While economic recovery has accelerated this spring, Virginia Tech urban economics expert Margaret (Maggie) Cowell says there’s increasing concern for economic scarring in the future.

“We’re seeing some serious shifts in the labor market and these shifts will affect how and when localities recover. We’ll know a lot more in coming months as vaccination rates stabilize, travel resumes, local economies gain some steam, and the labor market stabilizes,” says Cowell.

Quoting Cowell

Cowell says the labor force participation rate during that post-pandemic period has dropped to its lowest level since the late 1970s. “Some workers are still staying home for health reasons and some are staying home because they remain concerned about finding safe and affordable child care. Many others are simply saying no to their old jobs for different reasons,” says Cowell.

“Depending on where people live and work, supplemental unemployment checks may make it economically beneficial to remain at home, at least for now. However, this is less of a factor in places where a living wage exists, and in states where the supplemental unemployment checks are being eliminated.”

Cowell says it remains to be seen whether these changes will substantially affect the hiring landscape and the overall recovery. “Some of the hiring challenges are related to workers that have opted for a career change, moving away from volatility of sectors like the restaurant industry, into less stressful, more stable positions in other parts of the economy.”

While no place was able to avoid the shock of the pandemic altogether, we did see some variability in terms of the pace and scale of recovery across the United States. “In general, many of the same ingredients that help a place recover from a hurricane or other natural disaster are also going to be helpful in terms of economic recovery from a pandemic.”

Colwell explains that economic resilience includes three primary attributes: the ability to recover quickly from a shock; the ability to withstand a shock; and the ability to avoid the shock altogether.

“Places that responded quickly to the shutdown, adopted local ordinances to allow for creative use of spaces and assets, and made space for innovative ideas and policies have typically seen a smoother recovery,” says Cowell. “We are seeing a lot of this in our smaller and medium-sized cities and regions, many of whom had positioned themselves well even before the pandemic but have also been able to highlight their affordability, ample space, and high quality of life.”

“In the longer term, I think our larger cities will regain their strength but they will likely face greater competition from some of these smaller and medium-sized cities more than they had in recent years.”

About Cowell

Margaret Cowell is an associate professor of Urban Affairs and Planning for the School of Public and International Affairs at Virginia Tech. She teaches courses on economic development, urban economics, and public policy and is based in the greater Washington D.C. area. She is the author of Dealing with Deindustrialization: Adaptive Resilience in American Midwestern Regions (Routledge 2014), Vibrant Virginia: Engaging the Commonwealth to Expand Economic Vitality and Inclusivity (VT Press, forthcoming) and has published numerous peer-reviewed articles focused on economic resilience, economic restructuring, and economic development. More here.

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