Jefferson Policy Journal

Will $50 million be enough? Will that get all the Virginians who have fallen behind due to COVID-19 square on their rent or mortgage payments?  Or is that amount, in a new relief program detailed Monday by the Northam Administration, merely a start?

There is a hint on the program’s web page. “Financial assistance is a one-time payment with opportunity for renewal based on availability of funding and the household’s need for additional assistance and continued eligibility.”  Of course, it is just a start.  A Senate committee was told last week that Governor Ralph Northam is considering spending hundreds of millions more for the same purpose.

Why not?  The flood of COVID-19 relief money from Washington continues, with applicants lining up for their share.  Within the more than $28 billion directed to Virginia in just a matter of months, the money to help with late rent and mortgage payment constitutes a rounding error.  Much of the rest is going to businesses or individuals with far less need.

The Virginia Senate Finance and Appropriations Committee met virtually on June 23 to be briefed, among other things, on how the four waves of federal assistance have been or will be spent.  The meeting was not reported at the time, but was recorded, and the presentations are online.

Secretary of Finance Aubrey Layne, in his presentation, estimated that Virginia has received more than $28 billion in direct aid – $6.5 billion direct to the state and local governments, $14.4 billion to state businesses in the Payroll Protection Program and $7.3 billion pledged to municipal liquidity facility loans to cover revenue losses. 

That does not, repeat not, include the funds flowing to individuals through the supplemental unemployment insurance payments (that extra $600 per week) and the billions paid out in those individual stimulus checks to federal taxpayers. The unemployment bonus alone may exceed $1 billion per month feeding Virginia’s economy.

In all, Layne estimated, the four bills which have passed Congress (so far) created 79 distinct paths for money to flow to the Commonwealth, its localities, its businesses, and its citizens. The most important to the state budget was an increase in the federal share of the cost of Medicaid, saving the state’s General Fund $650 million this year and next. Another $644 million has already been shared with local governments, not counting the $200 million Fairfax County got directly because of its size.

After all the state-level spending on emergency response, personal protective equipment, testing equipment and lab services and other direct costs of dealing with the disease, more than $2.2 billion remains unspent and presumably will carry into the new fiscal year
July 1.

In a separate presentation, the committee staff took 46 pages to detail all the ways the federal money is propping up the state, its localities, colleges and hospitals. It also provides a bit of historical context, contrasting the trillions spent nationally this year with $10 billion in grants to the states during the 2001 Dot Com recession and the $275 billion provided states during the Great Recession starting in 2008. This time, the big bucks (so far) have gone to businesses and individuals.

Virginia hospitals and other health care providers have received $1.7 billion to date, in two waves. Four hospitals hit hardest by COVID received $75 million, directly, with another $75 million to nine “safety net” hospitals. An additional distribution for Medicaid-only providers is pending this summer.

Despite all the money that has flowed out, the list of pending requests totals another $1.2 billion. The staff reported that the Department of Housing and Community Development wants a total of $235 million for rental and mortgage relief, homeless housing, and broadband expansion (so, indeed, $50 million is the down payment.)

In the early waves, $394 million was directed to Virginia colleges and universities.  Just one university, Virginia, has asked for $260 million more out of the remaining pot. Virginia Tech can get by with a mere $33 million more.  The Department of Social Services wants $171 million, “mainly for providing a stimulus benefit to immigrant families that are not eligible for social security numbers.”

The sugar high this has provided to the state’s economy so far, with the glucose drip right into the vein continuing into next year, explains why the state’s finances look far, far better than many expected. In fact, at one point in last week’s meeting, Senator Richard Saslaw, D-Fairfax, started pressing for an estimate on how much of the $2 billion frozen in the coming state budget could be released.  Layne demurred, but did not deny that much of the deferred spending may be restored.

This massive tsunami of federal largess, all borrowed from the future, far exceeds any precedents, like so much else that has happened in the past four months. It cannot continue. Yet it probably will. If you thought government spending would be among the COVID casualties, you were wrong. If you thought the Bernie Sanders utopian vision of society’s needs being met by unlimited federal spending died with his campaign, the pandemic brought it roaring back to life. 

Working from home was already becoming more common, but the COVID-19 crisis forced many employers to quickly alter policies to enable more workers to perform their jobs from home.

This forced experimentation with remote work is causing some employers to alter their policies permanently.

Shopify, for example, announced in May that its 5,000 employees would be allowed to work from home indefinitely. Twitter’s CEO told workers in May that they can continue working from home “forever” even once the pandemic is over.

More employers following this example could cause a fundamental shift in demand for office space.

But not all work can be performed remotely.

Which occupations could be performed remotely? The American Time-Use Survey and the Occupational Information Network, or ONET, the database of occupational information developed under the U.S. Department of Labor, can shed some light.

The Time-Use Survey asks if respondents can work from home, if they actually have worked from home, and the reasons for working from home.

NET provides worker characteristics including the need to “… perform job tasks in close physical proximity to other people.” It also has information on other working conditions that would typically preclude working from home, such as working outdoors or in an enclosed vehicle or needing to spend working time standing or wearing safety equipment.

Combining the Time-Use Survey and ONET data, occupations can be classified into one of three buckets: remote jobs, partial-remote jobs and non-remote jobs.

About 12% of U.S. employment falls under remote job occupations, with 26% in the partial-remote bucket and the remaining 62% in non-remote occupations.

Remote jobs include occupations such as bookkeepers, software developers, lawyers and financial managers. Office clerks, personal care aids, and general operations managers top the list of partial-remote jobs. Non-remote jobs include retail salespersons, cashiers and registered nurses.

The 12% for remote job seems like a small number, but it could have significant implications for regions that have a relatively large amount of office space.

To measure the potential impact on metropolitan areas, let’s look at the industries with the highest concentrations of remote-work employment as defined by each industry’s component occupations. The top industries included software publishers, computer system design and legal services.

The resulting remote-work index compares the mix of remote-work employment in the region versus the mix in the nation.

An index of 100% means the region has the same mix as the nation. An index of 110% means the region has 10% more remote jobs than average for a region of its size and an index of 90% means the region has 10% less remote jobs than average.

Changing remote work conditions have significant implications for economic development, site selection and urban planning.

Employers shifting to remote work arrangements can drastically change the demand for office space.

Likewise, labor supply questions for some occupations need to be approached differently if commuting time becomes a less important factor.

If more people are working from home, shifts in daytime population will have ripple effects for both business districts and neighborhoods.

Based on the remote-work index, the top five metro areas with high concentrations of either tech or office employment:

• San Jose-Sunnyvale-Santa Clara, Calif., with 145% index;
• California-Lexington Park, Md., 134%;
• Boulder, Colo., 131%;
• Washington, D.C.-Arlington-Alexandria, 128%; and
• San Francisco-Oakland-Berkeley, Calif., 126%.

Of metro areas with lower ratios of remote work jobs, some have high concentrations of tourism industries, others are heavy with agriculture, while others have large manufacturing sectors.

The bottom five are:

• Elkhart-Goshen, Ind., with a 66% index;
• Visalia, Calif., 66%;
• Kokomo, Ind., 69%;
• Ocean City, N.J., 69%; and
• Madera, Calif., 69%.

The Richmond metro area remote-work index is 107%, ranking it No. 34 in the nation.

The tourism activity in Virginia Beach-Norfolk-Newport News region puts it at 95%, with a ranking of No. 115.

The coronavirus pandemic has reshaped our lives over the past few months. Some analysts are expecting reduced demand for traditional office space in the post-COVID era. Others point out the difficulties of onboarding new employees and creating a culture in a totally remote work environment.

The long-term effects remain to be seen as the direct coronavirus impact plays out and the responses of employers take hold in the post-COVID economy.

A version of this commentary originally appeared in the July 6, 2020 edition of The Richmond Times-Dispatch.