It’s no surprise that the COVID-19 pandemic walloped the commonwealth of Virginia in 2020, but a new report from Old Dominion University lays out the impact in dramatic fashion.
The pandemic broke a streak of 11 straight quarters of economic growth in Virginia, and the 27% contraction in the second quarter ensures a year of negative growth in the commonwealth, Old Dominion’s sixth annual State of the Commonwealth report found.
“While there continue to be signs of recovery, we cannot gloss over the simple fact that we are witnessing an economic, social and public health shock the likes of which has not been seen in the United States since the Great Depression,” the report said.
That translated to impact on jobs: 1 in 9 Virginians was furloughed or laid off between February and April 2020, the report said. While the jobs bounced back for a while, they’re slowing again.
And, as is the case nationwide, the impact fell hardest on Black and Latino people, with unemployment and COVID-19 cases and deaths all far about the statewide average.
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The report comes from ODU’s Dragas Center for Economic Analysis and Policy, and director Robert McNab told WTOP that the commonwealth is still ahead of many other states in terms of hospitalizations and death from the virus, and with vaccines on the way, he characterized Virginia’s condition by saying, “We’re nearing the crest of the hill, but there is still an uphill climb.”
Though Virginia’s federal connections and contracts make for “a floor on economic activity,” and that revenues should continue to grow in 2021, there’s still a lot of work to do — and the pandemic has highlighted a lot of fractures in Virginia’s landscape that were already there.
“One of the problems we’re seeing is that we’re evolving into two Virginias,” McNab said. “We have Northern Virginia, Richmond and Hampton Roads, which account for more than 70% of the population of the commonwealth and 70% of economic activity in the commonwealth. And, increasingly, rural areas are feeling more and more left behind — that’s reflected in society and in politics.
“Is that sustainable? Are we sharing a common destiny anymore? We’re going to have to tackle those tough questions in the coming years.”
And though the pandemic has hit Virginia hard, another crisis has flown almost under the radar, he said: the opioid epidemic, which McNab said “has continued unabated, and shows no sign of slowing.”
So what can be done? A few things, McNab said.
For one, the gap in broadband access across Virginia would spread economic activity and opportunity around. The pandemic has shown that a lot more people can work from home than originally thought — if they have the internet connection to do it.
“Less urban areas of the commonwealth can use their lower living costs as a competitive advantage. But if they don’t have reliable broadband, if they don’t have reliable infrastructure, then they can’t market themselves; they don’t have the ability to say, ‘Look, you could live here, live cheaply; you don’t have to pay mid- to high six digits in terms of housing in Northern Virginia. … If you don’t have broadband, if you don’t have the quality of services, you can’t do that.”
Education is another key. McNab said that the effects of the pandemic, and the distance learning that resulted, have taken a hit on public schools, and that 2020 should be considered a wash: “2020 shouldn’t be used as a basis for education funding; we should use 2019 until the shocks from the pandemic essentially fade out in the coming years.”
He also said that simplifying the tax code for the benefit of businesses trying to operate across Virginia would be a big help; so would legalizing and regulating the growth and sale of marijuana, which would provide more legitimate economic activity as well as fixing a documented disparity in the criminal justice system.
Of course, a lot depends on vaccines, and getting people to take them in a time of unprecedented, unfounded skepticism.
“We could end up in the situation that we don’t end up with sufficient population taking the vaccine … and we don’t hit the acquired immunity that the epidemiologists say is necessary for us to essentially mitigate the spread of the virus,” McNab said. “So how do we combat that? Public education — we need to have public officials, corporate leaders, teachers, etc., being willing to step forward and take the vaccine.”
The long term
“This is a time to have difficult conversations,” McNab said, about food security, the state’s ability to handle a flood of unemployment insurance claims and other needs, with an eye toward the long term.
“We know that, at some point in the future, there will be another contraction in economic activity; there will be another surge of unemployment,” he said. “It may be two, five, 10 years down the road. But if we treat this as a one-off … then we’ll be facing the same difficulties in the next turn.”
That said, if Virginia learns its lessons well, the future could be bright, McNab said: “I think vaccine resistance and learning the lessons from this crisis … are part of the preparation for an economic expansion that could be the equivalent of what happened after the 1918 pandemic in the United States. In other words, you find a Roaring ’20s that, as people came out of that pandemic. You had this surge of economic growth due to improved expectations and investment.”
WTOP’s John Domen contributed to this report.