The next month will be a tough time for Northern Virginia as consultants and government workers alike face furloughs, layoffs, and pay cuts. The impact from millions of dollars being removed from the Fairfax economy on a monthly basis will hurt everyone from restaurant owners to dentists. After 4 years of relative calm for employment in NOVA, at the same time the US Economy faced the harshest economic conditions of the post World War II era, a certain amount of schadenfreude is to be expected.
Many Pentagon civilian employees, federal consultants, and local private businesses found little consolation this weekend from the New York Times article titled to sting, Virginia’s Feast On U.S. Funds Nears End. Interestingly, everything under that inflammatory header was actually reasonable, including a few quotes from Pentagon employees who spoke favorably of the restraint in spending, even as it may impact their own lives.
It is also important to note that an article from the city of hedge funds and risky mortgage practices, which sent the US Economy on this nearly decade long plummet, after receiving billions in infusion, would suddenly begin attacking those in charge of keeping the country safe for having “feasted” on tax dollars. Perhaps New York City should remember the world ten years ago, and what the IT industry and counter-intelligence community in Virginia has done to keep those events from happening again.
There will be many more attacks on Virginia for what is our on-going connection to federal policy. Of course much of this has to do with our geography and the inevitable need for many federal positions, like Pentagon civilians, to be located near… you know… the center of the free world. That dynamic doesn’t appear to be changing anytime soon. So the angst will continue. The cuts are likely to remain because politically it makes sense for all sides to continue to be tepid about their removal in light of electoral logic.
It won’t however be the end of the world.
Remember these cuts constitute about 5 to 10% less economic activity in Fairfax this year, possibly balanced by the return of construction (equally influential) and the emerging technology sector. This will be far from a ghost town scenario.
60.1% of residents in Fairfax hold an associate degree or higher level of educational attainment. The median household income of Fairfax is over $110,000. While the sequester cuts will have an impact, that figure will likely remain above $100,000, maintaining this area as one of the most prosperous regions of the country. Businesses will want to remain here because the consumer market, and employee talent market remains strong. Many of the technical skills held by those who will be directly affected by the sequester can relate to a broad range of industries, especially IT consultants and computer engineers.
Without focusing these assets the opportunity to match the investment prospects of this region with the talent pool may go to waste. While Fairfax has been somewhat successful attracting businesses to expand or move to the county, our area remains dependent to government consulting. The area needs a business plan for how to encourage start ups and innovative new industries to grow from the vast pool of talent.
How can we encourage business? Tax cuts like Kansas? Perhaps but then you really don’t see any benefit returned if you remove all taxes all together. Free money for companies who come to Fairfax? That didn’t work too well for DC and Living Social.
In order to be a good business atmosphere for start ups we need to lower the high upfront costs for an idea to become a product.
This month we’ll talk about StartUp Workhouse Projects around the country and the pay back returned on minimal investments.