FROM THE EDITOR: Job Cuts, Funding Freezes Trouble Virginians ...
... unknown is how significant the government workforce shakeup will be, and the impact it will have on our economy.
By Martin Davis
EDITOR-IN-CHIEF
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Three months into the Trump Administration, and there remains far more that we don’t know about how the remaking of the federal government will affect our region than we do know.
The impacts of this remaking of the federal bureaucracy have certainly been felt in Virginia’s nonprofit, health, and educational sectors, as the Advance has previously reported. But just how widespread the problem is, and how bad it may become, has proven difficult to peg down.
Putting a number to the extent of job and economic loss to this point in Virginia has proven elusive, due in part to the ongoing legal battles over many of the Trump Administration’s decisions around federal dollars and human resources.
Thanks to the Weldon Cooper Center, however, we are gaining a bit more insight into the scale of disruption that could potentially hit the commonwealth and our region.
An April 8, 2025, report by the center to the House Emergency Committee on the Impacts of Federal Workforce and Funding Reductions both clarifies the extent to which Virginia’s economy is tied to the federal government, and projects what job losses the state might feel depending upon the size of federal workforce reductions.
The commonwealth is second only to California, and then by only a few hundred people, in the number of citizens employed by the federal government. As a percentage of residents, Virginia (10% federal employees) is second only to Maryland (13% federal employees).
In real numbers, this translates to Virginians holding 321,516 federal full-time civilian jobs; 130,751 Armed Forces jobs; and 441,488 Virginians being directly dependent on federal contracting. In short, roughly 1 out of every 7 Virginians’ jobs are tied to the federal government.
How deep the job losses in the commonwealth goes depends on how large the reduction in the federal workforce the Administration levels.
A 1% reduction in force at the federal level would mean nearly 4,000 lost jobs for Virginians. A 10% reduction raises that number to nearly 40,000.
It’s not just the numbers of federal employees who could potentially lose their jobs, but the types of employees they are.
Virginia’s federal employees are clustered in fields dealing with national security. Among civilian federal employees in Virginia, three departments top the list in where they work: Navy (around 45,000), Defense (some 30,000), and the Army (roughly 20,000).
Educationally, Virginia’s federal employees are nearly twice as likely to hold a college degree as other Virginia workers, earn nearly two-times more than private sector employees, and are more likely to work in high-paying fields compared to their peers nationally.
So, it’s not simply that Virginia has more federal employees than most any other state in the union, it’s the high level of training and skills that these people have that make them so valuable.
It’s also why deep cuts could have an outsized impact on the state’s economy.
Economic Concerns
Another Weldon Cooper report from March reveals the extent to which federal contract dollars flow through the state. Of the $699 billion in contracts dispensed nationwide in 2023 — the last year for which data is available — $109 billion of that went to the commonwealth.
Almost half of those contracts are spent on professional, scientific, and technical services. This includes people such as lawyers, accountants, consulting firms, computer services, and architects, according to the center.
Because of the highly skilled people potentially affected by deep cuts, the impact to the state’s economy would be significant.
Virginia’s Gross Domestic Product (the sum of consumer spending, business investment, government spending, and net exports) is almost $600 billion, according to USAFacts.
Cooper Weldon estimates that the state could lose as much as $13.5 billion of its GDP — about 2% (a number many economists would consider “significant”) — were Virginia to realize a 10% reduction in work force on both the civilian and the military side of the federal workforce.
How Much Would the Diamond Be Affected?
There are two issues with the data that the Cooper Weldon Center has put together. The first is that most of the data sets the reports draw upon represent 2023 information. The second is that it’s difficult to know how widely the cuts would be distributed throughout the state.
There are indicators, however, that the Diamond region (Caroline, Fredericksburg, King George, Spotsylvania, and Stafford) would be disproportionately affected.
King George County has the second highest percentage of civilian workers employed by the federal government in the country — 23.7% — according to the Federal Reserve in Richmond. Stafford is sixth nationwide, with 20.1%.
Both counties are currently facing significant budget challenges. A sudden reduction in federal employees could have significant consequences for the overall economic health of both counties. They’re not alone. Spotsylvania and Fredericksburg have more than 12% of their citizens employed by the federal government, and Caroline County has between 9% and 12%.
Brain Drain
The most concerning issue for our area, however, may well prove to be brain drain.
Remember that it’s not that Virginia simply has lots of people working in the federally government, it’s that the people who do are very well educated and high skilled. Should they lose their jobs, they will find other opportunities, being it in North Carolina’s Reasearch Triangle Park, the area in and around Austin, Texas, or another burgeoning technology hub.
Moreover, foreign countries are also beginning to make a play for U.S. government employees.
Losing a significant portion of the state’s GDP to job loss will certainly have short-term consequences for the commonwealth. It’s the long-term consequences of brain drain, however, that are more concerning.
Before hitting the panic button, however, it’s important to remember that we are still talking about potential scenarios. The full-scale impact of the Trump Administration’s decisions won’t be known for a while.
Already the Trump Administration has shown that there are moves that they are willing to back down from — pausing tariffs (save for those on the Chinese and on computers and technology) for 90 days — when it’s clear that disaster will ensue if it doesn’t change course.
There’s also a widening gulf between the claims the administration is making about cuts to federal jobs and contracts, and the reality of what’s happened.
Concern, Unknowns
Virginians certainly have reason to be concerned about the events that are transpiring. From lost federal jobs, to a reduction in federal contracts and contractors, and the potential for brain drain, these are unsettling times.
However, there still remain far too many unknowns.
How many jobs will Virginians ultimately lose? Will the impacts of significant cuts lead to reversals in policy? What becomes of the highly skilled people who do lose their jobs?
The Cooper Weldon Center has rolled out a look at what could be.
The Advance will be here to continue tracking the real-world impacts of these cuts on our region, and how people are responding.
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