Virginia’s economy could struggle with looming recession, Congressional instability
Old Dominion University released its annual State of the Commonwealth report earlier this week.
As with the university’s State of the Region report, there are some economic warnings.
WHRO talked to Bob McNab, who heads ODU’s Dragas Center for Economic Analysis and Policy, about this year’s report.
Here are some of the key takeaways:
Virginia’s economy is still hurting from Covid-19
The state’s labor force hasn’t returned to pre-pandemic levels but waning inflation is good news for families.
“The economy of Virginia is neither as bad as people think or as good as some people argue,” McNab said.
But the analysis warns of stormclouds on the horizon.
McNab said expect an economic recession in the latter half of 2023.
Virginia needs nurses
Gov. Glenn Youngkin recently noted that Virginia hospitals are short 4,000 nurses.
And this isn’t just a Virginia problem. The number of registered nurses in America was growing every year before the pandemic. In 2021, the number fell by 3.2%.
McNab said one of the big bottlenecks is in education, where fewer nurses carrying a larger load have less time to do the clinical mentoring needed for nursing students.
Youngkin’s new budget proposal includes $45 million to address those issues.
McNab said wages and working conditions have to be addressed in order to attract and keep nurses too.
If we don’t, the gap between rural and urban health care access will widen even further.
“There are pockets of the Commonwealth where there really are no medical services,” McNab said.
Lawyers aren’t making as much as we think
The State of the Commonwealth report notes many people believe “attorney” is not only one of the most prestigious jobs out there, but also one of the best paying.
But over the last decade and a half, lawyer pay has been slashed.
Since 2005, Virginia lawyer salaries have decreased about 14%. Wages overall in the state went up by 11% in the same period.
The salary drop has been most pronounced in Hampton Roads.
McNab points to a couple of factors.
For one: there’s just too many lawyers. Law schools are turning out more and more new lawyers as the number of legal filings has actually decreased in recent years.
Besides that, McNab said the robots are coming for lawyers’ jobs.
“A lot of things that lawyers used to do that were sort of rote and processed are now being replaced by computer algorithms,” he said.
McNab said paralegals, who often run the software in law offices, are actually faring better than lawyers themselves.
Virginia’s economy is threatened by Congressional discord
Hampton Roads and Northern Virginia are both major drivers of the state’s economy. They’re also both heavily reliant on spending from the federal government.
While McNab considered the threat of potential military policy changes in the State of the Region report, the economist also pointed out a more mundane threat to our economy: politics.
Congress just approved an omnibus spending bill. That will make sure the country can keep paying its bills and workers.
But in January, Republicans will take control of the House, splitting Congress. McNab said that means gridlock.
“The concern is we'll get through the omnibus this year, but then we're facing a potential train wreck with the debt limit,” he said.
Previous fights over raising the nation’s debt limit have caused economic shudders. And the failure to pass a spending bill in 2013 led to a government shutdown that lasted more than two weeks.
Tens of thousands of government employees and contractors in Hampton Roads were furloughed, going 16 days without a paycheck.