This essay is part of our December cover story, How the Last 6 Decades Transformed Northern Virginia.
It is important to understand where the regional economy is before thinking about where we will be. After decades of substantial growth that usually outperformed the national economy, the DC Metro region has been underperforming the national economy since the end of the Great Recession. We continue to add jobs in tech sectors like cybersecurity, but other regions are growing faster. Data centers remain one of best performing growth sectors, but we are seeing much higher levels of competition from other regions, while local political pressures are showing anti-growth sentiment that could cost the region future investment in this critical sector. Domestic out-migration, which is driving young professionals with families to move to places with lower housing and child care costs, is constraining job growth. We are not yet showing the political will to meaningfully address housing and other cost-of-living challenges.
With this background, we can see three scenarios.
1. Business as Usual
We do not make the policy changes needed to create the housing units needed to attract and retain young families. We persist in thinking that businesses will locate to this region no matter what proffer requirements and regulatory barriers we place on new firms. Some sectors will grow, total job levels may rise, but the region will see mediocre economic performance well into the mid-21st century.
2. Federal Tsunami
New technologies like AI (artificial intelligence) improve bureaucratic efficiency, and many retiring federal workers will simply not be replaced. Fewer federal workers results in fewer supporting contractors. On top of this, there is a drive to relocate portions of some federal agencies to other locations across the country. The region becomes economically smaller, commercial property values drop, and local governments cut services but have to increase tax rates.
3. We Get It Right
We change our perspective on economic development, land use regulations, and reshaping our urban environment to compete for workers and business attraction. Respect traditionalists but reshape local policies to compete for investment, not keep things the way they are. Remove barriers to building housing for all economic cohorts that provide affordable options across all life stages. The entrepreneurial ecosystem is deeper and more focused on product development instead of services. We have maintained our existing competitive advantage in data center development recognizing that the location of key industries of the future will require data storage infrastructure. The federal government will be proportionately smaller in this region, but we will be a more competitive, affordable, and attractive region.
There are external factors that will influence the regional economy, but it is the choices we make as a region that will dictate which of these scenarios comes to be.
Feature image, stock.adobe.com
This story originally ran in our December issue. For more stories like this, subscribe to Northern Virginia Magazine.
