In a December 2025 report, “Is the District of Columbia Still Competitive?” researchers at the Alice M. Rivlin Initiative documented the District’s lackluster nonfarm employment growth after the COVID-19 pandemic. The report showed that 55 months after the decline in economic activity associated with the COVID-19 shock, the District’s nonfarm employment level was below its February 2020 peak. The city’s poor employment growth contrasts with a stronger recovery nationwide.
This week’s chart updates that analysis by using more recent data on nonfarm employment and employment in select sectors of the District’s economy. As the chart above shows, the District’s employment picture remains troubling.
More broadly, the weak local job market threatens to limit opportunities for young people in the District who will soon graduate from high school or college. The difficult local job market makes it more important to ensure that D.C.’s schools are effectively preparing students for postsecondary education and entering the workforce. An upcoming report on the State of D.C. Schools by the D.C. Policy Center’s Education Policy Initiative gauges the system’s recent progress and readiness to meet this challenging moment.
As of December 2025, nearly six years after the pandemic, nonfarm employment and employment in key sectors remain below pre-pandemic levels. The District’s nonfarm employment is roughly 8 percent below its February 2020 level—equivalent to a loss of 65,600 jobs. The professional and business services sector, a cornerstone of the District’s economy, initially recovered but is now 3.8 percent below its February 2020 level. Federal government employment in the city, which has faced cuts by the Trump administration, has fared worse—14 percent below its February 2020 level. And while employment in the leisure and hospitality sector rebounded to an impressive degree, that recovery stalled in early 2025.
An anemic labor market not only reduces a city’s attractiveness to prospective workers and residents but also increases the probability that young adults entering the labor market under such conditions—similar to those who enter the labor market during recessions—may experience long-lasting negative consequences. For young adults, entering a labor market during a recession is associated with depressed earnings and poorer employment prospects for a decade and possibly longer.
The associated adverse consequences are not just economic. They may also include a higher risk of certain diseases during midlife, a lower likelihood of finding an economically successful partner, and elevated rates of disability.
Spotlight on college and career readiness for D.C.’s public school students
Some indicators of college and career readiness are declining. In school year 2024-25, 16 percent of students in grade 12 met the SAT College and Career Ready Benchmark, a decline of 4 percentage points. In addition, the share of alumni enrolled in postsecondary institutions after high school graduation declined by 2 percentage points, and across most major student groups.1 These indicators are important to monitor to ensure student access to economic opportunities are viable, and especially critical to track given the state of the economy.
Programs that help young people stay in school or remain employed may help protect against the adverse consequences of entering a poor labor market.2 D.C. has some promising programs in this vein. These programs build young adults’ human capital and can help delay entry into a poor labor market by keeping them engaged in education or by facilitating employment opportunities. For example, there is evidence to suggest that high-impact tutoring improves attendance and academic performance in D.C.’s public schools. Both of these outcomes are associated with students staying in school. Moreover, as the D.C. Policy Center’s Education Policy Initiative has documented, D.C.’s public schools and their partners provide a range of career-asset-building opportunities—such as apprenticeships and work-based learning—that smooth the transition from high school to employment. By keeping young people engaged in school or work, these kinds of programs have the potential to mitigate the risks associated with entering a poor labor market.
Endnotes
- Office of the State Superintendent of Education (OSSE). 2025. “DC School Report Card Data.” OSSE. Retrieved from https://osse.dc.gov/page/data-and-reports-0
- Hannes Schwandt and Till M. von Wachter, “Socio-Economic Decline and Death: The Life Cycle Impacts of Recessions for Labor Market Entrants,” Working Paper # 26638, January 2020. The authors write that “employment or education programs assisting unlucky graduates to avoid entering the labor market in a recession may be the most promising for avoiding the destabilizing effects of unlucky early labor market entry.” (p. 28).