Annual Job Change, Northern Virginia, 2002-2015. Image credit: Terry Clower.

There has been considerable wailing and gnashing of teeth over the abrupt halt in economic growth in Northern Virginia due to sequestration-mandated cutbacks in defense spending and other federal government programs. My fellow Bacon’s Rebellion bloggers and I have led the wailing chorus. Indeed, Don Rippert engaged in some ferocious teeth gnashing in a post this morning.

There’s no question that the Northern Virginia economy has under-performed the national economy over the past two years. But there is evidence to suggest that Virginia’s economic engine may be over the hump. That chart above comes from Terry L. Clower, director of the Center for Regional Analysis at George Mason University, who presented it during a business round table sponsored by the Thomas Jefferson Institute two days ago.

After shedding thousands of jobs in 2012, 2013 and 2014, the federal government has stabilized employment, actually adding a few in 2015. After declining for three  years straight, federal procurement inched back up in 2014. Perhaps most important, Northern Virginia’s professional & business services occupational category grew by 5% between April 2014 and April 2015. That category is the economic driver of the Northern Virginia economy, and the fact that it is expanding faster than federal employment and federal procurement suggests that maybe, just maybe, Northern Virginia tech sector is diversifying beyond the federal government.

It’s hard to imagine that the federal government, with its severe long-term budget constraints, can resume the spending growth path that propelled the Washington metro economy for so many years. Still, there are signs that Northern Virginia businesses are adapting to the new normal. I’m hopeful that the promising statistics represent more than a dead cat bounce.


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  1. Counting “jobs” is a pretty weak way to look at the economic situation. What kind of jobs are being added? The substantial drop in personal income across all of Northern Virginia in 2014 was a telling sign. Commercial real estate vacancy rates are another telling sign.

    Are there signs of hope? Sure. The technology sector in Northern Virginia has expanded in areas outside of the federal government. The recent purchase of FoundationDB by Apple indicates that the start-up technology community in NoVa is not only progressing but creating acquisition targets as well. However, that wasn’t enough to stop Virginia from finishing 48th out of 50 in state economic growth last year.

    The biggest issue with the analysis in your chart is that it ignores population and demographics. If Northern Virginia is adding people of employment age faster than it is adding jobs it makes the apparent turn-around in your graph a whole lot less calming.

    Your chart seems to show more jobs added than lost in NoVa in 2014. Yet state economic growth flatlined.

    Virginia’s economic growth has been:

    2011 – 0.6%
    2012 – 0.7%
    2013 – 0.4%
    2014 – 0.0%

    NoVa added fewer jobs in 2012 than in 2011 but Virginia’s growth increased.

    The question is not whether NoVa is adding jobs. It’s whether the urban crescent is adding economic growth fast enough to offset the economic decay elsewhere in the state. Based on the data at hand, it seems the answer is “no”.

  2. TooManyTaxes Avatar

    According to Ed Long, Fairfax County executive, job growth at the high end continues to be virtually non-existent with significant job growth in low-paying service jobs. For that and other reasons, I remain very pessimistic on a strong economic recovery for Fairfax County.

    1. Meanwhile, Prince William, Loudoun, Stafford, Arlington and the City of Alexandria all had bigger percentage drops in personal income than Fairfax County. So, the challenges go across NoVa – not just Fairfax County.

      Meanwhile, OC (Original Clown) Dick Saslaw is chalking up the $422M (this year) in additional tax receipts to “a mild economic recovery” and the business development efforts of McAuliffe. Never one to muddy the water with facts Saslaw ignores the impact of HB 2313 – the largest tax increase in Virginia history.

      Now, you can guess how this will play out. Once the education transfer payments from the urban crescent to the rural horseshoe decrease the cry will go out far and wide for “mo’ money, mo’ money”. Maybe those “transportation dollars” that were approved with HB 2313 can be “re-purposed” to supplement the educational transfer payments.

  3. larryg Avatar

    not sure how you measure population growth vs job growth on less than an MSA basis.

    and now with sequestration – no one seems to be saying that Obama has accumulated more debt than all his predecessors but instead they are saying that he is now responsible for the “flat” economy.

    The man offers Virginia 2 billion in money and 30,000 jobs and the fools in Richmond say – if it’s not military money they don’t want it.

    So Virginia has big time options for rural Virginia – real jobs in health care – and more tax revenue for education .. had the same option with tobacco money and what have we done?

    1. TooManyTaxes Avatar

      Not everyone agrees there’s a golden egg.

      Show me the statutory language that can ensure: 1) Virginia will save money and 2) that the savings will go to taxpayers and premium payers and not to the medical industry and I’ll be writing letters in support of Medicaid expansion.

  4. Cville Resident Avatar
    Cville Resident

    I’ve asked before, and I’ll ask again: When is the Urban Crescent going to finally say, “Enough!”?

    At some point, most voters should catch on that as long as you vote GOP for Delegate or Senator, they’re going to keep the transfer payments going to the rural horseshoe b/c the “backbone” of today’s GOP is rolling up 70% or more of the vote in rural Virginia (though the strategy seems to be failing).

    The Rs aren’t the “stupid party” in Virginia, it’s the Ds. The Ds should be running against every Delegate and Senator in the Urban Crescent and pinning down the local R Delegate and Senator about the transfer payments to Southside and SW….but the Ds aren’t exactly bright bulbs. They’ll spend millions on Senate elections in SWVA (Puckett) and get 35% of the vote, and say, “We must do better out there” rather than putting on the thinking caps and sweeping the Urban Crescent on a campaign to end transfer payments to the rural horseshoe.

    1. The one really big income transfer from NoVa to RoVa is education funding. The General Assembly re-wrote the funding formula back during Doug Wilder’s tenure — it was all about guaranteeing minimum standards of education for poor jurisdictions across the state. Cville, do you really want to argue that Virginia should cut funding for the poorest school districts in Virginia in order to end regional transfers of wealth? That doesn’t sound like you.

      1. larryg Avatar

        we seem to have some contradictions. Several have pointed out that the lack of a globally-competitive education is what is keeping ROVA on an entitlement track.

        looks like we have too options.

        1. stop those in ROVA from having kids

        2. – educate the kids who are born – to a level where they can actually compete for 21st century global jobs and not end up dependent on entitlements.

        maybe there are other options..

        we often hear of urban poor selling street drugs to survive.

        It’s a dirty little secret that rural folks have their own version – used to be stills and liquor – now days it’s Oxycodone and meth and other.

      2. The education transfer is far from the only big transfer. It may be the most overt transfer because it is overtly calculated. However, look at income tax payments per capita, sales taxes collected per capita, free vs tolled driving, etc. The transfers are unending.

        As for the educational transfer – it’s horsecrap. Why should some localities refuse to establish adequate real estate tax rates and then take money from localities which do establish adequate tax rates? Let me guess … because the people living there are too poor? Again, horsecrap.

        The only way to measure poverty is to also measure the cost of living. When you do that you get some interesting results. For example, the Northern Neck and Virginia Beach have far less poverty than the people in NoVa living inside the beltway. Maybe the educational welfare payments should be coming from those regions.

        Jim Bacon – a staunch conservative when big government wants to take money out of his pocket but a bleeding heart liberal if that same big government takes the money out of someone else’s pocket.

        1. “Jim Bacon – a staunch conservative when big government wants to take money out of his pocket but a bleeding heart liberal if that same big government takes the money out of someone else’s pocket.”

          What are you talking about? I have no idea what you could be referring to.

          1. Cville Resident Avatar
            Cville Resident

            Here’s my problem with your argument. From the numbers I’ve seen (and please feel free to provide additional data….I’m happy to change my mind on this), most school districts in rural VA (excluding Albemarle/Cville, Roanoke area, and Harrisonburg area) receive the vast majority of their school budget from the state (which is a transfer payment from the Urban Crescent). They’ve basically abdicated all responsibility for their local schools and set back and wait for that big ole check from Richmond. That’s wrong, and that behavior should be punished. They’re simply banking on a GOP legislature blocking funding changes so that they can continue to receive Urban Crescent tax dollars and not do anything in their own backyards about education.

      3. NoVA pays a lot higher car taxes, more sales tax, more gaso taxes, and so on. We have a crisis in school funding due in part to aversion to further tax increaes in NoVA. I sense a little bit of non-NoVA residents saying NoVA has nothing to worry about economically, but we are worried, and this puts some stress on the NoVA as funder of rest of Va. concept.

        School parents are being told our monies are sent to elsewhere in the state, so we have a new wave of resentment in young parents. They even talk about leaving Fairfax (due to proposed dismantling of school programs). I know because my grandkids have moved here from NJ, so I am hearing the fall-out first-hand. The sentiment did not come from me, rather school funding meetings.

    2. TooManyTaxes Avatar

      You’re right about the Ds – or some of them. Chap Petersen and Steve Shannon (both Ds) fought Mark Warner’s tax increases because it provided so little for Fairfax County Public Schools. But they received so much pressure from their Democratic colleagues from NoVA, the Fairfax County Chamber of Commerce and the WaPo, they finally surrendered. Warner got his tax increase; $107 M more in Fairfax County tax dollars headed south; and FCPS got about $7 M in new money. According to an older post on BR, 49 RoVA jurisdictions were able to reduce local tax support for public schools. The enemy is the liberal Ds from NoVA, Chap Petersen excepted.

      1. larryg Avatar

        I would speculate with regard to TMT’s claim – which has never really been substantiated with referable facts.

        but it would go like this:

        The State REQUIRES each locality to MATCH the state SOQ funding.

        All but a very few actually add additional dollars because many say that the State does not actually fund all needed staffing.

        so what some rural schools do – if more funding is provided – is that they actually do reduce local funding because they’re not paying for any extras to start with – just the basics.

        If you look at this:

        and especially so at the poorer counties , you can see they barely provide more funding than the required match.

        so while kids in Fairfax and Arlington have dozens ,or hundreds of various kinds of electives -the rural schools offer the bare minimum.

        so the irony is that more funding at the state level does not necessarily result in better education if they don’t use the money to expand course offerings or offer more rigorous courses – they just use the extra money to reduce tax burdens on the local folks many of whom are literally land rich and cash poor.

        This implies that just giving more money without strings won’t help rural education. It would have to be grants for specific things not just more generic money.

        This should not come as a shock. Most rural school boards are not the caliber that you’d find in more urbanized places where you’d actually find people with Masters and PHDs in education who know a rigorous curriculum takes staffing talent and money.

        It may well take something more that what we’re doing now to improve rural education in Va.

        1. TooManyTaxes Avatar

          Larry, here are my sources.

          Cost of Warner tax increases to Fairfax County. Spreadsheets prepared by the McLean Citizens Association’s Budget & Taxation Committee, populated by the staff of the Senate Finance Committee, as requested by Senator Janet Howell. Then Delegate Vince Callahan concurred the result.

          New money received by Fairfax County Public Schools – questions prepared by the same committee and answered by FCPS budget staff at the request of School Board member Jane Strauss.

          49 localities cutting local tax support for public schools Chart prepared by Chris Braunlich and posted in BR a number of years ago. I recently posted a link to the article and chart the last time Larry asked about my source.

          “Goings on within the Virginia General Assembly” I got the details over coffee with now Senator Chap Petersen three or four years ago.

          Pressure from the Post. Back then I used to read the paper.

          Pressure from the Chamber of Commerce. The Post and other papers. While I cannot reveal the person’s name, because she/he is still an active lobbyist, I was told the Chamber was given a large sum of money by Til Hazel and other developers who wanted a tax increase for transportation and would accept one for education. The goal was chiefly to get the Outer Beltway built as many of the “donors” owned land nearby the proposed location(s). As you will recall, this same group of developers invested heavily in the transportation referendum a couple of years later. I got that information from the Smart Growth Coalition.

          I’m sure your correct in that many rural schools, but not all, offer few electives. And Fairfax County offers too many electives in cost-inefficient ways. Even the staff realizes the schools need to use distance learning and broadband to make electives more cost effective. But people generally get the government they want. If they don’t want to offer electives beyond SOQ they don’t have to. They too could work with neighboring schools to collaborate on electives taught remotely.

          Like I tell my kids sometimes you have to live with the decisions you make.

  5. larryg Avatar

    hmmph…. I sorta see the rural GOP-dominated GA as the mule-master with NoVa being the mule that keeps on giving.

    All you got to do to win votes in RoVa is talk about all those “takers” the Dems like to subsidize… taking money from rural folks…

    don’t laugh. It works very well.

    1. You’re right about that. When the federal government uses tax dollars to provide a very small stipend to unemployed single mothers the Republican Boss Hogg politicians from the rural horseshoe scream “welfare queens”. When the state government takes money from the urban crescent (without a moment’s thought about relative costs of living) and gives it to the rural horsehoe so that real estate taxes can be kept unsustainably low in Hooterville all is fine.

    2. TooManyTaxes Avatar

      I actually admire the rural legislators. They’ve learned to train the NoVA delegates and senators to screw their constituents year after year. When push comes to shove most NoVA reps, especially the Ds, will vote for statewide tax increase that provides little benefit to their constituents just because its a tax increase. There aren’t many Democrats like Petersen who can resist the siren call for more taxes.

  6. larryg Avatar

    Red rural DOES love their Blue subsidies, eh?

    1. TooManyTaxes Avatar

      So long as the dippy NoVA Ds are willing to send more money to Richmond in exchange for pennies, why not play us as fools? OMG, they put huge pressure on Petersen and Shannon for not supporting the Democratic Governor’s tax increase when all they were doing was trying to get the new school money on a per student basis.

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