Corporations Tapping Virginia’s Under-Employed Labor Market

Hunter Willis, left, doubled his income by switching jobs from a call center to AvePoint in Richmond. Photo credit: Wall Street Journal.

A fascinating trend in the national job markets appears to be benefiting Virginia. A front-page Wall Street Journal article today is date-lined Richmond, Va.:

Pressed for workers, a New Jersey-based software company went hunting for a U.S. city with a surplus of talented employees stuck in dead-end jobs.

Brian Brown, chief operating officer at AvePoint, Inc., struck gold in Richmond. Despite the city’s low unemployment rate, the company had no trouble filling 70 jobs there, some at 20% below what it paid in New Jersey. New hires, meanwhile, got more interesting work and healthy raises.

As the unemployment rate approaches full employment, around 4%, companies are tapping the reservoir of under-employed — people working part-time, stringing together gig-economy work, or simply not fully utilizing the skills and capabilities they were trained for. It turns out there are a lot of those people in Virginia.

Here’s another example, which didn’t make it into the WSJ article: The Roanoke office of California-based PowerSchool will add 96 jobs and relocate to the former Norfolk Southern office building downtown.

PowerSchool’s expansion, announced Friday, will help offset the loss of more than 400 office jobs the railroad had eliminated in 2015, reports the Roanoke Times. The company expects the new jobs to pay an average annual salary of $68,116, 50% higher than today’s prevailing average wage in the city. The positions will include software development, customer service and administration and will filled during the next three years. 

Roanoke is shifting from being a “train city to a brain city,” said Roanoke Mayor Sherman Lea.

After years of sub-par economic growth since the 2008 recession, prosperity is finally trickling down from the millionaires and billionaires who benefited from booming stock and bond markets to everyday Americans. As the labor market tightens, corporations are still slow to raise general wages, but by tapping hidden corners of the economy they are creating better job opportunities for thousands.

The WSJ estimates the number of part-time workers who would prefer to work full time is about 5.3 million, or about 3.2% of the civilian workforce. That’s down from 6% at the depth of the recession but still high by historical standards.

AvePoint faced stiff competition for qualified workers in Jersey City, across the Hudson River from New York City, recounts the WSJ. Rather than increase worker pay in New Jersey, the company hired a site-selection consultant to review some 20 other locales. Richmond fit the bill. Although unemployment was only 4%, under-employment was pegged at 12%.

AvePoint pays its Richmond workers about 20% less than its New Jersey employees, but CEO Brian Brown says its Richmond workers enjoy more buying power. Median housing prices in the city are 40% cheaper. Indeed, AvePoint’s experience in Richmond has been so positive that Brown is making the city his operational headquarters. The company plans to have 200 employees there by the end of 2018.

I’ll take steady, incremental growth generated by a lot of midsize employers like Avepoint over a transformational investment by Amazon any day.

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4 responses to “Corporations Tapping Virginia’s Under-Employed Labor Market

  1. Re “prosperity is finally trickling down” and “by tapping hidden corners of the economy they are creating better job opportunities for thousands,” — you make it sound like the trickle-down is falling onto a giant sponge that is finally becoming saturated throughout.

    Is there a second message here? Prepare your children for the Knowledge Economy and jobs with benefits will come to them. Don’t, and your children will have only the gig economy to look forward to.

    Or is it this one: there are places in Virginia with the right combination of urban lifestyle and amenities that young people with education and aspiration will flock to even if they don’t have a good job yet, while they continue to live in that under-employed status you describe? So the rest of the State can fuggeddaboutit?

    I submit, the sponge is far from saturated. Trickle-down won’t fill it, only education will, by making Virginians more attractive employees than those of other States. In this economy there continues to be far less than full employment with traditional benefits nationwide, so Virginia wins only at some other States’ expense; places in Virgina win only in contrast to others. And this is not a situation we are “finally trickling” out of, but a permanent, new condition Richmond and our smaller cities have to get better at: competing with our own neighbors.

  2. totally on board with Acbars’ sentiments…

  3. Someday soon these same companies will figure out that Alta Vista is 20% cheaper than Richmond and Juarez is 20% cheaper than Alta Vista and Pune is 20% cheaper than Juarez and Bangladesh is 20% cheaper than Pune. And robots are 20% cheaper than Bangladesh.

    Trying to supply the cheapest labor is a race to the bottom.

    Assuming that Amazon is planning on performing software development in its “second headquarters” it will create knowledge worker jobs that are very hard to outsource to other countries. Despite all the hoopla about IT jobs in India the fact is that Silicon Valley, Silicon Alley, Austin, Seattle and Boston are all booming with high paying technology jobs. Jobs where the salaries are very price insensitive.

    Virginia needs to stop looking for the quick fix … being 20% cheaper than New Jersey, unending tax breaks for particular industries and companies, etc. Our port – which was kindly dredged by the US Navy at taxpayer expense, ought to have money dedicated to making it a technological logistics marvel. Integrate the cottage industry of trade finance, freight forwarders, etc with a blockchain based application. Establish strong science and technology programs at Virginia’s urban center public colleges – George Mason, VCU, ODU. UVA, VT and W&M will never be effective economic development engines given where they are located. It’s time to give up on that unending hallucination. Unify transportation and land use decision making to create the kind of urban, walkable places where educated young people want to live and work. Let cities annex densely populated areas of adjacent counties until we have real cities.

    These are the things that will make a difference, not some temporary labor arbitrage vs New Jersey.

  4. Well then, Virginia might have messed up with the fellow from Louisiana because at least part of his mission and success was attracting business to use the labor force Louisiana did have…

    … and that does not mean to exclude the other things that DJ is talking about – they’re all valid also…

    but .. we need to walk and chew gum at the same time…

    you still have under-employed, under-educated.. that need jobs and you do’t just sweep them under the rug.

    I still don’t quite agree with the “abandon RoVA and invest in NoVa” idea.

    you must have SOME level of economic development outside of the urban employment centers.. It will never be to the level of the urban centers but even in Louisiana – the ED efforts sought to direct prospective employers to areas beyond just the urban areas….

    What this discussion and prior ones point out is just how wretched Virginia is at Economic Development -and to a bigger issue which is that some things government must do – but that does not mean it will be done well.. whether it’s ED, or Education or Transportation or Health Care. It also does not mean that if govt doesn’t do it well that it should be done by the private sector … the private sector sucks just as bad as govt and worse on a wide variety of things…. because the goal of the private sector is to serve investor and entrepreneurs not society and not the more vulnerable members of society including the under-educated and under-employed. The private sector only does that to the extent it benefits them as DJ points out.

    It’s up to govt – and it’s citizens to do the things that are best for it’s citizens.

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