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Posted on: July 19, 2022

State of the Region: COVID19 Economic Recovery in Northern Virginia

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The Northern Virginia Regional Commission has issued a report on the state of the regional economy as the region, Commonwealth and country recover from the COVID19 pandemic.

Findings indicate that the Northern Virginia labor force significantly declined following the onset of the COVID-19 pandemic in March 2020 and to-date remains significantly below pre-pandemic levels. The Northern Virginia labor force was at its lowest in January 2021, representing a loss of 85,000 individuals compared to February 2020. It remains down by 45,200 as of May 2022, reflecting nearly double the population of the Town of Herndon. 

As society eases back to normalcy, people have been returning to the labor force, but – despite many people returning to the labor force and new entrants to the Northern Virginia labor force – there are currently not enough workers to meet the labor force demands across various industries in the region. 

The economic effect of the COVID-19 pandemic and the economic recovery has been uneven across industries and demographic groups in Northern Virginia. Three of 17 industries – accommodations, education services, and other services – have yet to reach employment levels at or above pre-pandemic levels at any point since the pandemic began. The food industry has had the next slowest recovery, not reaching pre-pandemic levels until April 2022. 

Looking more closely at these affected industries, key observations are:

  • The accommodations industry has had the slowest recovery, with May 2022 employment down 29% from February 2020. 
  • Food services gradually improved over time, finally reaching pre-pandemic levels in April 2022. Food services that cater to a large business-centric population have been the most negatively affected businesses in this industry. (Business-centric retail is similarly experiencing a negative effect.)
  • “Other services” employment, as of May 2022, is down by 6% from February 2020.
  • Education services employment, as of May 2022, is down by 7% from February 2020. 
  • The education industry has been particularly impacted by a worker shortage due to the childcare occupation being vulnerable to low wages, face-to-face contact, as well as a majority women workforce. 
  • The education industry also has had large turnover due to teacher burnout and pandemic safety concerns. 

    Industry impacts have also been unevenly distributed across demographic groups. Low-wage earners and women workers in Northern Virginia were negatively and disproportionately impacted by the pandemic – much more so than other demographic groups – which mirrors national pandemic impacts as found in many studies. Workers ages 24 years and under were the hardest hit at the beginning and peak of the pandemic, followed by the 65 and over age group. These two age groups have had the fastest rate of recovery in Northern Virginia, with under age 24 years recovering 89% of lost employment and the 65 and over recovering to levels beyond pre-pandemic employment levels. 

Recommendations

The following recommendations are offered to leaders across the business, government, and non-profit sectors to assist the region in overcoming the labor shortage and evolve in post-pandemic times.

  • Promote non-traditional career paths and educational opportunities for low-income residents and women to ensure a less vulnerable career path from long-term pandemic impact and to align with the changing labor market demands.
  • Embrace those who are not in the labor force who want to work by diversifying the hiring pool for underrepresented, economically vulnerable groups such as long-term unemployed, veterans, women, and older workers.
  • Provide additional childcare and affordable housing programs to reduce the cost burden for low-wage workers who want to work and live in the region.
  • Promote efforts like the Northern Virginia Economic Development Alliance and GO Virginia to incentivize collaboration between business, education, and government to meet the needs of today’s workers and overcome the shortage of workers. 
  • Expand public-private partnerships to promote lower-skilled jobs that underemployed businesses are seeking to fill. Consider a program to target high school students and college students.
  • Expand public-private partnerships to promote higher skilled jobs that underemployed businesses are seeking to fill.
  • Form more public-private partnerships to invest in training for economically vulnerable groups.
  • Embrace those who are not in the labor force who want to work by establishing business recruitment programs that incentivize upskilling.
  • Perform a comprehensive review of immigration policies to address the regional and national needs for industries that typically have a large share of immigrant workers and are now experiencing a labor shortage. This would prevent future labor declines in these industries.
  • Establish conditions in the workplace that will induce those who have left the labor force to return. Consideration should be given by employers to increase wages, increase benefits (e.g., sick leave and health insurance), and implement flexible work schedules for work-life balance to have an edge in attracting and retaining talent in this competitive, tight labor market.
  • Examine the impact of the pandemic and lessons lear­ned from it to build resilience in preparation for the next economic recession.

The report can be downloaded here: https://www.novaregiondashboard.com/covid19-economic

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