County Can Weather Layoffs, Experts Say
Thursday, August 10, 2006
AOL could lay off as many as 900 employees in Loudoun County over the next six months, according to a company official, but economic analysts and Loudoun government officials said they did not think the layoffs would have a noticeable effect on the county.
The company is the county's largest private employer, with a workforce of more than 5,000, said Tricia Simons, a research analyst with the county's economic development department. Almost all of those employees work at the AOL campus off Waxpool Road in Ashburn, where the company has added six buildings over the past 10 years.
At a company meeting last Thursday, AOL chief executive Jonathan Miller told employees that 5,000 of the company's 19,000 positions worldwide would be eliminated, and another executive said several hundred jobs in Northern Virginia would be affected.
The AOL official, who did not want to be identified because an announcement had not been made about layoffs in Loudoun, said this week that as many as 900 positions could be eliminated in Ashburn. But the official emphasized that it was too early for a more precise estimate and that the total could be about 400. Laid-off employees will receive job-transition assistance and severance packages, the official said.
Analysts said that most of the AOL workers in Loudoun who are laid off will be absorbed into a regional economy that remains strong and that they will not move out of the area.
"Certainly we feel bad for anyone who loses their job, but the good news is this is probably one of the best places to find work in America," said Larry Rosenstrauch, head of the county's economic development department.
Rosenstrauch said AOL's downsizing might not even affect Northern Virginia's unemployment rate, which has hovered around 2 percent. He also said he did not expect it to have much of an effect on property tax assessments in Loudoun, which have been projected to grow at a much slower rate next year because of the cooling housing market.
Stephen S. Fuller, director of the George Mason School of Public Policy's Center for Regional Analysis, said more than half of AOL's employees in Loudoun are probably commuting from outside the county, with most from Fairfax County. Many of the Loudoun workers who are laid off may seek jobs with federal contractors or competing technology companies in the Washington area, he said.
"It may be a matter of going to work for a competing shop down the road. They'll just shift hats," Fuller said.
Younger employees may decide to leave the area, but those departures would be offset quickly by the steady stream of people moving in, he said. He noted that Northern Virginia has more than 1.5 million employees and a $121 billion economy and that it added 40,000 jobs between June 2005 and June 2006.
AOL has concentrated on subscription-based Internet dial-up services since the 1990s but has struggled recently to compete with companies that offer broadband.
To regain customers, the company is restructuring operations to focus on Internet advertising instead of subscriptions, meaning that job cuts will be in such areas as marketing and subscription services. Many of the layoffs are expected to come from AOL's business operations in Europe, but the company's Loudoun employees work in divisions that include marketing and customer service and will be affected as well.