NORFOLK, Va. — As we reach the end of 2021, Old Dominion University published a report predicting what’s next for Hampton Roads and Virginia.
The university's Dragas Center for Economic Analysis and Policy put together the seventh annual State of the Commonwealth report.
The report says: “To say Virginia’s economy faced turbulence over the last two years would be an understatement.”
ODU economics professor and head of the Dragas Center, Bob McNab said the COVID-19 pandemic will have a lasting impact.
“We will see the effects of the pandemic for years to come," McNab said.
He said 2021 marked a year of recovery, but it wasn’t without its challenges.
"The purpose of the State of the Commonwealth report is to provide an objective view of economic conditions in Virginia and spark a discussion of how to move Virginia forward," McNab said. "We hear a lot of rhetoric without a lot of data. We want to bring data to the conversation."
Among the challenges in 2021: a decline in the labor force.
The reason why businesses have been having trouble finding workers is nuanced, according to McNab.
“We do know one thing: People who have left the labor force do not qualify for unemployment insurance, and blaming expanded unemployment benefits (which ended in early September) for the decline in the labor force is misleading," the report says.
“The labor force in Hampton Roads is actually smaller today than it was in the depths of the economic shock in 2020," McNab explained. “It boils down to three things. First, some people are staying out of the labor force because of COVID fears; Second, women especially are unable to join the labor force because of childcare scarcity; and third, we’ve seen an acceleration in Baby Boom retirements.”
McNab said unemployment is a "good news and troubling new story" because the unemployment rate "understates the extent to which people left the labor force."
It's caused a shift in the way people approach job opportunities.
"This means that employers are having to compete for a smaller pool of labor, and workers are exercising that power by saying, 'You either pay me more or I'll go to someone else who will.'"
He said the Hampton Roads economy is growing slower than Virginia as a whole because "we're just not creating enough private-sector jobs."
McNab said Virginia is still recovering from the pandemic. He said the state has the tools to combat it – things like COVID testing, vaccines, and antiviral treatments – but there was still uncertainty surrounding the future.
“If there’s one thing we’ve discovered in the last year, is that public health and economic resiliency are two sides of the same coin. We've discovered our world is really interconnected," McNab said. "A virus emerging in China can shock supply chains around the world, and lead to empty shelves in the United States, and inflation globally. But we’ve also discovered that we’re a little more resilient than we thought and that we’re all in this together."
McNab said he advises Hampton Roads to have good expectations for 2022, but to still be prepared for uncertainty, as the pandemic took a toll not only on the economy but people's mental health.
"When we talk about the shocks of the pandemic we see some of them visibly: that is people losing their jobs, people having difficulty putting food on the table, and inflation. But the toll of the pandemic is going to be with us for a long time," McNab said.
The report also goes into more details about Virginia’s future in casino gaming, higher education, tourism, job creation, and real estate.