Bacon's Rebellion

James A. Bacon

Don't Worry, Be Happy

We Virginians grumble a lot, nothing ever quite suits us. But the best single measurement of well being -- growth in per capita income -- indicates that we're progressing far better than the nation as a whole.

We Virginians don't know how good we have it.

Oh, sure, the Northern Virginia economy is booming, people say, but what else do you expect with the federal government running up deficits and throwing money at everything in sight? It'll never last. And how about the rest of the state? The textile-apparel industry is shot, tobacco agriculture is wilting and the varnish is peeling off the furniture industry. And the entrepreneurial success of Northern Virginia has never migrated downstate. Oh, woe is us.

Virginians tend to focus on the downside. If a Virginian takes off a week for vacation, he frets about the work piling up at the office. If a Virginian wins the power ball lottery, he sinks into depression thinking about all the taxes he has to pay.

Every once in a while, it pays to take a look at the facts. And the fact is, by the measure that matters most -- per capita income -- Virginians have been doing pretty darn well. Between 2000 and 2004 (the last year for which data is available) per capita income in Virginia increased significantly faster than it did in the nation as a whole. Over that four-year span, marked by the bursting of the Internet bubble, a recession, the 9/11 terror attack and a "jobless" recovery, the Consumer Price Index rose 9.7 percent. Nationally, incomes increased 10.7 percent -- a mere percentage point ahead of inflation. But in Virginia, incomes rose 16.3 percent!

If you're determined to be gloomy, you might say, big deal, that was good enough to rank Virginia only 15th out of 50 states and the District of Columbia. The national average was weighed down by under-performing economies in the biggest states -- California, Texas, New York, Florida, Michigan and New Jersey. Lots of lesser states, from West Virginia to Mississippi, fared better than we did. 

(Skip the table.)

Source: Bureau of Labor Statistics

Go ahead, be cranky. But there are positive ways to view the numbers, too. Other than Washington, D.C., which is a phenomenon unto itself, Virginia turned in the strongest performance of all high-income states. Notice how Virginia has a higher income than every one of the states (D.C. excepted) that grew faster?

Here's another thing I find encouraging: Northern Virginia isn't doing all the work, as many might expect. Of the 115 jurisdictions (or combinations of jurisdictions) tracked by the Bureau of Labor Statistics, only 11 under-performed the national average. The other 104 out-performed the national average.

The Hampton Roads metro area bested the national average. The Richmond metro area bested the national average. Even sad-sack Danville and Martinsville-Henry County -- jurisdictions that epitomize the decline of Virginia's mill-town economy -- bested the national average.

Neither of those Southside communities has set the world on fire when measured by job creation. But change the metric to per capita income, and they more than held their own during those four hard years. Per capita incomes in Martinsville-Henry County posted a 13.7 percent increase, while they jumped 16.5 percent in Danville-Pittsylvania County!

A perusal of per capita income growth, broken down by Virginia jurisdiction, reveals some interesting patterns that I don't believe are sufficiently recognized in our business and political discourse.

1. Hampton Roads. The top-performing metropolitan region in 2000-2004 was not Northern Virginia -- it was Hampton Roads, racking up a dramatic 20.7 percent increase in income. This represents a sharp reversal from the previous decade, in which Hampton Roads acted as an drag on statewide income growth. The single-most important factor explaining that turn-around, I suspect, was a shift in priorities between the Clinton administration, which scrimped on military pay as the nation harvested the 1990s-era "peace dividend," and the determination of the Bush administration, even before 9/11, to rebuild the military. Can the growth sustain itself? I don't know -- but it's sweet while it lasts.

2. The Chesapeake Shoreline. The hottest performing non-metropolitan counties in Virginia bordered the Chesapeake Bay. Northampton County (up a stunning 32.2 percent) on the Eastern Shore, as well as Mathews, Lancaster, Accomack and others fared particularly well. My conjecture: Affluent retirees are moving into the region, bringing up average incomes.

3. The Urban Core. Core urban jurisdictions are rebounding as affluent residents relocate from outlying counties to enjoy more urban lifestyles. Top performers: Portsmouth, with an sizzling 27.4 percent growth over four years, Roanoke (city), Hampton, Newport News, Norfolk, Richmond (city) and Alexandria. While there is an endless supply of new planned communities in outlying counties, nobody is building any more traditional neighborhoods like downtown Portsmouth, Old Southwest in Roanoke, Ghent in Norfolk, the Fan in Richmond or Old Town Alexandria. To enjoy an urban way of life, you have to move back into the city.

4. Coal Country. A rebound in the coal industry has lifted the fortunes of Virginia's coal-mining jurisdictions:

Wise, Norton, Buchanan, Lee and Tazewell (and to a lesser extent Dickenson). After two decades of strenuously trying to diversify their economies, the jurisdictions of far Southwest Virginia still find their fates tied to the fortunes of the black rock. For the first time in 25 years, that's a good thing.

5. Washington Metro. The Washington metropolitan area (including D.C., Maryland and West Virginia) under-performed Virginia: 15.0 percentage per capita income growth compared to 16.3 percent. However, the Virginia portion of the Washington MSA -- Alexandria (19.0  percent) Arlington (17.7 percent) and Fairfax (16.5 percent) -- did quite handsomely for the most part. (A striking exception to Northern Virginia's strong performance is Loudoun County, the only Virginia jurisdiction to suffer a loss in per capita income over the four-year period. I can only surmise that the slippage was due to a massive in-migration of less-affluent residents who could no longer afford to live in Fairfax, Arlington or Alexandria.)

6. Mill towns. There is a widespread notion that Virginia's manufacturing-based "mill town" economy is uncompetitive and undergoing irrevocable long-term decline. Lynchburg, Danville, Martinsville, Winchester, Harrisonburg, Christiansburg and the other "burgs" and "villes" are not exactly what you'd describe as boom towns. But during these four hard years, a number of them racked up income-growth performances exceeding the growth rate in Virginia's larger metro areas -- and smartly outperforming the national growth in incomes. Lexington and its neighboring jurisdictions, Rockbridge and Buena Vista, turned in a handsome 20.1 percent per capita income growth. Petersburg, Harrisonburg, Roanoke and Danville all beat the state and national averages.

(Skip the table.)

Source: Bureau of Labor Statistics

In an economy as large and diverse as Virginia's, not everyone is moving at the same speed. You would expect a lot of eddies swirling back against the main current.  But most of Virginia is moving in the right direction. And progress is remarkably broad-based, not concentrated in just one or two areas.

No part of Virginia can match Northern Virginia for pure economic dynamism: Northern Virginia has few peers nationally when it comes to job creation. But, unless inhabitants derive meaning in life from solving other peoples' unemployment problems, labor-shortage communities like Northern Virginia need to focus on raising incomes, especially when the stresses and strains associated with rapid growth -- congested roads, skyrocketing housing prices, crowded schools and rising taxes -- can make life so difficult. Rising incomes accompanied by modest job growth, one could argue, is the ideal condition.

For the most part, Virginia is doing just fine, thank you very much. So, in the immortal words of Bobby McFerin, "Don't worry, be happy."

-- May 30, 2006