When the disappointing national monthly employment report for August was released last Friday morning, one statistic regarding the few new jobs created popped out. More than one-third of the meager 96,000 hires nationwide originated in the hospitality industry.
The importance of hospitality sector job creation in the District is as critical to the local economy as it has consistently proven to be across the country.
In the most recent 12-month U.S. Labor Department reporting period, nearly half of all new jobs created in the Washington region originated with restaurants, bars and hotels. According to regional economic analysts, hospitality businesses will remain a predominant generator of new jobs throughout the metropolitan area in coming years.
This will prove true whether federal government downsizing continues under a President Obama or a President Romney. Of course, this assumes that the feared local economic impact of the looming federal budget sequestration is avoided by alternate deficit reduction planning.
Already a primary source of D.C. jobs and both local revenues and taxes, it is projected that the hospitality sector will likely become the single largest employer in the nation’s capital in the near term. In addition, the outsized overall financial contribution to the local economy and the city’s tax base exceeds the magnitude of the industry.
D.C. hospitality employment – including food and beverage enterprises, hotels and entertainment and arts businesses – currently comprises approximately 100,000 of the nearly 490,000 private sector jobs located in the city. Almost half of those hospitality related workers reside in the District. By comparison, less than a third of the 736,000 total jobs in D.C. employ city residents – including all federal and local public sector employment.
Those numbers don’t include employment in associated businesses and services dependent on hospitality sector activity for both providing a customer base and generating income.
These are, however, realities of which District elected officials and city government agencies seem painfully unaware. Wholly counterintuitive and counterproductive regulatory and tax policies are particularly apparent when evaluating the business obstacles imposed by local government.
Astonishment is the only sensible reaction when measuring D.C. Council lack of attention span regarding enacting real and meaningful reform providing regulatory relief for restaurant, bar and nightlife businesses. This is especially evident in the archaic and out-of-balance alcohol licensing protocol allowing for the direct intervention of tiny ad hoc license protesters consisting of only five persons and small citizens groups, resulting in the arbitrary imposition of business operating restrictions.
D.C. has long been recognized as the nation’s worst state-level jurisdiction when it comes to small business friendliness. Relying on an inherent level of economic vitality as the national capital, local officials have long displayed disregard and disrespect toward hometown businesses.
Ironically, the District has recently been able to offset this bad behavior by reaping the economic benefits of strong population growth – largely fueled by 20 and 30 year olds, as well as older “empty-nesters” and retirees. These new residents seek a vibrant urban lifestyle characterized by the dynamic hospitality and entertainment amenities that are fueling local development, employment growth and increases in city revenues.
As an illustration, more than 2,000 jobs have been created by 40 surveyed hospitality venues representing only a portion of the new nighttime economy in the 14th and U streets entertainment zone, according to a recent economic impact assessment measuring the contribution of hospitality businesses in the revitalized area.
This single and geographically modest hospitality destination is conservatively estimated to generate approximately $200 million in economic activity and directly contribute more than $20 million to city tax coffers. Multiply the economic impact of these community small businesses throughout the city and the aggregate financial significance is substantial.
As the city continues to grow and demand for social amenities heightens, it is imperative that D.C. officials finally get serious about revising cumbersome business licensing procedures and eliminate selective and unpopular operating restrictions.
A city with a regulatory scheme that kowtows to the rarified notions of mere handfuls of dissenting residents and unduly empowers unrepresentative citizens groups is a locale with a serious self-imposed handicap and a singularly shortsighted vision.
Mark Lee is a local small business manager and long-time community business advocate. Reach him at OurBusinessMatters@gmail.com.