Category Archives: Economic development

Senate Committee Votes to Raise Minimum Wage

by Hans Bader

The Virginia Senate’s Commerce and Labor Committee has voted to raise Virginia’s minimum wage. As NPR notes, “business groups maintain that Virginia will lose jobs — and its business-friendly reputation” — as a result. The Virginia chapter of the National Federation of Independent Business estimates that the increase would slash 130,000 jobs in Virginia over 10 years.

(The original version of the bill would have increased the minimum wage to $15. In approving the bill, the committee amended it, but the text of the amended bill is not currently available. One person attending the General Assembly session told me the increase was to only $11.75, but I have not independently confirmed that. I have updated this story to reflect the new information.)

The bill now goes to the Senate Finance Committee. Before voting on the bill, the Finance Committee should study the cost of such a large minimum wage increase to state taxpayers. A big minimum wage increase will increase the cost of products and services purchased by the state government, and the state’s own labor costs. Continue reading

NoVa Kicked Maryland Butt in Job Growth Last Year

by James A. Bacon

Northern Virginia dominated job creation in the Washington metropolitan area in 2019 and, as Amazon makes its presence increasingly felt, likely will continue to do so, reports the Washington Post.

In the first 10 months of 2019, Northern Virginia gained roughly 19,500 jobs compared to a year earlier, compared to 5,700 jobs in the District and just 200 in suburban Maryland, according to preliminary data from the Bureau of Labor Statistics. In other words, Northern Virginia accounted for about 71% of the metro region’s job growth. That’s an increase from about 52% in 2017.

Despite fluctuations in its fortunes due to the ups and downs of defense spending, Northern Virginia has had a more vigorous economy than D.C. and Maryland as long as I can remember. The interesting questions raised by this article are (1) why, and (2) will trends continue?

One explanation for Northern Virginia’s dynamism is the luck of the draw. Thanks to the presence of the Pentagon, NoVa developed a robust economy based on defense, intelligence, and information technology, while suburban Maryland, which enjoys the presence of the National Institutes of Health, developed a stronger biotech sector. IT is a bigger and faster growing part of the economy, so NoVa has benefited from secular economic trends over which it has no influence. Continue reading

Farewell to Virginia’s Lost Decade

Click image to enlarge. Data source: 2018 State of the Commonwealth Report

by James A. Bacon

As we close out the decade of the 2010s, Virginians’ collective response could well be, “Good riddance.”

For all of the state’s assets, economic growth in the Old Dominion consistently lagged that of the nation between 2010 and 2018, according to data published by the 2019 State of the Commonwealth report. The lackluster performance, as measured by growth in Gross Domestic Product, could not be blamed on a single metro, or even upon the state’s moribund rural areas. The Compounded Annual Growth Rate (CAGR) of every single metropolitan area, large and small, under-performed the national economy.

Gross Domestic Product compounded annual growth rate (CAGR).

Virginia’s traditional growth champion, Northern Virginia, logged an uninspired 1.5% average growth rate compared to 2.2% nationally. The Richmond region performed just as lackadaisically, with 1.5%. Hampton Roads, Virginia’s second largest population center and economy, was an anchor on statewide growth, barely expanding at all, at 0.2%.

Only two metros came close to matching the national average — Charlottesville, which sported a 2.1% CAGR over the decade, and Blacksburg, with a 2.0% rate. The commonality: Both are home to Virginia’s two leading research universities, the University of Virginia and Virginia Tech. Continue reading

Virginia’s Economic Performance Ticks Higher

Source: Old Dominion University, “2019 State of the Commonwealth Report”

by James A. Bacon

After years of markedly under-performing the rate of U.S. economic growth, Virginia’s economy appears to be approaching national parity, according to data published by Old Dominion University’s “2019 State of the Commonwealth Report.” Indeed, as the U.S. economy slows somewhat this year, the authors expect Virginia to exceed the national rate by a small margin.

One sign of a vibrant economy is Virginia’s low statewide unemployment rate, 2.6%, significantly below the national rate of 3.6%. The Old Dominion has enjoyed a lower unemployment rate for decades, but as the economy reaches full employment, the gap between Virginia and the national has narrowed in recent years.

Continue reading

The Future of Agriculture — in a Danville Industrial Park

by James A. Bacon

Newark, N.J.-based AeroFarms will invest $42 million to build its largest, most sophisticated indoor vertical farm to date in a joint Danville-Pittsylvania County industrial park. The project will create 92 new jobs.

Virginia competed with North Carolina for the project. Subsidies include a $200,000 grant from the Commonwealth’s Opportunity Fund, a $200,000 grant from the Governor’s Agriculture and Forestry Industries Development Fund, $190,000 from the Tobacco Regional Opportunity Fund, and an unquantified tax benefit from locating in a Virginia Enterprise Zone.

Aerofarm’s business model is incredibly cool. The company uses proprietary aeroponic growing technology to “produce highly flavorful leafy greens at at rate 390 times more productive than field-grown plants,” states a press release from the Governor’s Office. The farming techniques use a fraction of the water and fertilizer of traditional agriculture. Continue reading

Northam Proposes Reorganization of Tech Programs

The Center for Innovative Technology’s iconic soon-to-be-former headquarters.

by James A. Bacon

I’m so old that I remember when the Center for Innovative Technology, created to catalyze high-tech development in Virginia, was in charge of allocating state funds for university-based R&D. After commanding center stage in Virginia’s conversations about technology development during the 1990s and 2000s, CIT underwent successive downsizings to the point where it is a mere shell of its former self. Responsibility for overseeing state funding for R&D shifted to the State Council of Higher Education for Virginia (SCHEV), where it still resides.

The politics driving CIT’s dismemberment are long since forgotten. Now Governor Ralph Northam proposes to combine CIT with SCHEV’s Virginia Research Investment Committee, the Commonwealth Center for Advanced Manufacturing and the Commonwealth Cyber Initiative under the mantle of the Virginia Innovation Partnership Authority, reports the Richmond Times-Dispatch.

“What we have right now are multiple initiatives, all with good intent,” Secretary of Commerce and Trade Brian Ball said in an interview. “What we’re trying to do is pull all these together in one authority so we can allocate resources in the most efficient possible way.” Continue reading

VEDP Chief Urges More Funds for Site Readiness

by James A. Bacon

The paucity of developable sites and buildings resulted in Virginia communities being eliminated from consideration for at least 65 projects totaling 19,000 jobs and $5 billion in capital investment over the past three years, according to Virginia Economic Development Partnership President Stephen Moret.

Of the 466 large suites available for development as factories, distribution centers, call centers and other job-producing businesses, only 30 are classified as Tier 4 or Tier 5, meaning they are ready to compete for big economic development projects, Moret told the Virginia Growth and Opportunity Board Monday. Only two sites — one in Hampton Roads and one in the Roanoke/New River Valley region — qualified for the highest level of readiness.

In Moret’s analysis, site development is one of the four drivers behind site location decisions, along with workforce characteristics, supportive business climate, and quality of life. Virginia has historically under-invested in site preparation compared to states with whom it competes for manufacturing and distribution/logistics investment. 

Continue reading

In Failure, the GOP Has an Opportunity to Reinvent Itself

Todd Gilbert, House Majority Leader and soon-to-be House Minority Leader: GOP must learn to appeal to suburban voters.

by James A. Bacon

So, the Republicans have wrapped up their annual “Advance” — a retreat at the Omni Homestead resort in Bath County. And if reports of the two newspapers that covered the event are to be believed — one from the Washington Post and one from the Roanoke Times — GOP leaders have absolutely no clue how to become competitive statewide.

Attendees do agree that they got shellacked in the November election, and they share a vague sense that they need to increase their appeal in the suburbs. But their only hope at this point resides in the conviction that Democrats will over-reach with Trump Derangement Syndrome in Washington and enact California-style legislation in Richmond. If voters get buyer’s remorse, they might start voting for Republicans again.

But you can’t defeat something with nothing, and there is no indication in either news account that Republicans gave much thought to what they stood for, other than not being insane. Continue reading

Virginia’s Tech Roadmap: Space, Biotech, Cybersecurity and More

by James A. Bacon

A new study, “The Commonwealth Research and Technology Strategic Roadmap,” has identified six strategic technology clusters exhibiting the greatest potential for Virginia’s economic growth. The report, conducted by the State Council of Higher Education for Virginia, is not prescriptive — it does not offer legislative recommendations. Rather, the report identifies fruitful areas for collaboration between education, industry, government, and economic developers.

The most promising areas for focused research and economic development include:

  1. Life and health science
  2. Autonomous systems
  3. Space and utilities
  4. Agricultural and environmental technologies
  5. Cybersecurity
  6. Data science analytics

Collaboration should take the form of aligning investments in R&D, talent development, industry engagement, capacity building (such as venture capital), and marketing/advocacy for the purpose of globally competitive industry clusters. Continue reading

…. And a Nod to the Federal Reserve Bank of Richmond

by James A. Bacon

As a follow-up to my post about Stephen Moret, whose contributions to Virginia’s economic development have been amply recognized, I’d like to acknowledge the work of an important figure who has largely flown under the radar: Tom Barkin, CEO and president of the Federal Reserve Bank of Richmond.

Federal Reserve Bank presidents are quoted mainly for their thoughts about Federal Reserve Board monetary policy. Presidents of the Richmond Fed, for instance, have been known over the years as monetary hawks, advocating the Fed’s role as inflation fighter. Although the Richmond Fed has always gathered data and business intelligence about economic activity in the 5th federal reserve district, which includes Virginia, previous bank presidents rarely delved into the nitty gritty of local economic development.

Barkin is different. He may be engaged in national policy debates — I don’t know — but I can state with certainty that he has reoriented the analytical and research resources of the Fed to figuring out how to promote economic growth and development within his district, which encompasses Maryland, Delaware, West Virginia, Virginia, North Carolina and South Carolina. He has been traveling throughout the region — not just to the big cities — and talking to local leaders. One particular focus has been rural community development. Continue reading

Mr. Economic Development as Biz Person of 2019

Virginia Business magazine has named Stephen Moret, CEO of the Virginia Economic Development Partnership, as its 2019 business person of the year. The recognition is richly deserved. In less than three years, Moret has overhauled the badly dysfunctional VEDP, directed the effort to capture Amazon’s HQ2 project, restored Virginia to a top ranked state for business climate, and launched several initiatives that should improve the state’s economic competitiveness even more in the years to come.

The magazine has an excellent profile in its current edition, telling the story of his upbringing in a small Mississippi town, his winning a Louisiana State University scholarship by playing the trumpet, his contributions as a senior member of Louisiana Governor Bobby Jindal’s administration, and then his move to Virginia as chief economic developer.

The only insight I would add to the Virginia Business profile would be to note the breadth of Moret’s interests. The VEDP has a narrow scope: recruiting out-of-state corporate investment to Virginia (with a side job of promoting foreign trade). Moret, quite rightly, understands that the key to attracting corporate investment is building and retaining human capital. He also comprehends the role of university-centered innovation ecosystems in driving economic growth. Weaving together the strands of corporate recruitment, workforce development, and higher-ed, he has emerged not only as the leading practitioner of economic development in Virginia but its most visible and articulate theoretician.


Time to look at the Tobacco Commission again

The Tobacco Region Revitalization Commission (TRRC) has again demonstrated that the legislature needs to re-examine its operations and, perhaps, overhaul it altogether.

First, a little background. TRRC was established in 1999 to revitalize Virginia’s tobacco region and compensate tobacco farmers for the decline in tobacco production. Funding for these activities was to come from the Commonwealth’s share of the Master Settlement Agreement between 46 state attorneys general and large tobacco manufacturers. Through a complex “securitization” of half of its future settlement payments, the amount available for TRRC was capitalized at $1 billion. In 2032, the MSA payments will resume. Continue reading

Virginia Likely to Impose Excessive Minimum Wage

Beneficiaries… or victims… of a $15 minimum wage?

by Hans Bader

It doesn’t make sense to ban jobs that pay a living wage, just because an employer can’t afford to pay a still higher wage. But that is what a $15 minimum wage does in regions where living costs and wages are low. There are cheap regions to live in where $11 an hour supports a decent lifestyle. If someone can afford decent food, clothing, and housing on $11 an hour, and their employer can’t afford to pay them more than $12 an hour, it is pointless and cruel to ban their job just because it pays less than $15 per hour.

But that is what a $15 minimum wage does. It bans jobs that pay less than $15 per hour, regardless of whether an individual employer and worker have a good reason for a lower hourly wage.

Virginia is now poised to join seven other left-leaning states, such as New Jersey, in imposing a $15 minimum wage. The incoming majority leader of the state senate, Richard Saslaw, D-Springfield, has introduced a bill to increase the state’s minimum wage to $15 by 2025, and then adjust it for inflation in future years. Every Democrat in the state senate has already voted for a similar bill in the past, and Democrats took control of Virginia’s legislature this November. Continue reading

Appalachia’s Job Growth Challenge

by James A. Bacon

Employment growth in Virginia’s Appalachian region since 2002 has been the weakest of all five states in the Central Appalachian region, according to data contained in a recent Appalachian Regional Commission (ARC) report, “Industrial Make-up of the Appalachian Region: Employment and Earnings, 2002-2017.”.

Making matters worse, job growth in Central Appalachia was the worst in all of Appalachia, which was half that of the United States as a whole.

The growth gap between Virginia on the one hand and Tennessee and North Carolina on the other has been particularly marked, the gap between Virginia on the one hand and West Virginia and Kentucky not quite as bad.

Earnings growth in Appalachia also has severely lagged that of the United States as a whole — 17.5% compared to 27.3%. Continue reading

Bacon Bits: $$$$$ Edition

They didn’t ask this question until now? Will the wave of Amazon-inspired development in the Pentagon City area of Arlington County overwhelm the region’s transportation network? “Arlington planners, and nervous neighbors, want to know,” reports the Washington Business Journal. Some neighborhood groups are wary that the point of the planning review is to clear the way for a major up-zoning in the area. “They fear the county could determine that the neighborhood has the transportation infrastructure to handle more residents and allow for density increases — even though they believe the opposite is true.”

Meanwhile, JBG Smith Properties and other developers are pitching massive new projects around the new Amazon HQ. Not coincidentally, the WBJ reports, “JBG Smith ramped up its political giving in Virginia with control of the General Assembly on the line.” JBG Smith’s Virginia campaign contributions this electoral cycle: $34,206.

Glad to hear that “Black Enterprise” is still a thing. The Mount Olive Baptist Church in Culpeper wants to create a network of support, mentorship and information for African-American small business owners. Black business ownership is increasing, but black entrepreneurs face big challenges. The goal of the network is to help them gain knowledge about finances, start-up capital and the industrial/managerial skills it takes to grow successful enterprises, reports the Star-Exponent. As the politics of grievance and victimhood have taken hold nationally, we don’t hear much about black enterprise these days. I cannot help but note that this initiative comes from a black church, not a foundation-funded think tank staffed by white intellectuals.

Can you say “overreach”? Virginia Tech will spend $5 million to $10 million to launch a biomedical research facility in Washington, D.C. by early 2021, the university announced yesterday. On a campus of a new Children’s National Hospital campus, four or five Virginia Tech research teams will conduct research on cancers of the brain and nervous system. Virginia Tech President Timothy D. Sands said in a statement the partnership fits Tech’s ambition “to solve big problems and create new opportunities in Virginia and D.C. through education, technology and research.” Continue reading