The District is struggling to attract new workers for the first time in 30 years after the Trump administration’s mass layoffs of federal workers, a new report shows.
Yesim Sayin, executive director of the nonpartisan D.C. Policy Center, said the D.C. labor market hasn’t been this bleak since the city weathered the 1991-1992 recession and declared bankruptcy in 1996.
The nonprofit think tank noted this month that the District shed more than 46,000 government and private contractor jobs last year. That’s 57% of a net loss of 79,800 jobs since January 2020, the last month before the COVID-19 public health emergency.
The remaining 33,800 jobs lost between January 2020 and December 2024 resulted from a contraction of hospitality and service employment during pandemic-related restrictions and teleworking.
The report warns that the past year’s shrinkage of professional services poses a greater risk to the District’s “superstar city” economy by hurting its ability to attract an “educated, well-paid and engaged workforce.”
“A weak job market today can have lasting consequences for young workers entering their careers and, over time, make it harder for the District to retain and attract the talent that has driven its economic success,” Ms. Sayin said Tuesday.
According to the Bureau of Labor Statistics, nonfarm employment in the District dropped from about 805,000 jobs in January 2020 to roughly 725,000 at the start of this year.
The policy center reported that rising living costs — including high housing and childcare expenses — have made it harder to attract workers than six years ago.
Ms. Sayin urged city officials to “rebuild its competitiveness” by embracing the report’s three recommendations for private-sector growth: Expand apprenticeships for students in fields such as social work, new tax incentives for export-oriented industries and legislation that reduces living costs.
“The challenge is creating the conditions for job growth to return,” she said. “Young people are still moving into the city, but we are not able to retain them as they form households and families.”
White House spokesman Kush Desai said the report underlines the need for the District to rely less on government spending.
“Federal largesse that’s subsidized by taxpayers is not a substitute for real and sustainable economic growth led by the private sector,” Mr. Desai said in an email.
“The Trump administration remains focused on cutting taxes and slashing red tape to let private businesses, big and small, accelerate economic growth for D.C. and the rest of the country,” he said.
The Washington Times reached out to members of the D.C. Council and Mayor Muriel Bowser, who leaves office at the end of the year.
Researchers at the DMV Monitor, a website sponsored by the left-leaning Brookings Institution and the Metropolitan Washington Council of Governments, endorsed the report’s findings and recommendations.
“The report accurately identifies that this will harm both the young people in question and the region itself,” said Tracy Loh, a Brookings fellow.
Recent DMV Monitor analyses found softening demand for rental housing in the city and a 5.3% drop in D.C. internship postings from April 2024 to April 2026.
D.C. job losses also have hurt Maryland and Northern Virginia, where the DMV Monitor found unemployment increases in well-off suburbs led the region last year.
Brookings estimated last month that the Trump administration cut 29,200 federal government jobs between January 2025 and April 2026 in Maryland alone, “upending the state’s economic foundation.”
Montgomery and Prince George’s counties have since experienced a net loss of private-sector jobs.
In contrast, Virginia’s Fairfax, Loudoun and Prince William counties have seen private-sector job growth from expansion of data centers, cloud computing, healthcare and artificial intelligence services.
Defense and technology expansions also have driven private-sector job growth in Charles County, Maryland.
Meanwhile, the District’s negative financial outlook has become an outlier in the nation’s broader recovery from the pandemic.
The D.C. unemployment rate hit 6% in June, compared with 4.2% nationally.
Chief Financial Officer Glen Lee noted in a June 30 letter to the mayor and council that the District experienced a 6.2% year-over-year loss of 47,000 total jobs in May, driven largely by a 15% decline of 28,000 federal jobs since January 2025.
“While the nation sees steady growth, the District’s real GDP and total resident wages have both trended downward during the past year,” Mr. Lee wrote.
One bright spot for the District has been tourism. Destination DC estimates that the city received 27.2 million visitors in 2025, up 20,000 from the previous year. Visitors spent a record $11.9 billion, up 4% from 2024.
The city’s tourism bureau expects another bump this year from a higher-than-usual volume of events related to America 250 celebrations.
LaToya Nkongolo, a former official for Maryland’s Anne Arundel County, said the trends call on the region to embrace new ways of making money.
“D.C., Maryland and Northern Virginia need a stronger, more diversified economy driven by entrepreneurship and innovation, not permanent dependence on taxpayer-funded jobs,” said Mr. Nkongolo, an analyst at the conservative National Center for Public Policy Research’s Project 21.
