Private workforce losses show Montgomery County’s economic decline

Montgomery County’s long economic decline is accelerating, and if residents and businesses aren’t alarmed yet, they should be.

In spite of having an educated workforce, proximity to the nation’s capital, and several large private employers, the county’s value proposition to businesses in the market for new locations or considering expansions is not helping the county to grow or maintain its share of regional jobs in industries and occupations that pay high wages.

Those jobs are important to the county’s ability to fund the critical government services that the community needs and expects.

The county executive’s knee-jerk negative response to a report (“Elrich blasts report on county’s economy; others say it raises concerns,” July 1) is disappointing, but unsurprising. This county executive has spent decades articulating and advancing a flawed approach to economic development and land-use planning, and the results speak for themselves.

Federal economic data show a county that is irrelevant to the private-sector decision makers who invest in enterprises, edifices, and employment. 

For the five years from January 2016 through December 2020, the county actually lost 514 (or 0.5%) jobs in the Professional and Business Services industry (North American Industry Classification System Code 1024).

Across the river, Fairfax County gained 10,939 jobs (5.2%) in that same industry. That is a stunning difference for two counties so geographically proximate and similar in many key respects. 

Looking more narrowly at the economic data from 2019 to 2020, Montgomery County lost 4.0% of its Professional and Business Services jobs.

You might think that those numbers simply describe the economic effects of the pandemic, but you’d be wrong. The number of jobs in that high-paying industry declined by only 0.5% in Fairfax County and increased by 4.1% in Arlington.

The trend lines are consistent with what has generally been occurring for years, but that such a big divide is evident during the pandemic should be a wakeup call.

During periods of economic contraction or uncertainty, many businesses roll out efficiency improvements and cost-cutting measures that they held in reserve when the future seemed more certain and when revenue was strong.

Those measures include reducing real estate footprints, increasing investment in technology and automation as labor substitutes, and making strategic decisions to invest resources in lower tax environments. 

Furthermore, the sort of businesses that are growing and expanding in the region are increasingly choosing other locations.

Amazon has a footprint of more than 11 million square feet in the region, very little of which is HQ2-related. Montgomery County has less than 100,000 square feet (0.9%) of that total.

Similarly, Microsoft has nearly 2.8 million square feet in the region, of which 53,000 (1.9%) is in the County.

Facts, as they say, are stubborn things. And the facts about Montgomery County’s economy should be concerning to all county residents and businesses.

The data underscore an urgent need to address the county’s economic challenges. Failure to do so could have lasting consequences.

While incentives cannot be the only tool that the county uses, they are the tool that will have the largest impact on the strategic decisions that businesses are making right now about how and where to invest their resources. The county can choose to establish a set of policies and practices that will turn this crisis into an opportunity, and the time to do so is now.

Jacob Sesker is a regional economic policy expert and former senior manager at the Montgomery County Council, the Montgomery County Economic Development Corporation, and the Montgomery County Planning Department.

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Editor’s note: Empower Montgomery, a 501-c-4 nonprofit organization, hired Sesker’s firm, Harpswell Strategies, to do a study of Montgomery County’s economy. David Blair, who is running against Marc Elrich for county executive, is a former member of Empower Montgomery.

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