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Fairfax County leaders are warning that sweeping federal job, contract and real estate cuts could inflict widespread damage on Northern Virginia’s economy, even as incomplete data leaves the full scale of the disruption unclear.

Mass layoffs, canceled contracts and potential property sales are accelerating the region’s longtime effort to reduce its dependence on federal employment and spending. Northern Virginia Chamber of Commerce President and CEO Julie Coons told the Fairfax County Board of Supervisors that leaders cannot afford to wait for clearer numbers before acting.

“We cannot afford to take a wait-and-see approach,” Coons said during a 90-minute economic initiatives committee meeting on Tuesday.

Supervisors described the discussion as the first of many as officials struggle to track the Trump administration’s downsizing campaign.

The federal government eliminated 10,000 jobs nationwide in February, according to the Bureau of Labor Statistics’ latest employment report. But many changes may not appear in official data until the fall.

One layoff-tracking firm recorded 62,242 federal government cuts in February, more than in any other sector. Overall job-cut announcements reached their highest level since the COVID-related shutdowns of July 2020.

Northern Virginia is home to approximately 175,000 federal workers, including about 79,000 Fairfax County residents. Thousands of private contractors also depend on federal spending. Because unemployment statistics can lag by weeks or months, local officials are relying heavily on anecdotal reports to understand who has already been affected.

“The data has just not shown up yet,” Northern Virginia Regional Commission senior demographer Jill Kaneff said, adding that it could take another month or two to see what is happening.

Stephen Tarditi, the Fairfax County Economic Development Authority’s director of market intelligence, said the effects will take time to unravel.

Contracts and office space shrink

The uncertainty extends beyond federal employment. Officials still do not know how grants and other federal funding will be affected.

The federal government leases about 4.3 million square feet of Fairfax County office space, representing roughly 3% of the county’s total. It also occupies additional warehouse and support space.

As of Feb. 27, the government had canceled more than 4,000 contracts nationwide, including 106 in Northern Virginia involving 82 contractors, according to data presented by the economic development authority. Fairfax County cancellations originated from 18 agencies, with the departments of the Interior and Agriculture leading the list.

The General Services Administration had also canceled at least 725 leases and relinquished more than 9.5 million square feet of space as of March 4. Local reductions included 15,000 square feet in Lorton and 4,500 square feet in Herndon.

Board Chairman Jeff McKay said the fallout will spread to retail businesses, restaurants and other parts of the economy that rely on discretionary spending. It could also affect Fairfax County’s proposed $5.7 billion budget.

“The total economic impact … is almost impossible to measure,” McKay said. “We’re going to have to be creative and move people to other jobs, if they are there, as soon as possible.”

He predicted Northern Virginia could soon have far more residents cutting their spending because their incomes have disappeared.

At the March 11 meeting, McKay renewed calls for Virginia Gov. Glenn Youngkin to respond more aggressively. Democratic supervisors previously urged the governor to oppose the job cuts and possible relocations of federal agencies.

Youngkin, who has supported the downsizing effort, launched a statewide employment portal in February. The Virginia Employment Commission has also assembled resources for displaced federal workers.

Fairfax County’s own federal-worker resource hub has become one of the five most-visited pages on the county website, behind only the homepage, library and search pages, Office of Public Affairs Director Tony Castrilli said.

McKay warned that Northern Virginia’s economic health has consequences throughout the commonwealth because taxes paid by Fairfax County residents help support rural communities.

“If Northern Virginia’s economy is struggling, the state is doomed,” he said.

Northern Virginia Regional Commission Executive Director Bob Lazaro agreed that the cuts must be treated as a statewide concern.

Workers may leave the region

Officials are also worried that displaced workers will move to less expensive parts of the country, creating additional consequences for the regional housing market and economy.

“People are literally under siege,” McKay said. “My fear is a lot of people … are going to decide they’ve got to move to a more affordable market. We’ve got to be real about that.”

Victor Hoskins, president and CEO of the Fairfax County Economic Development Authority, said online job postings in the region have dropped 50% from a year ago, a sharper decline than reported nationally.

However, he said private employers could benefit from the skills and experience of people leaving federal service.

“There is a lot of talent that is coming out of the federal government,” Hoskins said.

Coons similarly pointed to Northern Virginia’s underlying strengths and said creative, collaborative action could protect its long-term prosperity.

Hunter Mill District Supervisor Walter Alcorn said local officials have little control over federal decisions but must use the tools available to them.

“We can adapt and have to adapt,” Alcorn said. “We really have no choice.”

Supervisors consider expanded unemployment aid

Fairfax supervisors could ask Youngkin to use state money to increase unemployment payments for federal workers and others displaced by the downsizing.

Youngkin said in February that Virginia’s general fund revenue remained on course for a $2.1 billion surplus over the budget adopted the previous May. The General Assembly approved budget amendments before adjourning Feb. 22. The governor faced a March 24 deadline to approve or veto them before the existing spending plan would remain in effect.

Braddock District Supervisor James Walkinshaw, chairman of the board’s legislative committee, said he could not think of a better use for the surplus. He planned to ask supervisors to approve a letter to Youngkin at their March 18 meeting.

Additional benefits could “keep people afloat, keep people spending money,” Walkinshaw said.

Unemployed Virginians currently qualify for payments of $60 to $378 per week for as many as 26 weeks.

Walkinshaw drew inspiration from the Federal Pandemic Unemployment Compensation program, which supplemented state benefits by $600 per week before reducing the amount to $300. Assistance was available for up to 39 weeks.

Coons cautioned that, unlike during the pandemic, federal money is unlikely to support local and state safety-net programs this time.

Board Democrats have already sent Youngkin two letters this year asking him to advocate for the region with President Donald Trump. Expanding unemployment benefits would also require support from the General Assembly, which was scheduled to return to Richmond on April 2 to conclude its 2025 session.