Unemployment in the District rose to 10.7 percent in May, up nearly a point since April as two critical sectors bled thousands of jobs.
The numbers, released by the D.C. Department of Employment Services, are bad but not unexpected. In mid-May, Chief Financial Officer Natwar Gandhi told a House appropriations subcommittee that the city’s unemployment rate would rise to 11.5 percent next year and the District’s economic condition would continue to deteriorate.
“So far it is consistent with our revenue estimates,” Gandhi told The Examiner on Friday. “Things are bad, no doubt about that.”
The District’s unemployment rate rose 0.8 percent over April’s 9.9 percent. It has risen 4.1 percent since May 2008.
The education and health services sector, widely consider one of the most resilient if not recession-resistant, lost 2,700 jobs in May while the professional and business services sector lost 1,500 jobs. Leisure and hospitality and the federal government, meanwhile, gained 2,500 jobs combined.
D.C. is creating jobs, Gandhi said, but not ones that District residents are filling.
Gandhi is slated to release his latest revenue projections Monday.
“We all know, things just don’t look good,” he said. “This is the widest and deepest recession that we have seen in the last 75 years. Things are bad across the country and it has caught up with the District.”
D.C. leaders have already closed a $250 million shortfall in fiscal 2009, as well as a projected $800 million gap in fiscal 2010.
Plunging revenues would send Mayor Adrian Fenty and the D.C. Council scrambling for extra pennies to balance the budget.
Complicating the issue further are so-called “spending pressures” — when an agency requires more money than its budget allows. Spending pressures can be caused by rampant inflation or the addition of individuals to the human services rolls, among other consequences of a troubled economy.
Fiscal 2009 spending pressures could hit $60 million, several council members have said. And once the government raids the agencies that have underspent their annual budgets, the only remaining options are to cut spending and freeze hiring, said Council Chairman Vincent Gray.
“You only find it by telling people to stop spending,” Gray said. “We’re cutting into the bone marrow at this point.”
