In a newly released report, Virginia Gov. Terry McAuliffe (D) sets priorities for improving the commonwealth’s economy, and there is reason to think Virginia — and the Northern Virginia suburbs in particular — are in need of a turnaround.
As a whole, Virginia’s economic growth has fallen behind the rest of the country’s. Though it fared better than the rest of the country during the depths of the recession, the commonwealth’s growth has trailed the national rate the past three years. McAuliffe’s report attributes this to an over-reliance on the federal government for jobs and growth.
“The commonwealth currently has a material imbalance in its job generating machinery,” it says. “We are overly dependent on the public sector for economic prosperity.”
Things aren’t getting better, at least not yet. Virginia isn’t even expected to close the gap until 2017, and its growth rate isn’t expected to match the nation’s until 2018.
It’s hardly a revelation that the Washington-area economy is too reliant on the federal government. About 30 percent of Virginia’s economy is tied to the federal government, and the Defense Department is by far its biggest employer (Wal-Mart is second and Fairfax County Public Schools is third). Every time there is an economic recession or slowdown, there are calls to grow one private sector or another.
At the moment, it seems as though just about every Northern Virginia neighborhood looking to grow its commercial base is pointing to tech firms and start-ups as the future, including Crystal City, Rosslyn and Ballston. Among the industries outlined in the McAuliffe report are biosciences, cybersecurity, advanced manufacturing, renewable energy, tourism and, naturally, tech start-ups.
Maybe there is more reason for concern this time around. Since 2010, according to the report, the federal payroll dropped $1.16 billion, or 7.5 percent, causing consecutive monthly federal job losses in Virginia for more than a year.
Even though it looks like the loss of Virginia’s federal job might be slowing, the pace of federal contracting cuts is expected to double in the 2015 fiscal year. That would mean the loss of an additional 22,000 public and private jobs in Virginia, per the report.
No wonder owners of Northern Virginia office buildings are having such a hard time filling them.
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz