Study shows Virginia’s dependence on federal spending

Published November 26, 2013 by Robert Powell, III

A study released Monday shows Virginia’s economy continues to be dependent on federal spending for many jobs.

The report by Keith Hall and Robert Greene of the Mercatus Center at George Mason University says private-sector jobs funded by federal contracts in Virginia make up 10.7 percent of the commonwealth’s total nonfarm payroll employment.

That is the highest percentage of the 50 states, with the national average being 2.7 percent.

Virginia was followed by New Mexico and Maryland, both at 7.7 percent. The lowest percentages were found in Oregon and Delaware, both at 0.7 percent.

The combined total of federal contract-funded jobs and public-sector jobs make up 29.8 percent of the commonwealth’s nonfarm payroll, second only to New Mexico’s 31.9 percent, according to the study.

Trailing Virginia was Alaska, 29.3 percent and Mississippi, 28.2 percent.  The national average is 19.2 percent.

The state with the lowest percentage is Rhode Island, 14.3 percent.

Turning the percentages around, Rhode Island led the nation with “real” private-sector jobs as a ratio of total nonfarm employment, 85.7 percent.

The study authors defined real private-sector jobs as those not funded by government spending.

Virginia was 49th on this list at 70.2 percent. The national average was 80.8 percent.

Looking at growth for real private-sector jobs during the past five years (2007-12), the study found only eight states with overall gains.

They are North Dakota (24.6 percent), Alaska (6.7 percent), Texas (5.6 percent), South Dakota (1.7 percent), New York (1.6 percent), Louisiana (1.5 percent), Vermont and West Virginia, (both 0.5 percent).

Virginia showed a decline of 2.8 percent, dropping from 2.691 million private-sector jobs  in 2007 to  2.615 million in 2012, slightly better than a national average of 3 percent.

Nevada had the highest percentage of lost private-sector jobs, 13.1 percent.