Source: Bureau of Economic Analysis
Paycheck growth in Fairfax County and the city of Alexandria are lagging behind the state and the nation, according to data from the Bureau of Economic Analysis. A look at per capita personal income from the last five years shows Northern Virginia struggling to keep up as everybody else recovers from the recession.
Fairfax County had the lowest rate of growth, only 2 percent. Alexandria isn't much better, showing a 3 percent growth in per capita personal income. Arlington has the highest per capita personal income, although its growth is just under the state and national average. The only bright spot in Northern Virginia is Loudoun County, which has seen a 15 percent rate of growth from 2008 to 2012 (the most recent year available). For the most part, Northern Virginia is stuck.
"The region has stopped growing," said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. "High wage jobs and most new jobs are paying below the average for all jobs."
Part of the explanation is that the typical American household is getting poorer, according to a new study by the Russell Sage Foundation that shows the inflation-adjusted net worth for the typical American household has dropped 36 percent from 2003 to last year. Another part of the explanation is that the region is emerging from the recession with a serious hangover. Stimulus spending was drying up just as Northern Virginia is facing a series of troubles related to a dysfunctional federal government.
"This area is highly dependent upon the federal government," said Frank Shafroth, director of the Center for State and Local Leadership. "Sequesters, shutdowns and freezing Department of Defense and domestic appropriations can be very disruptive."
THE GREAT RECESSION came on the heels of one of the worst business cycles on record in terms of job creation, a phenomenon that's true for per capita personal income as well as household income. By 2009, when the bottom fell out of the global financial system, the typical working-age American household was earning about $5,000 less than it did in 2000. Since 2009, when the recovery officially began, household income has fallen even more.
"It's depressing," said Richard Fry, a senior researcher at the Pew Research Center. "Household income is down, and even during the years it was supposed to be recovering it has actually continued to fall further."
Here in Northern Virginia, demographic changes are at the root of why per capita personal income has remained flat. As development and redevelopment moves forward, low-income families are being priced out of Arlington and Washington, D.C. Meanwhile, the older housing in Fairfax County and Alexandria are drawing lower income families.
"The older apartments were designed for singles, but they are now occupied mostly by families with children," said David Versel, senior research associate at the Center for Regional Analysis. "If you look down Route 1, all the apartments near Fort Belvoir were built for singles and young couples. Now they have predominantly immigrant families."
THE ONE BRIGHT SPOT in Northern Virginia is the fast growing exurbs of Loudoun County, where per capita person income increased from $52,000 in 2008 to $60,000 in 2012. Researchers who study the shifting demographic patterns of Northern Virginia say part of the explanation for this is the different kind of people who are now moving to Loudoun County, which is growing at the fastest rate in Northern Virginia. The county's population has doubled in the last 15 years, and so has the county's demographic profile.
"One of the things that is really changing in Loudoun is having more younger people going out there, and families without children going out there," said Hamilton Lombard, research specialist for the Demographics Research Group at the University of Virginia Weldon Cooper Center for Public Service. "And that's just kind of a transformation from being a bedroom community into actually having lots of job centers there and having lots of younger people going there before they start families."
Part of the change for Loudoun is the kind of construction that's been happening in recent years. The county has seen a number of new mixed-use developments that include residences, shopping and offices. The Village at Leesburg, for example, was one of the first of its kind in the area. That was followed by One Loudoun in Ashburn and Crescent Place, a trend that is slowly making Loudoun more friendly for millennials.
"We're not seeing as many mansions or large single-family houses being built, and we are seeing more smaller units, which means smaller households with fewer children," said Versel. "That means for each new household that moves in, there are fewer dependents and thus the per-capita income will be higher."
ACROSS AMERICA, the poor are getting poorer. The Russell Sage Foundation study concludes that households at the bottom of the wealth distribution lost the largest share of their total wealth, and researchers who conducted the study believe the slow recovery will continue to generate increased wealth inequality in the coming years. The study also concluded that the Great Recession caused an unprecedented decline in wealth holdings among American households. Inflation-adjusted net worth for the typical household in America dropped 36 percent from $88,000 in 2003 to $56,000 last year, and most of that drop came in the wake of the Great Recession. Ultimately, the researchers concluded, the data show very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession.
“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” wrote Fabian Pfeffer, one of the study's authors.