A writer’s strike in Hollywood? Banking uh-ohs? The aftermath of a housing boom? In some ways, 2023 feels…a lot like 2008.
But fear not, dear readers. For those that actually understood the majority of “The Big Short,” the year’s economic picture so far sits nowhere near Great Recession levels. In fact, DC was on the upswing for venture capital in Q1.
Still, VC is certainly not the only economic indicator, and workers across the country are still biting their nails about potential layoffs — especially in tech. But some have faith that, at least in the DMV, things aren’t looking so grim.
So, what will the coming summer months bring for the region? We asked Luke Pardue, a DC-based economist at HR tech company Gusto, for his thoughts.
Employment is still strong
One thing to know about DC’s economy: layoffs are lower here than in other major US cities. According to Gusto’s data monthly layoff rates averaged 0.2% in DC in 2023, compared to 0.6% in New York City, New York and 0.7% in San Francisco, California and Boston, Massachusetts.
This, Pardue said, paints a pretty optimistic picture because the district remains stable even during uncertain economic trends. Not only that, but it’s growing. Pardue said that employment growth went up 8% in DC in April, the seventh highest of the 50 metro areas Gusto tracks.
“Even as we’ve seen layoffs start to tick up a bit overall in tech — and especially in large metros like New York, San Francisco, Boston — the layoff rate in DC has actually remained relatively stable and low,” Pardue told Technical.ly.
As always, this stability can be partially attributed to DC’s proximity to the federal government, which remains an always-stable buyer for many DC tech companies. But Pardue also thinks it has something to do with politics: The area’s multitude of market research, polling and other political tech companies are all gearing up for 2024.
“We’re coming into an election year, and a lot of these different companies are not hesitant to lay off but are actually starting to bulk up a lot,” Pardue said.
Meanwhile, salaries in DC stay strong, especially in tech. Salaries in DC are the fourth highest in the country, ranking only behind San Jose, San Fransisco and Boston.
The State of the Union
Even with DC’s stability, national economic trends do impact the region. Still, Pardue thinks the country at large is more stable than it might seem. The fall of First Republic (which was just bought by JPMorgan Chase), he said, was more of a continuation of instability from Q1 in response to interest rates and not a broad issue that will keep moving outward.
“As we wrap up the second stage of financial instability, I’m actually optimistic that we can get into a new stage of stable banking rather than see this contagion spread,” Pardue said.
Even if uncertainty remains around the next six months, Pardue pointed out that consumer spending is still strong. Despite some high-profile layoffs that impacted thousands of employees, he said that leaders are largely hesitant to let go of employees. Overall layoffs, according to Gusto data, are relatively flat and sit around 1%.
“We’re certainly entering a period of cooldown where economic growth is not going to be as strong as it was post-pandemic in 2021,” Pardue said. “But I don’t necessarily think that any of these signals are flashing that red light that would lead me to paint a much less optimistic picture.”
With this cautious optimism, Pardue cited the importance of remembering that things can change. So, founders should still stay lean and keep as much cash on hand as possible, just in case things take a turn for the worse or recover slower than expected.
He also suggested staying flexible and preparing for plans to change. One way, he recommended, is changing the types of roles you’re filling or the ways that they’re being filled. Gusto data found a huge surge in contactor usage across its platforms in the two years, which can provide options if staff needs to be trimmed or the chance opens to bring someone on full-time who already knows the ropes.
In the post-COVID world, finding the right time to grow looks different. Pardue said that over the past few years, the ideas about when is a good time to start a business changed because people no longer subscribe to the idea that entrepreneurship and company-building can only happen during a boom or normal economic times.
“Opportunity always exists in the economy and especially during times of disruption, we can see that that there’re a lot of chances that business owners can take advantage of, even if overall growth is slowing down,” Pardue said.
Here’s another stat for technologists to remember: Tech is the highest-paid subsector among all of DC’s industries, with an average annual salary of $123, 841. For talent, the generally high salaries still make the region an attractive place to live and stay.
“Prospects for DC are incredibly bright because people want to live here and companies want to attract the talent that’s here,” Pardue said.
Knowledge is power!
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