THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 8, 1996 TAG: 9601060177
SECTION: BUSINESS WEEKLY PAGE: 04 EDITION: FINAL
SOURCE: Ted Evanoff
LENGTH: Medium: 84 lines
Lost in the talk about the federal shutdown is the story of Hampton Roads' shrinking federal workforce.
All the talk has focused on Washington, where the politicians have locked on the question of how to scale back government spending and how fast.
While the wrangling in Washington closed federal offices for want of a budget bill, it also overshadowed a simple truth. Almost one of every five federal civilian jobs that existed in Hampton Roads a few years ago is now gone.
You'd never guess there was such a sizeable cutback by looking at Hampton Roads. Travel around the country and you'd search long for a place with more federal workers than the lower shores of Chesapeake Bay. With everything from NASA to the Navy present in Tidewater, this is a federal town, even today.
The U.S. government employs 43,260 people on the Peninsula and the southside, the nation's largest concentration of federal civilian employees after Philadelphia and Washington, says the U.S. Office of Personnel Management.
Federal town or not, the government's presence in Tidewater isn't what it was. In recent years, federal agencies have shed almost 10,000 civilian workers in Tidewater, some 3,000 between summer '94 and summer '95, Virginia Employment Commission surveys show.
In mid '85, the federal payroll accounted for 16 percent of all wages paid in Hampton Roads. By last summer, the number was 11.4 percent and falling.
This ranks among the largest drawdowns in Hampton Roads since the end of the Vietnam War. If it were Virginia Beach chainsaw maker Stihl Inc. leaving town, no doubt you'd hear a clamor about the local economy losing a $20 million annual payroll.
But little has been said about the federal cutback, though if the 10,000 lost jobs were on the books today, the annual payroll would surpass $350 million.
One reason so little has been said about the federal reduction is that it has been slow and quiet rather than quick and loud.
And the focus has been on the fate of Tidewater's big military installations.
While many in the region were relieved when all major bases escaped the harshest work of the base closing commission, the ranks of civilian defense workers dwindled sharply.
``In the first couple of years (in the '90s), it was (downsizing) in the shipyards. But then there were fairly substantial cuts in the federal agencies,'' said William Mezger, senior economist at the Virginia Employment Commission in Richmond.
Most of Tidewater's federal reduction fell on payrolls in the Defense Department.
The earliest Defense Department employment report available to Mezger showed 44,232 civilian defense workers in '89 in Hampton Roads. By '94, the number was 37,132, a loss of 7,100 jobs, or 16 percent of defense's '89 level.
``It appears the reductions have been in the last couple of years,'' Mezger said. ``They're technical people. Some of them are highly skilled.
``In most areas of Virginia, the federal employees have the highest wages or are among the highest wages in the area. In Hampton Roads, you have all sorts of people involved, like civilian inspectors on the Navy payroll.''
When the recession reached Tidewater in the early '90s, shipyards took the brunt. Newport News Shipbuilding alone cut more than 10,000 position. Then other defense vendors cut back.
Finally the dark cloud of job cuts hit federal defense agencies, part of the downsizing of the U.S. government that had begun in earnest long before Washington's budget impasse.
In a federal town, a sharp reduction in government payroll might be expected to trigger a recession. This hasn't happened in Tidewater. Why it hasn't happened brings up a remarkable fact.
``Probably one of the reasons the defense cutbacks have hurt, but haven't hurt as much as they did after World War II or the Korean War or even after Vietnam, when there was a period when the economy was stagnant for a couple of years, has been the expansion in the overall economy,'' Mezger said.
``Other things have come in there,'' hew said. ``The area isn't as dependent on the federal government as it was 20 or 30 years ago.''
What's emerged, of course, is a service economy. Medical clinics, engineering firms, office cleaners, psychiatric hospitals, temporary help agencies, car shops, theaters, copy machine mechanics - the service industry expanded wildly, added 65,000 jobs since '85. by CNB