Economy of Washington

*--- Major Economic Activities ---*
From the time of its origin, Washington was expected to emerge as a great trading city because of its site along the Potomac River.

However, the city lagged behind other major port cities, such as Baltimore, along the eastern seaboard. Instead of trade, the driving force of the city’s economy has proved to be the federal government.

At first employing no more than several hundred workers, the federal bureaucracy grew steadily in the 19th century and exploded in the 20th century.

By 1940, 44 percent of civilian workers in the city of Washington were federal employees.

Although the private economy grew faster than the public sector after World War II, it still remained closely tied to the federal presence through the proliferation of national associations, lobbyists, subcontractors, lawyers, and accountants associated with government work.

America’s increasingly global role created scores of jobs in such organizations as the World Bank, the International Monetary Fund, and the Organization of American States, in addition to the U.S. government’s own departments of state and defense.

These federal jobs stimulated the economy and boosted the value of real estate in Washington, especially in the 1980s.

Tourism is the second most important aspect of the city’s economy.

The national monuments and museums attract more than 18 million visitors each year; hotels are numerous.

The city hosts many conventions, and a major convention center opened in 1983.

The functions of federal and local government and the tourism industry have created a large service economy, which employs more than one-third of all the city’s workers.

Manufacturing is of only minor importance and is dominated by the printing, publishing, and food industries.

*--- Transportation ---*
For years the hub of transportation to and from Washington was Union Station, served by several railroads.

Built in 1907, Union Station occupies 10 hectares (25 acres) in the heart of the city.

During the second half of the 20th century, airports and highways became important.

Washington is served by three commercial airports—Ronald Reagan Washington National Airport, Washington Dulles International Airport, and Baltimore-Washington International Airport—with extensive national and international connections.

In 1964 an expressway known as the Capital Beltway (comprising interstate highways 495 and 95) was completed around Washington to facilitate traffic. Its 36 cloverleaf intersections link it to all major routes to and from the city.

In 1976 a subway system opened in the city that extends into Virginia and Maryland suburbs. Called the Metro, the system extends more than 160 km (100 mi) throughout the Washington metropolitan area.

*--- Economic Problems ---*
A result of the growth of Washington’s white-collar employment in the 1980s was an increasing gap in income among the city’s residents.

Disadvantaged areas, predominantly black neighborhoods, became subject to a plague of drugs and associated violence. These areas were concentrated in the older sections of the northeast and the southeast quadrants of the city.

Even as downtown real estate values rose, so did Washington’s murder rate.

While the metropolitan region prospered, much of the inner city lagged behind.

The city’s tax base declined as more and more middle- and upper-middle-class families moved to the suburbs. This lower tax base contributed to a fiscal crisis for the city.