Four Charlottesville companies were named this year to the Inc. 5,000 list of fastest growing companies: SNL Financial, WillowTree Apps, Search Mojo and Silverchair Holdings. All four firms are located in downtown Charlottesville, which is emerging as a high-tech district of sorts. Proximity to a leading university and its supply of engineering and IT graduates is clearly a bonus, as is the enviable quality of life in the Charlottesville-Albemarle region.
But fast-growth firms are swimming upstream when it comes to growing their companies. Recruiting and retaining workers is not easy, reports the Daily Progress. One reason is that Charlottesville offers little opportunity for lateral moves between companies if someone hits a ceiling. Another is that two-income families can be reluctant to move to a region where it is difficult for the second wage-earner to find a job. Yet another is that young people are drawn to the “glamour of the big city” — singles prefer larger cities with more singles. It’s all about the mating market.
Charlottesville is a wonderful place. When I graduated from the University of Virginia in 1975, my greatest dream in life was to return to Charlottesville. I did so when I was 32. However, I soon discovered that if you weren’t part of the university community or the Farmington Country Club, the area didn’t have that much to offer. I landed in Richmond, where I found it far easier to make friends and where job options were more abundant.
In a knowledge economy, the critical ingredient to economic success is human capital. Economies of scale have shifted decisively to the larger metropolitan regions because they have much larger, more diverse labor pools. Charlottesville may be a superb incubator of small businesses but it will be very difficult for small companies to grow into big ones there. The same logic applies as well to Blacksburg, Harrisonburg, Lynchburg, Danville and other smaller metros (perhaps even to the Roanoke Valley). That’s not to say that it’s impossible to grow large, successful firms, only that it is far more difficult.
Indeed, some economic geographers are touting the rise of the mega-region, which suggests that even million-person metro regions like Richmond may suffer a competitive disadvantage.
I don’t like the trend. To the contrary, I find it incredibly dispiriting. I want to see Virginia’s smaller metros thrive. But facts are facts, and reality is reality. Virginia’s public policy makers should take heed.
As fellow blogger Don Rippert argues, Virginia’s two leading research universities — Virginia Tech and UVa — are located in small metro areas where the possibilities for spinning university knowledge creation into economic growth are far more limited than if they were located in one of the state’s major metro areas. From the perspective of maximizing the investment of state resources, does it make sense to privatize UVa and Tech and to concentrate on building George Mason University, Virginia Commonwealth University and Old Dominion University into higher-ed powerhouses that can support their regional economies? I don’t know the answer, but I think the question is worth debating.