Sequestration is the buzzword in Washington right about now. No wonder — it's going to have a major affect on the local economy. There are 378,000 federal executive branch employees in our region, plus thousands more working for the legislative branch. Beyond that, federal spending supports 225,000 contract jobs.
Many people are on high alert for furloughs, and salary cuts, but Julie John Knott, of Burke, Va., already knows how the sequester will impact her. She's been fired.
Knott, just shy of 50 years old, works at a Sonjara, a company based in Falls Church, Va., that builds websites for different government projects. On her second-to-last day of work, she's typing up a list of where things are around the office; from now on, it's up to the staff to find the coffee filters and stamps.
Federal cuts impact the local level
Shioban Green, Knott's boss, has been running the company with her husband, Andrew, for 11 years. "There's sort of this general freezing that I'm finding," Green says. "I've got one contract we submitted in May 2011 that I'm still waiting on being awarded." They have work now, but there's little on the horizon. Unless new contracts come in, Green says, they will be forced to make more cuts.
This single layoff does ripple through the local economy. Knott has already cancelled her gym membership at Vantage Fitness, and called off her monthly personal training session. That means the gym is down $90 a month.
On her way into the office, Knott typically orders a medium soy chai from Starbucks with a spinach egg wrap. That's about $8.00. Lunch is typically another $10 dollars. There's CVS, where she estimates she spends about $15 a week. Her dry-cleaning bill will be lower, since it will just be her husband's work clothes, not hers.
Stephen Fuller, director of the Center for Regional Analysis at George Mason University, explains Knott's impact. "She's an economy unto herself, and her economic wings have been clipped. She can't spend as much."
The big picture
On a broad scale, Fuller is optimistic about our economy. He says most likely we've seen the peak of federal spending come and go. From 2007 through 2010, we were the fastest growing economy of any major metropolitan area in the US.
Now, Washington ranks number 10. "That's because the federal government isn't driving growth anymore," Fuller explains, "But there is activity here that isn't federally funded."
Federal spending in our region has declined over the past 2 years by $7 billion. That rate (5 percent a year) is "the rate of decline, which has been proposed by those who want to reduce federal spending." In other words, he says, we've already experienced the first year of sequestration.
Fuller says we're diversifying. The mix of jobs is changing. We'll have more jobs in growth sectors like health and education, which are industries where he says, will grow the most.
If there is a silver lining in all this, Fuller says Knott shouldn't have a tough time finding a new job. He sees a growing need for office administration, but most likely not for a government contractor.
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[Music: "Never Tear Us Apart" by Paloma Faith from www.musicasparabaixar.org]
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