Jobs and Development
A long-standing rule in the real estate industry is follow the jobs. Job growth is the leading indicator of strong demand for new residences, stores and places of work. While still true, an important fine-tuning to the rule is: follow the jobs in Science, Technology, Engineering and Mathematics (STEM).
STEM jobs are the gold standard for stimulating innovation and economic growth because STEM job growth is double non-STEM growth and its salaries are nearly double non-STEM. STEM jobs disproportionately enrich regional economies resulting in a ruthless competition among every State and municipality.
Recent Analysis Suggests DMV Can Be A Strong Player in the STEM Competition
RCLCO has recently published its 2024 STEM Job Growth Index which ranks the Washington, DC Metropolitan Statistical Area (MSA) 8TH among 50 MSA’s. Ahead of the DMV (in rank order) are: Austin, Seattle, Denver, San Francisco, Raleigh, Portland and San Jose. RCLO summarizes the DMV’s STEM job market as follows.
“Washington, DC has a unique tech economy heavily influenced by its proximity to federal government agencies. The city excels in cybersecurity, data analytics and IT services with significant opportunities in government contracts and defense-related technology. The nation’s capital is among the best in workforce quality and scores admirably in economic factors and quality of life although business taxes and office rents are a negative factor.
Take-Away For The DMV Real Estate Development Community
This ranking is good news for the future because the DMV’s ability to attract STEM jobs has been stagnating. While the DMV currently is home to the 3rd most STEM jobs (367,000) in the country behind only New York City and Los Angeles, our strong STEM job count is deceptive. The DMV’s number of STEM jobs has either declined or remained constant year-over-year for the last 5 years. This negative trend has been blamed on the belief that our STEM job engine is too dependent on the federal government and public spending.
But RCLCO’s ranking notes that the DMV is benefiting from increased venture capital investment into the private sector. The DMV’s relatively strong future ranking suggests the current weak trend can be reversed. A return to STEM job growth in the DMV should ripple growth through all real estate sectors.
The RCLCO analytic model employs 24 factors to look into the future and forecast the concentration of STEM job growth over the next five to ten years. Our #8 rank is good evidence the DMV can compete far into the future for STEM jobs with both legacy (San Francisco) and upstart (Austin) tech hubs.
About the STEM Job Growth Index
Since 2016, RCLCO has published the STEMdex—an annual ranking of 50 U.S. MSA’s that evaluate their potential for growth in STEM industries. The analytical model evaluates 24 factors including economic trends, workforce quality, tax environment and quality of life.
Contact: RCLCO Consulting, 4800 Hampden Lane, Suite 710, Bethesda, MD, 240-644-1300.
Attribution
Much of this article is based on the RCLCO publication “2024 STEM Job Growth Index” authored by RCLCO (Bethesda office) senior staff: Gregg Logan, Managing Director and Ryan Guerdan, Vice President. George Mason University thanks them for their time and expertise. Of course, this article’s author is responsible for the contents and conclusions.