When four top state legislators appeared in Roanoke at a Cardinal-sponsored event recently, some of the questions from the audience turned to what impact President Donald Trump’s government job-cutting would have on the state.
Senate Majority Leader Scott Surovell, D-Fairfax County, who comes from a ZIP code where 1 in 5 people work for the federal government, said his constituents were “terrified.” Surovell noted that Northern Virginia accounts for 42% of the state’s general fund revenue. “I’m very concerned about what this will do for the Northern Virginia economy, which does fund your schools.”
Senate Minority Whip Bill Stanley, R-Franklin County, sought to reassure Surovell, and the audience, that everything will work out. He recounted the economic decline of Southwest and Southside Virginia as an example: “When government told us we’re no longer going to let you grow tobacco in the fields, that coal is bad, that manufacturing should go overseas so we can get cheaper sneakers, that textiles should not be made where they’re made — we watched, from a decision of the government, our economy disintegrate over decades. I’d like to reassure my Northern Virginia friends, you’re going to be fine. OK? This happens.” The big employers in Northern Virginia might change, he said, “but the economy is going to be fine” because people are resilient. Northern Virginia will overcome this economic transition “in much the same way that Southside and Southwest are overcoming.”
That prompted a response from one audience member, former Franklin County School Board member Penny Blue. She said the economic changes in Southwest and Southside brought about “many years of depressed economy that should not have happened.”
That impromptu three-way exchange highlights some of the questions now looming over Virginia in general, and Northern Virginia in particular. The immediate one is: What will the government cuts mean for the Northern Virginia economy, which, as Surovell pointed out, does indirectly subsidize school systems across the state? The longer-term questions involve how long will it take Northern Virginia to recover from any economic downturn — and do we have any examples of a metro area that size that has had to undergo a dramatic economic makeover?
To try to answer those questions, I turned to Terry Clower, a public policy professor at George Mason University and director of the Center for Regional Analysis, which studies the D.C.-area economy.
The first question is the easiest for him to answer. Given the size and speed of Trump’s government cuts, “I fully expect there to be a recession in the region,” Clower says. “The depth and length of it depend on how far they go and how quickly we adapt.”
Of course, there are now signs that we might also see a national recession, including Trump’s warning that “there is a period of transition” ahead. That raises the question of whether Trump expected this all along and just didn’t tell voters, or whether international reaction to his tariffs has caught him by surprise. That’s a separate question, though. Our focus today is simply the Washington metro, specifically the Northern Virginia portion on which the rest of Virginia depends economically.
This is where Clower has multiple messages: There’s nothing really comparable to what we’re seeing play out now in the Washington metro, but there’s also some opportunity here, for both Northern Virginia and communities downstate — after we get past the initial pain.
We have seen lots of smaller communities lose a major employer entirely: Southwest and Southside are far too familiar with this, as both Stanley and Blue noted. Danville and Martinsville saw their economies collapse in about 2000 with the demise of textiles and other industries.
In some ways, they’ve never recovered. Danville’s civilian labor force peaked in May 1995 at 28,251. In December 1999, it was 24,723 when the bottom fell out. Within a month it was 21,249, and then went lower. The real low came in 2022 when employment was 18,354. At the end of 2024, the Danville area’s employment was up to 19,172, still far below what it once was. Of course, in the interim, Danville has lost a lot of population, too. The most recent census estimates show Danville gaining population again, for the first time since 1990. It’s basically taken a quarter-century for Danville to remake its economy. Today Danville is regarded as a success story for how to deal with economic transition, but you can also see how long it’s taken to get there. Roanoke never saw a dramatic collapse the way Danville did, but it, too, went through a long transition after Norfolk Southern began pulling people out in the 1980s and 1990s. Cardinal’s technology writer, Tad Dickens, has written a four-part series about Roanoke’s evolution “from train town to brain town,” a reference to the brain research taking place at the Fralin Biomedical Research Institute at VTC, but the point is that was a decades-long process, as well. Virginia’s coal-producing counties are still struggling with the shrinkage of their main industry.
All those are smaller communities than Northern Virginia and economically less important to the state treasury. Virginia obviously could afford to wait all those places out. We can’t really wait decades, though, for Northern Virginia to invent a new economy to replace dependence on the federal government. Maybe all these cuts are temporary and whoever occupies the White House after Trump will busy himself or herself with reconstituting a federal government of the same size it was before Trump. That’s not something we should count on, though, so it’s best to deal with the economic consequences of Trump’s government downsizing, both short-term and long-term.
Besides the job cuts, Clower worries about Trump’s goal to relocate up to 30% of the federal workforce out of the Washington area. “If you hollow out D.C. and make it a ghost town, Northern Virginia is going to suffer,” Clower says. Trump has indicated he’d like to clear out and sell off a lot of federal buildings in Washington. That could be an opportunity for the District, but not for its neighbors, Clower says. “If you dispose of federal assets in a certain way, the District would have the ability, if they didn’t trip over their feet, to encourage massive new development downtown but that would not be real great for Arlington, Alexandria and Fairfax to recover their commercial base.”
We have seen other major cities lose major employers — Detroit’s long slide as an auto-making capital comes to mind, or Pittsburgh’s demise as a steel center. Washington is different, though, Clower says, because of the nature of its workforce — highly educated white-collar workers who have more economic opportunities than blue-collar auto workers or steelworkers. That’s both good and bad for Northern Virginia, Clower says, but potentially good for the rest of the state.
The downside is those workers may not be able to find other jobs in the Washington area, or even in Virginia. Gov. Glenn Youngkin has touted how many jobs are available in Virginia, but Clower says his research shows there’s only about a 30% overlap with the qualifications of most federal workers.
The upside, he says, is that Northern Virginia could be well-placed to develop new jobs. “If we look at the industries likely to dominate high-value growth into the mid-21st century, we’re talking AI and quantum computing. We should be pretty well-placed for both.” (He does worry that growing opposition to data centers “could crater our ability” to keep and attract those facilities, but that’s a local and state government issue, not a federal one.)
To develop a new economy, one that’s less dependent on the federal government, Clower says that Northern Virginia governments are going to have to change their way of thinking about economic development. “The biggest thing that has to change is about attitudes and perception about how you do economic development. For the better part of 40 years, people have come here to do business with the federal government.” In other words, those companies had to be in the Washington area. No other would do.
If Northern Virginia reinvents itself as a technology center unrelated to whatever remains of the federal government, it’s going to have to learn to compete with other tech capitals, he says. He cites this example: “If a company went to Danville or Martinsville” and expressed interest in locating there, “the red carpet would be rolled out,” he says. “The question local governments would ask would be, ‘How can we help you?’ If you came here, the response would be, ‘Here are the proffers you need to give us.’”
That attitude, he says, will need to change. “We have the core capability of competing more effectively … but we have to go about it differently.” The challenge, he says, is “we’ve never had to do this before.”
He thinks there might be an analogy with Pittsburgh after the steel industry shrank. The city had to bring in outside experts to advise it on how to go about building a new economy, Clower says. “All their local folks couldn’t get themselves out of the mindset of the steel industry and I wonder if that’s what we have to do here.”
For the long term, “I would not use the word ‘worry,’ but I would say be concerned.”
And if Virginia’s biggest economy is advised to be concerned, its smaller ones should be, too.
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