How quickly will Virginia’s employment bounce back from the mother of all recessions? That will depend upon the extent to which employment is “structural,” in the sense that there is little demand for the skills that unemployed workers have, as opposed to the skills required for new and emerging jobs.
The skills mismatch is particularly acute for industries less likely to recover quickly, such as manufacturing, construction and finance. Further, the mismatch is aggravated by low housing prices, which inhibit people from selling their houses, possibly at a loss, and moving to other parts of the country where job prospects are better.
That’s the thinking of the International Monetary Fund, in its annual “Selected Issues” paper on the United States. The IMF publishes a map showing the increase in the Skill Mismatch Index since the onset of the recession for the 50 states. Virginia is in the second quartile (the 1st quartile being the best), suggesting that Virginians’ skill mismatch is less severe than the national average. That consideration, combined with the “best state” business climate and the ongoing expansion of federal employment, bodes well for the economy in the near-term. (Go out 15 years, when Boomergeddon strikes, and it’s a different story.)
If Gov. Bob McDonnell is looking for an innovative way to boost employment in Virginia, he should encourage his economic development brain trust to address this issue. One good place to start would be to consult with Chmura Economics & Analytics, a Richmond-based economic consulting firm that has developed proprietary software and databases for that very purpose. (My apologies if those consultations are taking place.) This map, taken from Chmura’s “Underemployment in the United States” ranking, shows where highly skilled workers are in most excess supply, broken down by metropolitan statistical area.
