by James A. Bacon
Thanks to its high share of federal government employment and a high percentage of jobs that can be performed remotely, Virginia is somewhat less vulnerable to job losses from COVID-19-related shutdowns of large sectors of the economy than other states, said Stephen Moret, CEO of the Virginia Economic Development Partnership (VED) in a Monday update to economic development partners.
“We expect a large increase in unemployment to happen quickly, led by the hospitality sector, with substantial job losses in retail as well,” he wrote. The short-term impact will vary substantially by industry sector:
- Minor impacts for ~48% of total employment in Virginia (federal government, healthcare, K12 education, utilities, data centers, and agriculture);
- Moderate impacts for sectors representing ~35% of total employment (professional services firms, IT firms, manufacturers, higher ed, real estate, construction);
- Severe impacts for sectors representing ~17% of total employment (hospitality, retail (with a few exceptions, e.g., grocers), and small businesses generally (especially those in the non-traded sector), and movie production.
Any prognostication must be tempered by big unknowns, he said: (1) the size and speed of federal stimulus to offset social distancing impacts, and (2) the timeline for social-distancing measures to remain in place.
Meanwhile, Secretary of Finance Aubrey Layne said yesterday that the commonwealth is likely to lose $1 billion in revenue in each year of the next biennial budget, reports the Richmond Times-Dispatch.
Layne based his estimate on a pessimistic scenario considered and rejected by the Governor’s Advisory Council on Revenue Estimates in the fall when state revenue growth appeared to be robust.
The pessimistic alternative would reduce state revenues by about $1 billion in the first year and $2 billion in the second, compared with the standard economic outlook adopted by the advisory group of business leaders and legislators.
The finance secretary hopes to limit the revenue loss to $1 billion a year, as the state attempts to recover from the economic damage it expects the coronavirus crisis to inflict in the coming months.
Sen. Janet Howell, D-Fairfax, chairwoman of the Finance and Appropriations Committee, said Virginia is in a better position than some states because it has close to $2 billion in combined reserves.
