Federal Cuts & Shutdown Squeeze DMV Economy; Virginia Jobless Up

RICHMOND, Va. — Researchers have rolled out a new economy monitor to track changes in the Washington, D.C., Maryland, and Virginia region.

The Brookings Institution, a nonprofit research organization, worked with the Metropolitan Washington Council of Governments to create a real-time view of how policy changes, federal staffing, and spending cuts impact the DMV area.

The region has experienced the highest rates of unemployment compared to the entire nation, according to Brookings. The area has cut more federal jobs since January compared to the nation as a whole.

By the end of this year, an estimated 300,000 federal workers will be laid off by the Trump administration’s plans to cut federal spending and downsize, according to Brookings.

Hundreds of people laid off by the Trump administration were recently asked to return to work due to understaffing at the General Services Administration. The government is currently in a shutdown that began Oct.1 at midnight. This shutdown leaves uncertainty for federal employees who are at risk of being laid off if the shutdown continues.

The DMV tracker provides a look at the overall economy, labor market, and workplace, innovation, real estate and housing, destination and travel, transit and crime rates, and household wellbeing.

The data shows that the personal bankruptcy rate is going up in the DMV area, venture capital investment is down, and fewer jobs have been added. Additionally, the rate of homes for sale in the DMV area is two times higher than in other metropolitan areas and the U.S. average, according to Brookings.

Virginia Unemployment

Unemployment rates in Virginia increased from 2.9% last August to 3.6% this August, according to state data. Northern Virginia and Hampton Roads have the highest rates of unemployment in the state.

Over 54,000 people are unemployed in the Northern Virginia planning region, according to August state data. The defined region does not include Spotsylvania and Fredericksburg. The Hampton Roads area unemployment number is at over 34,000.

Over 162,000 people are unemployed in the entire state based on the adjusted numbers for August.

President Donald Trump issued an executive order in February that initiated mass federal layoffs. Trump’s administration said it is to improve government efficiency, while critics say it is doing the exact opposite by weakening the workforce and economy.

Impact of High Unemployment

A factor in increased unemployment rates in the state is the loss of federal jobs and contracts, according to Levi Goren, research director at The Commonwealth Institute for Fiscal Analysis. The state has lost around 11,000 in federal jobs and 10,000 federal contracts since January. 

Goren is worried about how the increase in unemployment rates are impacting families and individuals, in addition to how it will impact Virginia’s economy.

“I’m worried that we will start to see some impact on the ability of Virginia to do things like invest in public education and transportation,” Goren said. “So there’s both the sort of direct harm for families and the possible indirect harm through reducing Virginia’s ability to provide services.”

The state is taking some initiative to help those who are unemployed by connecting them to new employment opportunities, Goren said. Resources for impacted federal workers, like career fair information, resume building and mental health support, are provided in the Virginia Has Jobs website.

Other economic policies such as the trade tariffs the Trump administration implemented have also impacted Virginia’s economy, said Richard Meagher, professor of political science at Randolph Macon College.

State policy in reaction to these federal changes is expected when the General Assembly is in session in the spring of next year, Meagher said.

These recent federal cuts have strained federal contractors and state agencies, Meagher said. Dramatic cuts and changes at the federal level pull the rug from underneath state agencies, federal contractors and businesses that rely on forecasting.

The economy could be a significant factor in the upcoming gubernatorial election.

Virginians cited the rising cost of living as a top issue, followed by women’s reproductive rights, immigration and education, according to a poll by VCU L. Douglas Wilder School of Government and Public Affairs on Sept. 9.

By Bilan Osman
VCU Capital News Service

Capital News Service is a program of Virginia Commonwealth University’s Robertson School of Communication. Students in the program provide state government coverage for a variety of media outlets in Virginia.