appreciation of soccer and baseball. DC United and the WashingtonNationals both saw their most rapid growth in attendance last year. Exhibit 22 providesrelevant statistical detail.Exhibit 22. Sports Games Annual Attendance, Select Washington DC Teams, 2001 – 2011 Attendance Year Nationals Wizards Capitals United 2001 n/a – played in Montreal 638,653 636,914 258,213 2002 n/a 847,634 710,990 231,264 Source: Destinationdc.com; Washington DC’s 2010 Visitor Statistics 2003 n/a 827,092 647,272 233,476 *As of August 2011. 2004 n/a 645,363 603,528 258,484 2005 2,731,993 705,069 n/a – strike year 266,617 Conclusion 2006 2,153,058 705,062 570,113 291,442 2007 1,961,606 753,283 571,129 314,506 Last year represented another year of progress for Washington, DC’s economy. 2008 2,320,400 736,461 634,381 297,531 The population surged, the number of jobs expanded, personal incomes grew, and 2009 1,817,202 681,117 741,992 241,322 the housing market continued to stabilize. Much of the District’s economic rejuvena- 2010 1,828,066 664,398 749,357 217,978 tion is associated with the influx of young people that are drawn to the District by its 2011 1,940,478 688,466 754,309 258,332 distinct neighborhoods, glamorous appeal as a hotspot for politicos and home to oneSource: Nationals, Wizards, and Capitals data – ESPN, MLB Attendance Report, NBA Attendance of the deepest labor markets in the nation. Report and NHL Attendance Report. DC United data.Increased tourism translates into improving hotel performance. Exhibit 23 indicates An improving national economy has helped, through expanded visitation and touristthat both average daily rate and hotel occupancy have been on the rise, implying that spending. With the U.S. and global economies expected to expand, 2012 is positionedhotel owners and operators are seeing steady revenue increases year-over-year. This to be another year of progress in Washington.increased revenue performance allows for larger projected budgets, leading to elevatedwages and hiring. Ongoing improvements to the District’s business climate policies are However, this report notes a number of challenges for the District’s leaders to address.needed to further expand the city’s hospitality base. The city continues to be associated with high unemployment, particularly in Wards 5, 7 and 8. This is part of a broader story of disparities in income, educational attainment and employment. The possibility of federal sequestration next year is also concerning. “ year represented another year of Last Both the challenges of broadening economic opportunity for all District residents and progress for Washington, DC’s economy. countervailing federal spending cuts are associated with a common solution: continue The population surged, the number of jobs to improve the business climate in order to accelerate private investment, business formation, and job creation. It will be up to the Chamber of Commerce and other expanded, personal incomes grew, and stakeholders to ensure that this occurs. the housing market continued to stabilize.” 506 9th Street NW | Washington, DC 20004 | 202.347.7201 www.dcchamber.org8

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