As of December 2014, Arlington County’s unemployment rate was 3.0 percent, the lowest it’s been in six years – and by far the lowest rate among Northern Virginia counties. It’s predicted that rising demand for labor will cause rates to continue to decline through 2017.

In February, SIA Vice President Massoud Ahmadi presented to a packed auditorium of Arlington County citizens on the present and future states of the county’s economic development.

The current unemployment rate is in part explained by the fact that over 47 percent of all jobs in Arlington are supported by federal government and professional/business services sectors, making the economy highly sensitive to any fluctuations in either.

The federal government’s presence is a mixed blessing for Arlington. While it has shaped the region into a knowledge-based economy that thrives with a highly skilled workforce and has cushioned the impact of recessions, the region’s reliance on the federal government has made it quite vulnerable to the effects of downsizing through reductions in federal jobs and procurement spending. Federal sequestration, Base Realignment and Closure (BRAC) and the shut down resulted in a significant contraction of the federal jobs and slowed down the growth of the county’s private sector. Arlington has recorded the highest loss among all jurisdictions in the region since the beginning of the economic recovery – a compound annual federal job loss of 3.8 percent, translating to a total of 4,700 jobs.

Compared to the U.S., most economic sectors of Arlington are less competitive and growing at a slower pace. If Arlington industries had followed the national trends, they would have gained an estimated 15,000 jobs since the beginning of the recovery, but instead gained 9,000; dependency on the shrinking federal government and a rigid, non-diversified economy are contributing factors to the slow employment growth.

Arlington’s low unemployment rate has exacerbated a significant shortage in affordable housing for millennials and families earning less than 50 percent of the area’s median income (over 8,800 additional affordable rental units are needed to close the housing gap). Meanwhile, local residents account for only 14 percent of Arlington jobs, meaning that a significant portion of Arlington’s potential tax base associated with real estate and residential spending is exported to locations outside the county.

So, what’s the prognosis? Massoud told citizens that future economic growth in Arlington requires the diversification of its economic base. Arlington must take advantage of its competitive advantage in information services and financial activities by helping expand business formation in these sectors.

More affordable housing and a greater local skilled workforce will help bring jobs to local residents from future economic expansions, assuming the county’s fiscal capacity is flexible enough to accommodate growth.

Click here to view Massoud’s presentation & learn more >>