Southwest Virginia Job Losses 2010-2020
By Lewis Loflin
Update 2025: My warnings from 2005 and 2022 about flawed economic development strategies in Southwest Virginia have, regrettably, been validated. This cycle must end. I’ve been asked for solutions beyond critiques—see Needed Political Reforms Ending Poverty Southwest Virginia.
In December 2005, I wrote to the Bristol Herald Courier regarding Virginia’s $2 billion IT outsourcing deal with CGI-AMS and Northrop Grumman in Lebanon, Russell County. Nearly two decades later, the promised 700 high-paying tech jobs remain a mirage. Here’s my original letter:
“As a participant in the CGI-AMS Career Fair, I have serious concerns about transparency. The Herald Courier ad felt misleading. Most staff collecting applications weren’t CGI-AMS employees and knew little. Actual representatives were evasive, offering vague details—e.g., a BS degree with experience pays ‘low 40s,’ not the claimed $51,000 average.
They admitted plans to hire most staff from outside the region at below-industry rates, banking on our low cost of living to offset low wages. The Pasadena Star-News (July 13, 2004) reported CGI’s California deal outsourced jobs to India, sparking outrage. Their agitation when I raised H1B visa concerns suggests similar intent here—importing cheaper foreign labor.
I doubt they’ll hire 300 people locally. Past job claims, per VCEDA data, have been exaggerated. With millions in public incentives for this contract, we need strict oversight to ensure 300 American citizens are hired—no backdoor outsourcing to India. It’s time to stop these inflated job promises.”
The Bristol Herald Courier (June 2, 2007) article “After Plant Closings, Hard-Hit Towns See Salvation in High-Tech” compared Lebanon to Lenoir, North Carolina, where Google promised 220 jobs for a data center. Google’s Andrew Johnson cited affordable utilities, $265 million in tax incentives, and cheap land. Lebanon’s appeal to Northrop Grumman and CGI mirrored this “farmshoring” trend—exploiting rural areas post-manufacturing decline:
“In Lebanon, hit by manufacturing and coal losses, Northrop Grumman and CGI planned facilities for 700 jobs. A key draw: workforce stability. Unlike high-tech hubs with high turnover, Lebanon offers fewer job alternatives, keeping salaries low. ‘There aren’t many places for people to go,’ said CGI’s Mark Eschle, referencing their India operations’ 33% turnover.”
Lenoir’s Google project, by 2013, yielded only 150 jobs—many low-skill—leaving unemployment near 12%. Russell County followed suit, lured by similar incentives but delivering little.
In 2005, CGI and Northrop Grumman secured Virginia’s 10-year, $2 billion IT contract, promising 700 jobs at a Lebanon data center and help desk. Governor Mark Warner touted an average $50,000 salary. By 2010, the Bristol Herald Courier (October 17) noted: “CGI and Northrop Grumman changed the landscape with gleaming buildings, but no one calls them saviors anymore.” By 2013, Northrop Grumman reported just 170 employees—mostly call center roles at $9 hourly, per worker interviews, not IT positions.
With $9 million in local incentives, the reality starkly contrasted the hype. Russell County’s population fell from 28,897 in 2010 to 25,781 by 2020 (U.S. Census)—an 11% drop—accelerating to an estimated 24,500 by 2025. Coal declines, a completed power plant, and manufacturing losses deepened the slump. VCEDA and the Virginia Employment Commission still withhold specific IT job data, but statewide averages show Southwest Virginia wages lag 20% below Virginia’s $62,000 median (2023 BLS).
Local officials lauded $217,000 in annual property taxes from the firms against a $26 million school budget, but commercial growth faltered. GardenSide Village, a planned high-end housing project, remains largely unbuilt; developers cited a lack of buyers—young graduates renting elsewhere due to low wages. Chamber of Commerce Director Linda Tate admitted no surviving businesses tied to CGI or Northrop Grumman emerged in the decade post-2010. Morning Star Bakery’s Donna Watson closed shop, noting, “I don’t see any growth in town.”
The 2005 job fair I attended, run by VCEDA, not the firms, quoted $30,000 salaries—far from $50,000—confirmed by later outcomes. CGI’s defensiveness about outsourcing to India, mirrored by their California precedent, suggests many jobs never materialized locally. Virginia Highlands Community College’s IT courses (Java, C++) were dropped by 2013 for lack of demand. Fiber-optic infrastructure, touted as a game-changer, changed nothing.
Acknowledgment: Thanks to Grok, an AI by xAI, for formatting assistance. The analysis and updates are mine, based on public records and firsthand experience. —Lewis Loflin
