COVID-19’s Long-Term Changes in Virginia

by DJ Rippert

In the long run…  Over the past eight months COVID-19 has dramatically impacted the world, the United States and Virginia.  One hundred and twenty thousand cases of COVID-19 have been reported in Virginia  Over 2,500 people have died from COVID-19 . The cases, hospitalizations and deaths continue to grow in the Old Dominion. One year ago unemployment in Virginia hovered at 3%. Today it is 8%. Protests and rioting, possibly catalyzed by the COVID-19 lockdowns, have occurred regularly in several Virginia cities as well as Washington, D.C. Schools in Virginia moved to virtual teaching last Spring and many schools will open this Fall with either fully or partially virtual teaching. Nobody doubts the short- and mid-term effects of COVID-19. But what of the long-term effects? What impacts of COVID-19 will be felt after this version of the Coronavirus is gone?

The Spanish Flu (1918), Polio (1916 – 1955), H2N2 (1957), HIV/AIDS (1980s -), Swine flu (2009), COVID-19 (2020 -). Epidemics have broken out in the United States since the colonial days. Smallpox, yellow fever and cholera outbreaks plagued the country for centuries. The Spanish Flu pandemic was far worse than COVID-19 (to date). That flu struck in four waves and is estimated to have killed up to 50 million people worldwide. However, most Americans today would say that the Spanish Flu didn’t create major long-term changes in the United States. Some would disagree. Academics like Andrew Price-Smith believe that flu tipped the balance toward the allies in World War I. The growth of predominantly female-led nursing in the US may have been a consequence. In utero exposure to the pandemic may have negatively affected the health and prosperity of those exposed. Some survivors of the Spanish Flu never fully recovered. Despite all that, the Spanish Flu was called “the forgotten pandemic” until COVID resurrected interest. Economically speaking, the end of the Spanish Flu coincided with the start of the Roaring Twenties, making it hard to find long -term negative economic impacts from that pandemic.

But what of COVID-19? Will it be another “forgotten pandemic” 20 years from now or is this pandemic going to create long term change in society?

This time it’s different. American media seems to believe that the COVID-19 pandemic will forever change America in important ways. It took Politico Magazine only until March 19 to find 34 ways COVID-19 would reshape America. BBC followed at the end of June with a somewhat less philosophical list of long-term changes. The Brookings Institution checked in with an economically focused view of the post COVID-19 future. The International Monetary Fund had its own ideas.

Me? I’m not buying most of this. I’m old enough to have lived through a number of upheavals and I generally don’t see the predicted seismic societal change 20 years after the upheaval. Sept 11, 2001, happened almost exactly 19 years ago. How worried are Americans about terrorism today? Who can forget the color-coded terrorist threat levels — red for “severe,” orange for “high,” yellow for “elevated.” What color is it today? In my estimation, upheavals accelerate existing trends far more than they unleash new, unpredicted trends. That’s what I believe will happen with COVID-19.

Implications for Virginia. Here are just a few of my thoughts on how COVID-19 will impact Virginia over the long term. I’d be interested in hearing other Virginia-centric thoughts in the comments.

  • Micro-business disaster. Virginia is full of micro-businesses. Very small businesses that range from bowling alleys to tailor shops to bait stores. These ultra-small businesses were differentially hurt by the shutdown since they often failed to meet the test of “essential goods and services. I could walk into Wal-Mart and buy a fishing lure but not into my local tackle shop. Why? Because Wal-Mart also sold food and gardening implements. The lockdown and subsequent recession will kill off a lot of micro-businesses for good. In Virginia the jobs lost to micro-business shutdowns will be replaced by deliveries from distant warehouses run by companies like Amazon. Good for Arlington as it expands the Amazon presence. Bad for rural Virginia where the micro-business jobs will not have substitutes. Expect the COVID-19 recession to be particularly long and bitter in rural areas. Complex and expensive rules and regulations such as those proposed by Del. Richard Sullivan will only make this worse.
  • The retail apocalypse accelerates. One of the best investments of the COVID-19 pandemic has been shorting CMBX 6, an index of commercial mortgage backed securities with a strong exposure to shopping malls. Malls were on the ropes before COVID with most rehabilitation efforts centered around building out expanded indoor dining options and movie venues to attract shoppers. A double whammy. The stores are failing and no one is going to the restaurants or movie theaters. Jobs in malls and the malls themselves will disappear at an accelerating rate. This poses two problems, especially for suburban Virginia — how to replace the jobs and what to do with the land housing malls (along with oceans of parking lots)?
  • Upper class / Middle class flight from the cities. Many cities got hit hard by the virus then hit again when some protests turned violent then hit again when liberal city councils and mayors proved unable or unwilling to stem the violence. The 2015 riots in Baltimore over Freddie Gray’s death lasted 15 days. The 2020 riots in Portland have been continuing for almost 100 days. They are getting more violent. A Trump supporter was gunned down the day before yesterday.  This is a COVID quadruple whammy.  First, Coronavirus hit the populous cities especially hard and early.  Second, people moved to cities for the perks of city life — fine restaurants, music venues, sports stadiums, etc.  Those were /are shut down. Third, the trend toward safer cities has been fully reversed with July being the most violent month in Chicago in 28 years. Fourth, work from home has been far more effective than managers expected allowing many white collar city-dwellers to relocate elsewhere. Virginia is largely a beneficiary of this as people leave D.C. and head to Northern Virginia, heating up the real estate market. While the City of Richmond will suffer, I expect most Richmonders will relocate elsewhere in Virginia. Luxury second homes are suddenly in high demand. Are people looking for a place to temporarily run or permanently inhabit? Time will tell.

COVID-19 won’t tear Virginia to its foundations.  However, it will generate change. If we manage this change intelligently we could have a different but better Virginia. If we allow our state government to practice business as usual we will be in worse condition after COVID than we were were before the dread disease.