Around the United States, there has been much optimism as a persistent labor shortage has sent the unemployment rate to lows not seen since before the recession a decade ago. The national rate is at 3.9 percent as of July.
Yet the D.C. unemployment rate sits at 5.6 percent. A big part of that can likely be attributed to the fact that the minimum wage in the District is now at $13.25 as of July 1. While this is good news for many people, the District’s relatively high unemployment rate should serve as a strong indication that employers in areas such as retail and fast food are hesitating to pay higher wages, and that will only get worse as the District heads towards the $15 rate.
Complicating matters further is the fact that Virginia is much more attractive to employers, reflected in the fact that Virginia’s unemployment rate (3.3 percent) is actually lower than the national rate and most of the jobs advertised on Craigslist are in Virginia. Virginia has kept its minimum wage at the federal level of $7.25, and this is a big reason why the District is likely to lose jobs to Virginia for years to come. .
There are jobs to be found in serving food in the District, but the problem is that they are mostly at high end restaurants where even entry-level positions such as dishwasher, or kitchen prep demand substantial amounts of experience. While many restaurants now offer good wages to attract talent, the fact that Virginia can pay less means restaurants there have the ability to reduce labor costs if the economy sours, and have a much better chance of staying open than a similar restaurant in the District that has to pay the higher wage.
One challenge facing job seekers is that many jobs are still limited to part time. That is especially true in industries such as security, and may eventually move into other industries as the minimum wage continues to rise.
That is why entry-level workers in the District should consider limiting their job searches to part-time work. Put together two or three part-time jobs at 20 hours each, and you can earn enough to fully support yourself and your family. Otherwise, you can watch opportunities dry up as you push for a 40-hour week that will be nearly impossible to obtain. Some people may hesitate to work at multiple jobs, but the reality is that the market is pricing many people out.
A further concern many in the District should have is a potential government shutdown in October, which President Trump has threatened if Congress does not fund the construction of a border wall between the U.S. and Mexico. If that occurs, the District will very likely suffer, particularly retail stores and restaurants that depend on spending by the government employees who would be furloughed during a shutdown.
In the next issue, I am going to explain the difference in the unemployment rates by race and some of the reasons why such a difference exists.
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