U.S. Capital Richer Than Silicon Valley By Frank Bass and Timothy R. Homan -

U.S. Capital Richer Than Silicon Valley

Federal Employee Compensation Averages More Than $126,000

By Frank Bass and Timothy R. Homan -

October 20, 2011 "Bloomberg" -- Federal employees whose compensation averages more than $126,000 and the nation’s greatest concentration of lawyers helped Washington edge out San Jose as the wealthiest U.S. metropolitan area, government data show.

The U.S. capital has swapped top spots with Silicon Valley, according to recent Census Bureau figures, with the typical household in the Washington metro area earning $84,523 last year. The national median income for 2010 was $50,046.

The figures demonstrate how the nation’s political and financial classes are prospering as the economy struggles with unemployment above 9 percent and thousands of Americans protest in the streets against income disparity, said Kevin Zeese, director of Prosperity Agenda, a Baltimore-based advocacy group trying to narrow the divide between rich and poor.

“There’s a gap that’s isolating Washington from the reality of the rest of the country,” Zeese said. “They just get more and more out of touch.”

Total compensation for federal workers, including health care and other benefits, last year averaged $126,369, compared with $122,697 in 2009, according to Bloomberg News calculations of Commerce Department data. There were 170,467 federal employees in the District of Columbia as of June. The Washington area includes the District of Columbia, parts of Northern Virginia, eastern Maryland and eastern West Virginia.

Embracing K Street

In recent years Washington has attracted more lobbyists and firms with an interest in the health-care overhaul and financial regulations signed into law by President Barack Obama, according to local business leaders.

“Wall Street has moved to K Street,” said Barbara Lang, president and chief executive officer of the DC Chamber of Commerce, referring to the Washington street that’s home to prominent lobbying firms. “Those two industries clearly have grown in our city.”

Still, household income fell even in Washington by 0.8 percent last year from $85,168. In the San Jose area, home to Cupertino-based Apple Inc. (AAPL) and Cisco Systems Inc. (CSCO) in San Jose, income dropped to $83,944 from $84,483 in 2009.

Median income in both metro areas has been falling since 2008, when it reached a record in each place. The 4.7 percent drop in Silicon Valley during that period was three times larger than the Washington region’s 1.5 percent fall.

‘Shallower Recession’

The flow of federal dollars in and around the nation’s capital helped the region weather the economic slump better than most areas and is contributing to its recovery. The unemployment rate in the Washington metro area in August was 6.1 percent, compared with 10 percent in San Jose, according to Labor Department figures. Nationally, joblessness was 9.1 percent in September for a third straight month.

“The region did experience a shorter, shallower recession than San Jose,” said Sara Kline, a Washington analyst at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The federal government stepped in to take efforts to dampen the recession. It was focused to some extent in the D.C. area as well, given the presence of federal workers there and contractors. That insulated it from more of a downturn.”

Federal government spending for programs excluding Social Security and Medicare in fiscal year 2011, which ended on Sept. 30, rose to $2.38 trillion from $2.3 trillion the previous year.

Lawyer Capital

Last year Washington also had the most lawyers per capita in the U.S. compared with the 50 states, with one for every 12 city residents, according to figures from the American Bar Association and the Census Bureau. In New York State the figure was one out of every 123 residents, while in California the ratio was one in 243.

Associate attorneys in the Washington area who have worked between one and eight years had a median salary of $186,250, compared with the national median for their peers of $123,521, according to a survey by the Washington-based National Association for Law Placement.

Lobbyists play a prominent role in the Washington economy. In 2010 there were 12,964 registered lobbyists, with most working in or around the nation’s capital, according to figures compiled by the Center for Responsive Politics, a Washington- based research group that tracks political spending. Spending on lobbying efforts reached a record $3.51 billion last year, up from $3.49 billion in 2009.

Contractor Central

The Washington suburbs are also home to government contractors such as Bethesda, Maryland-based Lockheed Martin Corp. (LMT), the world’s largest defense company, and General Dynamics Corp. (GD), the Falls Church, Virginia-based maker of Abrams tanks and Gulfstream business jets.

With about 5.6 million residents, the Washington region has an aggregate household income of about $221.4 billion. The San Jose area has about 1.8 million people and income of $67 billion, according to census figures gathered from the American Community Survey. The annual survey polls about 3 million American households to provide annual economic, demographic, social and housing characteristics for the nation.

The Brownsville-Harlingen metro area in southeast Texas along the border with Mexico had the lowest median household income last year at $31,736.

Such income inequality is on display in Washington as well. In the District of Columbia, almost 11 percent of the city’s population qualifies as “very poor,” meaning they make less than half the poverty rate, or about $11,025 a year for a family of four and $5,415 for a single person. The same figure for San Jose is about 6 percent, according to census figures.

“Even though we’ve got this very healthy group of government employees and contractors, there’s still a lot of people left behind,” said Douglas Besharov, a professor at the University of Maryland’s School of Public Policy.

To contact the reporters on this story: Frank Bass in Washington at fbass1@bloomberg.net;