Narrative: II. a. 1. A.

The Virginia Economy in 2019

Table 1 provides a snapshot of the most recent economic data for Virginia, the change over the last five years, and how Virginia compares to the nation. The Commonwealth’s overall story is one of steady growth and a demographically diverse workforce. Between 2014 and 2019, the most recent data available, the Virginia population for the young professional eligible population aged 20 to 34 years had a 0.6 percent increase. There was a slight decrease in the number of adults of mid working age, with 68.7 percent of the population falling into the prime working years aged between 20 and 74. This portion of the population is most likely to be educated, with work experience, and have an established career. Using those metrics as a basis, Virginia can expect to hold the economy steady in the near future. Another thing to consider is that the younger cohort (20 to 34 years old) and the older cohort (55 to 74 years old) are close in size, meaning that as individuals age out of the workforce, there are individuals ready to enter into their positions.

One matter that may prove problematic for Virginia’s age group of 35 to 54 years cohort is that they are the most likely to enter into positions vacated by the aging population of 55 to 74 years old. In this case, the 35 to 54 years cohort is significantly larger than those aged 55 to 74 years. As the older population group retires, the positions that open up will not be in large enough supply for the younger workers to move into, thus setting the stage for underemployment and discouragement among the workforce in that age group.

Table 1: Virginia at a Glance

Economic Analysis

Existing Demand Industry Sectors and Occupations, Statewide[1]

The current industrial landscape in Virginia is largely centered around health care, retail, accommodation and food services, and professional services; while the agricultural, mining, real estate, arts, and utilities industries are exerting the least influence on the state economy. While the COVID-19 pandemic did have an adverse impact on employment in the retail and accommodation and food services industries, it’s likely both industries will continue to contribute a sizeable portion of the state’s employment. Table 2 reports the number of establishments, average employment, total wages, and average annual salary for each industry sector (2-digit NAICS level) as reported by the Quarterly Census of Employment and Wages (QCEW) program. Also reported are the employment and total wages location quotients (LQ).[2]

Table 2: Economic Breakdown of Industry Sectors, Second Quarter 2021

Source: Virginia Employment Commission, Quarterly Census of Employment and Wages

Totals may not sum due to rounding.

*Growth based on 2016-2026 Long-term Occupational Projections, Virginia Employment Commission

**Long-Term Industry Projections not available for Public Administration NAICS.

These location quotients show that the industrial share of Virginia’s economy largely mirrors that of the nation, with a quotient of one indicating that the industry’s share of Virginia’s employment or total wages is equal to the industry’s national share.

One noteworthy finding is the low statistic for the Mining and Agriculture industries. Current political discourse suggests that these are two declining industries, particularly in employment. With mining in particular, however, Virginia has traditionally been thought of as having a large stake in the industry as the Appalachian region, often viewed as the hub of mining activity, runs through the western portion of the Commonwealth. However, only the Southwest Local Workforce Development Area has a substantial mining presence.

Conversely, Professional, Scientific, and Technical Services have an employment LQ of 1.71, and a total wages LQ of 1.81. As was the case with the mining industry, professional services are disproportionately concentrated in the Commonwealth, largely in the Northern and Alexandria/Arlington workforce areas. Unlike Mining in Southwest Virginia, the Professional Scientific and Technical Services industry in Northern Virginia are large contributors to the statewide economy. The industry accounts for more than 15 percent of all Virginia establishments, over 11 percent of employment, and slightly over 20 percent of total wages. The high wages and employment suggest that not only is the industry in high demand from the point of view of business, but also will be sought after by the workforce.

Figures A, B, and C further highlight the current relative importance of the health care, accommodation, professional services, retail, and education industries, and the 20-year progression illustrated by the three figures shows how the landscape of Virginia’s economy has evolved. The Manufacturing industry, for example, declined significantly between 2000 and 2010, going from 10.7 percent of statewide employment and 11.0 percent of total wages in 2000 to 6.7 and 7.1 percent, respectively.

[1] For an ongoing examination of the Virginia economy, see publications from the Virginia Employment Commission’s Economic Information & Analytics Division, such as the Economic Indicators. All publications can be found at https://virginiaworks.com/publications

[2] Location Quotients reported utilize the nation as the base comparison. For a more complete understanding of this metric, please see the Bureau of Labor Statistics at https://data.bls.gov/cew/doc/info/location_quotients.htm

Over these same two decades, Professional, Scientific, and Technical Services has been increasing. Currently, Professional Services accounts for slightly over 20 percent of Virginia’s total wages, a 6.3 percentage point increase from 2000. When considering industrial shares of Virginia’s economy, it can appear that total wages is generally increasing across the majority of industries and geographies across Virginia. However, as will be discussed further, to assess decline and expansion of specific industries it is important to consider industry change in relation to other industries, as well as within the greater context of the overall state economy.

Table 3 displays the most recent Occupation and Employment Statistics (OES) program data. Office and Administrative Support positions rank first in terms of employment levels, which underscores the narrative of moving from goods-producing work such as manufacturing, to more white-collar positions in industries such as Professional Services and Health Care. Office and Administrative Support positions are concentrated in the Professional, Education, and Retail industries.

Table 3: Major Occupations by Employment, May 2020

 Source: Virginia Employment Commission, Occupational Employment and Wage Statistics program

Totals may not sum due to rounding.

*Growth based on 2018-2028 Long-term Occupational Projections, Virginia Employment Commission

**Data based on Industry Occupation Wage Matrix, Virginia Employment Commission. 4-Digit Industry NAICS

Existing Demand Industry Sectors and Occupations, Local Workforce Development Areas[3]

The occupational and industrial landscape across the local workforce development areas (LWDA) of the Commonwealth is similar to that of the wider state. This is understandably most evident in the more populous regions of the state, such as in Northern Virginia, the Capital Region, and Hampton Roads. Tables 5 and 6 detail these similarities to the state and to other regions. Before looking into specific details, Table 4 provides the most recent QCEW figures for each LWDA. One of the more striking issues is the wage disparity across the Commonwealth. For instance, the average wage in Alexandria/Arlington is more than double that of five other regions.

Table 4: Snapshot of State and Local Economies, Second Quarter 2021

Source: Virginia Employment Commission, Quarterly Census of Employers and Wages Program

Table 5: Top 5 Major Occupations by Employment for each Local Workforce Development Area, May 2020

Source: Virginia Employment Commission, Occupational Employment and Wage Rates Program

*Growth based on 2018-2028 Long-term Occupational Projections, Virginia Employment Commission 

Please note, since the 2020 Combined State Plan, Virginia has reduced its local workforce areas from 15 to 14 by merging Hampton Roads and Greater Peninsula. This merger took effect July 1, 2021.

Looking first at the top five occupations of each region in Table 5, Office and Administrative Support positions are either the largest or second largest occupation in each area. The rest of the top five are largely the same, with only the ranking changing. One difference that does stand out is the prominence of Computer and Mathematical positions in Northern Virginia and the Alexandria/Arlington workforce regions. Looking at the two regions combined,[2] the occupation group is expected to add the most jobs to the northern area over the next 10 years at over 32,000 jobs.

Table 6 displays the largest industry in each workforce area according to each QCEW metric. This table illustrates the strength of the Northern Virginia LWDA. Looking at average employment and total wages, Professional, Scientific, and Technical Services is the top industry in both Northern Virginia and Alexandria/Arlington. While this industry is no longer the largest in the Commonwealth as a whole, it is only slightly smaller than the Health Care industry, showing the large impact that the Northern areas of Virginia have on the state economy.

[1] For a complete, ongoing analysis of each LWDA economy, see the Local Workforce Development Area Industry Bulletin produced by the Virginia Employment Commission’s Economic Information & Analytics Division. All versions can be found at https://www.virginiaworks.com/publications

[2] Due to the close proximity and the commonality of individuals living in one area and working in another intertwining the two economies, it is common practice to combine the Northern Virginia and Alexandria/Arlington local workforce development areas.

Table 6: Largest Industry in Local Workforce Development Area

Source: Virginia Employment Commission, Quarterly Census of Employment and Wages

Table 7 further illustrates the disparity of size across the workforce regions. Nearly half of the establishments, employment, and wages are concentrated in three areas of the state, while LWDAs such as Southwest, Blue Ridge, and Crater exert less influence. The problem that stems from this disparity is that policies meant to strengthen the top grossing and employing industries of the state, such as Professional, Scientific, and Technical Services, may do little to benefit the once dominant industries of other regions, such as manufacturing and mining. Indeed, what we are seeing is that those areas are now becoming increasingly reliant on the health care industry.

Table 7: Regional Shares of Statewide Economy, Second Quarter 2021

Source: Virginia Employment Commission, Quarterly Census of Employers and Wages Program

Emerging Demand Industry Sectors and Occupations, Statewide

Table 8 ranks the top 20 minor group occupations according to projected employment growth. A quarter of the top growing occupations are specific to the Health Care and Social Assistance industry. The previous section illustrated the growing prominence of the industry, which began around the time of the Affordable Care Act. Other occupations, such as Food and Beverage Serving Workers and Information and Record Clerks, are strongly represented in the other top industries of the state.

Table 8: Top 20 Growing Minor Group Occupations by Employment Growth

Table 9 provides a ranking of the declining occupations in the Commonwealth. While the number of declining occupations increased compared to the 2016-2026 Long-Term Occupational Projections, many of the occupations have a high likelihood of being replaced or at least augmented by increases in automation technologies.

Table 9: Declining Minor Group Occupations by Employment Growth

Source: Virginia Employment Commission, Long-Term Occupational Projections 

Table 10 turns the focus to industries. As with the occupations outlined above, Health Care, Professional Services, and Accommodation and Food services are once again well represented among the fastest-growing industries. Some other emerging industries of note are Specialty Trade Contractors, Heavy and Civil Engineering Construction, and Truck Transportation. Table 11 illustrates the top declining industries, with manufacturing being the most vulnerable.

What is particularly troubling is that the Manufacturing industry, which accounts for roughly 235,000 workers, is not represented in either the occupations or industries that are emerging in the Commonwealth. With service-providing industries such as Health Care and Education providing jobs and growing wages in the most populous areas of the state, there is nothing wrong with feeding their growth. However, if the Manufacturing industry and associated occupations continue to decline, focus will need to shift to addressing the potential for an increasing skills gap across the Commonwealth, an issue that will be returned to in the later portion of this analysis.

Table 10: Top 20 Growing Industries (3 Digit NAICS) by Forecasted Employment Growth

Source: Virginia Employment Commission, Long-Term Industry Projections 

Table 11: Top 20 Declining Industries (3 Digit NAICS) by Forecasted Employment Loss

Source: Virginia Employment Commission, Long-Term Industry Projections

Emerging Demand Industry Sectors and Occupations, Local Workforce Development Areas

The fastest-growing occupations and industries are similar across workforce areas, all of which loosely resemble the state as a whole. Table 12 illustrates the top-growing occupations for each LWDA, while Table 13 addresses the emerging industries. Interestingly, unlike the highest regional industries outlined earlier, in the case of emerging demand the Northern Virginia LWDA looks very similar to the other areas rather than being a dominant outlier.

Table 12: Top 5 Growing Minor Group Occupations by Employment Growth

Source: Virginia Employment Commission, Long-Term Occupational Projections 

Table 13: Top 5 Growing Industries (3 Digit NAICS) by Forecasted Employment Growth

Source: Virginia Employment Commission, Long-Term Industry Projections

Employment Needs of Businesses and Potential Skills Gaps

Table 14 outlines the top occupations, skill requirements, and certification/license requirements for each major industry. As the data is pulled from online job orders via the Virginia Workforce Connection, it represents the self-identified needs of employers. The industries explored are the 2-digit super sectors, thus representing a wide array of more detailed industries and occupations. The primary requirements are customer service, problem solving, and similar skills that apply to a myriad of positions. The same is true for the certifications, with CPR; Commercial Driver’s License; and Basic Life Support occurring across multiple industries. Other in-demand certifications include Certified Public Accountant and Information Systems Security Professional Certification.

Table 14: Employer Needs by 2-Digit NAICS Industry[1]

Source: Virginia Employment Commission, Statewide Economic Analysis Report Program Year 2018 (2019). Skills, certifications, and technologies based on employer self-identification in the Virginia Workforce Connection.

Table 15 builds on the needs of employers, focusing on the occupations with the most openings. Many of the skills are similar to those requested by industry, but with a heavy emphasis on computer skills and health-related skills. The same goes for the most requested certifications, with computer-specific certifications such as Cisco Associate appearing in four of the top ten occupations. What is particularly worrisome is the lack of available candidates that specify an interest in these occupations with the highest need. In fact, only Customer Service Representatives has an adequate number of candidates, with the number of candidates greater than the number of openings.

Table 15: Employer Needs for Top Occupations by Current Openings

Source: Virginia Employment Commission, Occupation Profiles. Skills, Certifications, and Technologies are self-reported by employers in the Virginia Workforce Connection.

Virginia must find a way to increase the number of candidates for employers who have the highest number of openings (as displayed in Table 15). This includes encouraging job seekers to gain certifications in computer related skills. Knowing the top skill requirements of the largest industry sectors should inform the way that Virginia educates and focuses job search and job counseling activities. There is also a potential in creating career pathways that meet the needs of both employers and job seekers.

Finally, Table 16 explores the topic of a skills gap from another point of view. As mentioned previously, many of the desirable skills sought after by employers are “soft skills” that are difficult to measure and train. These include customer service, problem solving, and time management. The table below focuses on the labor gap that exists in various forms; in each of the top five occupations according to job openings, there is less than one candidate per opening. A positive consequence of this is that it creates a potentially favorable situation to unemployed individuals looking for work. However, it also points to the equally real possibility that job seekers in Virginia are not interested in the available opportunities, or at least not as a first choice.

One particularly troubling gap shown in Table 16 is the high proportion of experienced candidates to openings requiring said experience. At 38 candidates per opening, the idea of underemployment and subsequent worker discouragement becomes more understandable. The previous recession, as well as the move to a less physically demanding service-based economy which allows for individuals to keep working later in life, can cause individuals to face hardships including a layoff later in their career or an economy that is not ready to meet them at their optimum level. Without addressing this shortcoming, it is unlikely to see underemployment decline, which in turn creates a potentially more contentious labor force that is less likely to find benefit in participating in the labor market. This possibility is further supported by the declining labor force participation addressed previously.

Table 16: Supply and Demand in Virginia, September 2021

Source: Virginia Employment Commission. Jobs are online-advertised jobs. Candidates are individuals with active resumes in the Virginia Workforce Connection.

Note: Both job and candidate information are self-reported by businesses and job seekers as of September 2021

[1] Skills and certification requirements are based on the industries as a whole, and are not specific to any occupation within that industry.

[2] Monthly Job Count for September 2021. Job openings include all online postings, after de-duplication efforts.

[3] Candidate Count is individuals with active resumes in the Virginia Workforce Connection that specify a preference for a given occupation as of September 2021.

[4] Not all positions advertised include wage information.

[5] Not all positions advertised include education requirements