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Boom Town

We're in the money.

Why is housing so expensive here? Some special circumstances have held down supply, notably insufficient sewer capacity. But the important factors are on the demand side. Housing prices in Washington are astronomical for the same reason that Bloomingdale's has built two stores in the DC suburbs, its first ventures outride the New York area. It is the same reason Lord and Taylor has three stores hereabouts and Nieman Marcus will be moving in shortly from Texas. Why are there six Mercedes-Benz dealerships in the Washington area and only five in Chicago? Because 21,600 adults live in families owning a Mercedes-Benz is why. It's because, as they say in the media, Washington is "the most affluent market in the United States." According to figures assembled by the Washington Post research department, the Washington area's 1976 median family income of $20,300 ranked first among the country's 10 biggest metropolitan areas, just slightly ahead of Long Island, NY, and far above real urban complexes like Detroit, Chicago and Boston, where median incomes all were below $10,000, Washington's per capita income of $7843 was number three in the nation in 1975, according to Commerce Department figures—behind Anchorage, Alaska with $9,666 and New York's rich Connecticut suburbs. But among the biggest 10 metropolitan areas, the capital city was again number one.

It is no longer true, as it was in l969, that the Washington suburb of Arlington, Virginia has the highest per capita income in the country. US Census Bureau statistics put it third for 1974, behind wheat-growing Steele County, North Dakota, and Prince of Wales County, Alaska. The Commerce Department said that in 1975 Loving County, Texas had the highest per capita personal income, followed by Valdez, Alaska and Haskell County, Kansas. But, number four was Falls Church, Virginia, just south of Arlington. Little places awash in oil money or wheat profits may grab off statistical honors these days, but it remains true that no other metropolitan area in the country has the concentration of high-income suburbs that Washington has. The richest of these in per household income is Fairfax County, Virginia, with $23,000, and Montgomery County, Maryland, with $22,900.

One needn't study computer printouts all day to perceive that people in Washington have money and are willing to spend it. One need only watch one opulent shopping center after another open up and fill with people, watch audiences pour in to see ballet at the Kennedy Center at $15 per seat or read that Washington's two biggest department stores, Hecht's and Woodward & Lothrop, have been forced to eliminate their budget stores and hike prices to keep up with images projected by Sak's and Bloomingdale's. Washingtonian magazine, which makes money rating private schools, fine wines and tennis clubs and selling ads for $400 brass beds, designer dresses and hiking clothes you could wear to a soiree, has put it nicely in one of its promotion brochures: "In most major cities, you see street vendors selling hot dogs, peanuts or ice cream. In Washington there is a push cart vendor selling Quiche Lorraine, pâté, hummus and fine cheeses. But, that's the way it is in Washington—expensive tastes and the money to afford them. Even in the middle of a major recession."

Remember the recession of 1974? It may be hard to forget in industrial cities which prosper and wilt with the business cycle. Washington is not one of these places, "While recession was taking its toll around the nation," notes a publication of the Washington Board of Trade, "metro Washington residents had a free ride," Its unemployment rate was 30 percent below the national average. "It's not really that Washington's economy is recession proof," according to the Board of Trade. "But, when the largest employer in the area is the federal government itself, employing some 357,000 people, and when thousands more earn their livings from jobs that are directly or indirectly government supported—the thought of what it would take to put the government out of business is . . . unthinkable."

It wasn't planned this way, of course, but Washington always has grown and prospered in times of crisis and turmoil for the rest of the nation. The Civil War caused a doubling of the population. There was another big spurt during World War 1, and two huge ones during the Great Depression and World War II. The country—those who run it, at least—never lost a sense of emergency after the Depression and the second war, and Washington has been a boom town virtually ever since. In the 1960s, Washington area population grew by 38 percent, making it the fastest expanding metropolitan area in the country. San Francisco, in second place, grew just 17 percent.

Those who built and financed housing and office buildings during the postwar era have become very rich in the Washington boom, and so have some zoning lawyers, parking lot barons and sellers of insurance to government employees. So have a number of famous lawyer-lobbyists, some of whom are so rich they have put their portfolios on computers that will tell them what to buy and sell each day to maximize growth. But Washington is less a city of super-rich than it is a place of general affluence. Fully 16 percent of all the adults in Washington—347,000 of them—live in families with incomes above $35,000 per year. Washington has more scientists, engineers, mathematicians and computer specialists, proportionately, than any other big city in the country—double the percentage in Boston, in fact, its nearest competitor. Seventy percent of Washington's work force is white collar and 27.6 percent is professional or technical. It is also important that Washington has the highest percentage of working women of any big city in the country. More than 45 percent of Washington's wives work, which is a major reason why families can buy $100,000 houses and shop at Lord & Taylor, "1 always feel sorry when there's only one earner," said a woman who sells real estate in Glover Park.

 The chef du cuisine of Washington's huge feast, of course, is Uncle Sam—or, rather, the folks out in America who send their dimes and dollars to him. America is very generous to its 350,000 direct employees in the Washington area, although this was not always so. Before 1962 federal pay lagged well behind private industry. A senior government chemist, engineer or lawyer (GS 15), was paid $14,700 in those days, while his counterparts in private Industry earned $5000 or $6000 more, on the average. Credit for changing the situation is sometimes given to President Kennedy, who sought to attract the very best people into government; to the Union of Soviet Socialist Republics, which scared Congress by launching Sputnik; and to America's postal unions, which threatened to strike if mailmen were not paid more, and dragged other civil servants with them into prosperity.

Regardless of merit or blame, Congress in 1962 wedded itself to the principle of comparability and declared that federal workers henceforth were to be paid what their counterparts made in the private sector. Ordinary civil servants in Grades 1 through 15 are given pay increases almost automatically, although Congress retains tighter control over salaries of government executives, judges, Cabinet and sub-Cabinet officers and members of Congress themselves. There has been a great fuss in Washington lately about whether America will stand for congressmen to make $57,500 and White House aides in their 20s to be earning salaries in the $40,000 range. But for the vast number of Washington's government workers, the pay escalator continues to rise, quietly and efficiently. Senior career civil servants now earn between $33,800 and $43,900, just like their counterparts in corporate bureaucracies, and their health insurance and retirement benefits are better.

In 1950, federal workers accounted for 40 percent of the Washington area work force, but now they comprise only 23 percent. There was a time when statisticians thought the Washington economy had broken free from the federal trough, but closer examination has shown only that new ways have been found to feed at it. One study by the National Capital Planning Commission indicates that the number of persons in Washington involved in management consulting, for example, increased by 447 percent from 1964 to 1973. Pentagon consultants once were collectively known as "Beltway bandits," but highwaymen offering to perform R&D, systems analysis, public relations, contract evaluation, hardware and software services to the government have proliferated far beyond Washington's circumferential road and the military agencies and have attached themselves to virtually every program and sub-agency in the government. Often, consultants are apply their government-acquired expertise and contacts to take more money working indirectly for Uncle Sam than they did directly.

Among Washington's other high-growth enterprises during the 1960s and 1970s have been non-profit organizations, public interest groups, trade associations, think tanks, labor unions, professional organizations and law firms. Most of them are not taking money directly from the government, or even indirectly. Rather, they try to influence the government to make decisions and let contracts in accordance with their interests, Washington has also attracted offices of some 400 private corporations whose expense account executives are in town either to persuade or sell to the government. International organizations, foreign governments and commercial missions also have poured into Washington, which is not only the Nation's Capital, but Headquarters of the Free World.

Population figures indicate that the boom of the 1960s is now over and that, in fact, the 1970s may be Washington's slowest-growth decade in this century. Washington grew and got rich so fast during the 1960s, according to some experts, that it is simply impossible to keep the pace going. Now that federal pay scales have caught up to private industry levels, there can't be another 10-year torrent of money gushing through town. The corporations, lobbies, do-gooders and self-seekers who were most likely to come to Washington have already come. New lawyers and consultants will set up practice, of course, but others will retire and die. By these predictions, Washington is entering a period of affluent, sophisticated, recession-resistant stability. It may be true, but no one should put it past Washington to create a crisis in America, foreign or domestic, that would necessitate lots of new government activity and new round of enrichment for the local population.

This article originally ran in the July 9, 1977 issue of the magazine