As I alluded to in the previous post, Lieutenant Governor Bill Bolling’s staff handed out a “Jobs Report” to the delegation of bloggers attending the 5th annual Bloggers Day conference in Richmond two days ago. As one would expect from any politician, that report puts the sunniest possible spin on Virginia’s economic performance during the McDonnell-Bolling administration: 737 projects announced $6.4 billion in capital investment, and nearly 67,500 net jobs created.
The 6.2% unemployment rate is 11th lowest in the nation. More than 90% of the new jobs are private-sector jobs. Virginia ranked 9th in the nation since February 2010 in job creation, as compared to 35th in the nation between 2006 and January 2010, when a certain former governor, who shall remain nameless but happens to be running for the U.S. Senate, was in charge.
There is a positive story to tell. But it’s not the whole story. Here’s a figure that the Jobs Report did not mention: The number of Virginia jobs has increased 1.8% since the beginning of the McDonnell administration. That’s less than the 2.4% increase nationally recorded by the Bureau of Labor Statistics. Job creation in Virginia lagged the national average.
It gets worse. Nearly half of all net new jobs (46%) came from a single region, Northern Virginia. NoVa’s economy, as we all know, was goosed over the past decade by massive increases in federal spending under the Bush and Obama administrations. And, as we also all know, the torrid pace of federal spending is unsustainable.
My purpose is not to bash Governor Bob McDonnell’s economic development team, which has competently executed Virginia’s traditional economic development strategies. So far, the administration has announced 737 projects with projected employment of 48,906. I am interested in stripping away the happy face and recognizing that, outside the traditional economic development arena, things are not going very well.
Part of Virginia’s under-performance can be traced to the fact, beyond any governor’s control, that the strongest sectors of the national economy are tied to energy and agriculture, areas in which Virginia is not especially strong. But, as I have hammered home repeatedly, part of our sluggish job creation can be attributed to the paucity (outside Northern Virginia) of start-up companies and of dynamic, fast-growth middle-tier companies. The last thing we need to do is try picking winners and losers by handing out tax breaks or subsidies, but we could think more creatively about how to create the social, economic and tax conditions that stimulate entrepreneurial vitality. Handing out incentives to big corporations won’t do it.
Bottom line: We need to undertake a major re-think of economic development in Virginia, which remains substantially unchanged since the 1980s when I first started writing about it, if not longer.