Category Archives: Labor & workforce

The Marketplace is Speaking. Are the Counties Listening?

CoStar is occupying three floors of the Westrock building (on left) in downtown Richmond.

After CoStar Group, a provider of real estate market intelligence, announced last fall its intention to move its research division headquarters to downtown Richmond, the company offered employees from Washington, D.C., Atlanta, San Diego, and Columbia, Md., an opportunity to move to Virginia. A big concern of Senior Vice President Lisa Ruggles was how many would want to make the move. “I had no idea of how many people would be interested,” she said.

She was surprised that 150 applicants responded, Ruggles told Richmond BizSense. After they took part in three-day tours of the metropolitan area, she says, “I told them that they were all welcome to come to Richmond, and the place erupted. Everybody was clapping, people were crying; it was an amazing sight to see.”

AvePoint, a New Jersey provider of Microsoft cloud services, had a similar experience, according to BizSense. “We estimated that when we would be transferring people down here that we might not get a ton of people, because Richmond is very different from New York,” said AvePoint COO Brian Brown. “That’s proved absolutely not to be the case.”

Big selling points: a lower cost of living, shorter commutes and a high overall quality of life. “I think one of the things people are pleasantly finding, especially people who have families, is how cheap it is to find a really nice place to live and how easy the commute is,” Brown said.

Here’s the really interesting thing:

CoStar’s Ruggles said it has been interesting to see where employees have chosen to live in Richmond. Of the 120 employees who made the company’s initial move, she said the majority chose places such as Deco at CNB and other apartment communities in Tobacco Row and Manchester. Only two employees chose to live in Short Pump, said Ruggles, who herself just closed on a house in the West End.

“Coming from D.C., a lot of our employees don’t have cars, and that was not something they were wanting to run out and buy, so a lot of people ended up in locations where they could walk to work,” Ruggles said. “We have found that, because that group relocated from D.C., where they’re used to taking the Metro or walking or riding their bike, they’re continuing to do that here.

Bacon’s bottom line: Richmond’s urban core exerts a strong appeal to highly skilled and educated employees — the affluent, creative-class types who pay more in taxes and spend more in the local economy — from other cities. If the region wants to attract more employees like them, along with the companies that employ them, the city and counties need to facilitate the building of the kind of communities these people want to live in. That means more moderate density, more mixed-use development, more grid streets, more investment in streetscapes, and, where economically justified, more mass transit.

That’s an easy sell for Richmond, most of which was laid out according to the dicta of traditional city planning. It’s a harder sell for Henrico and Chesterfield Counties, built according to the principles of suburban sprawl. The marketplace is yelling loud and clear what it wants. As a Henrico resident with a vested interest in the county’s long-term fiscal viability, I hope county officials are listening. If they’re not the City of Richmond will kick our butts in the economic development game.

Business and Computer Science Majors are the Biggest Bargains in Higher Ed

Graphic credit: “Costs of and Net Return to College Major”

It is widely known that certain college majors offer better career prospects than others. Engineering and business majors earn more money on average than, say, art and English majors. Less well known is the fact that certain majors are more expensive to teach. As seen in the chart above, engineering graduates cost twice as much to educate as library graduates.

The data comes from a new study, “The Costs and Net Returns to College Major,” by Joseph G. Altonji and Seth D. Zimmerman, published by the National Bureau of Economic Research. They drew their cost data from the Florida State University System.

The insight that different majors have different costs has important implications for how state systems of higher education allocate their resources. In Virginia, there has been a big push since the “Top Jobs” legislation of 2011 to increase the number of STEM (science, technology, engineering and math) graduates at Virginia colleges and universities. The shift to higher-cost STEM majors, while arguably justified from an economic perspective, contributes to the rising cost of higher education.

Another way to slice and dice the data is to look on the return on investment for different majors based upon the cost of providing the education and the present value of graduates’ earnings. As seen in the chart below, business majors, who cost relatively little to educate but enjoy high lifetime earnings, represent an extraordinary bargain. By contrast, architects, who are expensive to educate but earn relatively little, are a Return on Investment disaster. Much to my surprise, even engineers don’t look like such a bargain.

Career earnings may not be the best way to measure the social value of a particular major. It is possible that architects contribute far more to social well being than their pay stubs would indicate. (It’s hard to imagine that genders-studies majors have anything worthwhile to contribute to the world, but, hey, that’s me.) But the present value of earnings is a pretty good proxy for a graduate’s economic value.

As lawmakers ponder how to allocate scarce higher-ed dollars, they would be well advised to take into account how much bang for the buck colleges are getting for their investment in different disciplines. Perhaps Virginia colleges need to promote enrollment in business schools and less in architecture. I never imagined myself saying this, but maybe we should be encouraging more kids to enroll in psychology and fewer in engineering!

Fudging Differences between Legal and Illegal Immigrants

Big difference in educational attainment between legal and illegal immigrants.

The big difference in educational attainment between legal and illegal immigrants doesn’t come through in this graph. Credit: Commonwealth Institute

Immigrants residing in Virginia are better educated and more entrepreneurial than commonly perceived, says a new report by the Commonwealth Institute (CI), “Virginia Immigrants in  the Economy.”

That’s true.

Yet immigrants’ contributions to the U.S. economy are often minimized by “some state and federal lawmakers,” adds a press release accompanying the report. In truth, immigrants make our communities and economy stronger, says Laura Goren, CI research director and co-author. “Too many politicians are using scare tactics and divisive rhetoric about immigrants to advance their own agendas.”

Grrrr. I must take issue.

In attributing “scare tactics and divisive rhetoric” to shadowy others, Goren is guilty of the very behavior she decries. Whether due to simple naivete or deliberate obfuscation, I don’t know, she conflates legal immigrants with illegal immigrants. Thus, legal immigrants, who make a large positive contribution to Virginia’s economy, provide statistical cover for illegal immigrants, whose net contribution is problematic.

That’s an turn-off to readers who otherwise might find value in the report, which does contain some useful information. Foreign-born inhabitants now constitute 12.2% of the state’s population, for instance, with the heaviest concentration in Northern Virginia. More than half the foreign-born population has become naturalized.

…Neither does the difference in entrepreneurial vitality.

Virginia immigrants are more likely than native-born Americans to hold a college degree, the report informs us. They have slightly higher incomes, and they are more likely to be self-employed or own a business.

“In sum, Virginia immigrants are relatively young, well educated, fluent in English, and more likely to participate in the workforce,” says the study. “This powerful combination reflects the substantial capacity for immigrants to contribute to the state’s economy.”

But average numbers obscure important differences between different categories of immigrants. Forty percent of Virginia immigrants are well educated (college or graduate degrees) and wind up working in professional and technology fields. But, according to CI’s data, 20% lack a high school degree, a much higher percentage than for the native-born population. In other words, we are looking at two very different groups — one highly educated and affluent (mostly legal) and one ill-educated and poor (mostly illegal).

I know of no respectable voices in Virginia who say we should clamp down on all immigrants. (There might be a tiny percentage of white nationalists who advance that argument, but their numbers are insignificant.) The controversy over immigration focuses on poor, ill-educated immigrants, mostly though not exclusively from Latin American countries, who compete with similarly poor, ill-educated native-born Americans. These immigrants (mostly illegal) drive down wages of unskilled occupations, and put a burden on educational and social services.

I’ve never heard anyone hint that there’s too darn many Indians, Chinese, Vietnamese or Koreans in Virginia. That’s because Asian-Americans quickly learn English, rapidly assimilate to mainstream norms, become educated, launch job-creating businesses, and place minimal stress on the welfare state. Their presence is indisputably a net benefit to society.

By contrast, the Commonwealth Institute concedes that there are “challenges” associated with between 275,000 and 300,000 unauthorized immigrants. Nearly one in five live below the poverty line, and 58% lack health insurance. When one calculates the impact of illegal immigrants on the wage levels of unskilled workers, on schools, on the welfare state, and on the criminal justice system, this sub-set does not look like a net benefit to American society.

The study contends that illegals make a positive contribution, contributing $250 million in state and local taxes. If provided a path to citizenship, they could generate an estimated $100 million more. To the Commonwealth Institute, the problem isn’t foreigners illegally entering the U.S., but the mean people who treat illegals as second-class citizens. Says the report: “Lack of access to health care and threats of deportation and discrimination all make unauthorized immigrants and their families less able to contribute to the communities in which they live.”

I don’t believe in demonizing illegal immigrants for the sin of wanting to build better lives in Virginia. I don’t bear them any animus. I think it is wrong to abuse or mistreat them. But I also believe that a sovereign state has the inherent right to choose who can enter the country and upon what terms and conditions they do so. Foreigners have no right to live in the United States. One can make an argument that the U.S. should expand opportunities for foreigners to enter the country legally, but only on the purely utilitarian grounds that their presence benefits the rest of us. Accordingly, I think we should give preferential treatment, as many other countries do, to those who can contribute to the national wealth and well being over those who cannot.

Having a rational conversation requires that we draw distinctions between immigrants on the basis of education, skills, wealth, age, ability to assimilate, and proclivity to become a burden on the state. It is difficult to have that conversation when we lump all “immigrants” together.

Virginia Ranks 6th in Tech Employment

From the “Cyberstates 2017” research report…

Virginia tech employment (2016): 291,312
National rank: 6
Increase from previous year: 4,145 jobs
Percent of overall workforce: 7.7%

Average tech industry wages in Virginia (2016): $112,014
National rank: 7

What the Obama Giveth, the Trump Taketh Away

Slash and burn

The federal budget sequestration may have kept a lid on escalating federal budget deficits, a good thing, but it was a disaster for Virginia’s economy. The cap on federal spending hammered a Northern Virginia economy built largely around the Pentagon. The ascension of Donald Trump to the presidency signaled a possible return to the region’s glory days as the new president promised to increase defense spending by $50 billion.

But the president has created massive uncertainty with a vow to slash discretionary spending in civilian programs and bureaucracies. The Washington Post is all in a dither:

The cuts Trump plans to propose this week are also expected to lead to layoffs among federal workers, changes that would be felt sharply in the Washington area. According to an economic analysis by Mark Zandi, chief economist for Moody’s Analytics, the reductions outlined so far by Trump’s advisers would reduce employment in the region by 1.8 percent and personal income by 3.5 percent, and lower home prices by 1.9 percent. …

Trump’s emphasis on defense spending might provide a buffer for Northern Virginia, although, as noted previously on this blog, there are some within his administration who believe that the Pentagon civilian bureaucracy needs to be whacked down to size in order to free more resources for fighting forces. Under a serious effort to rebuild the U.S. Navy, Hampton Roads’ military bases and shipbuilders could be big beneficiaries.

We can’t say anything with certainty until Trump releases the details of his plans later this week. But at this moment in time, it looks like the new budgetary policies could be a mild plus for Virginia with boosts in defense spending offsetting cuts in other areas. Conversely, Maryland and Washington, D.C., with their large non-military exposure, could be in for a world of hurt

Adding to Washington’s woes…. The metro area’s job performance in 2016 has been revised downward. Reports the Washington Business Journal: “The D.C. region added 55,600 jobs in 2016, according to final data released Tuesday by the Bureau of Labor Statistics — about 16,800 fewer than the agency had initially counted.”

“We are talking slashing and burning several different agencies on the discretionary, non-defense side. That could have a pretty chilling effect for the local economy,” said Clifford Rossi, a professor of the practice at the Robert H. Smith School of Business at the University of Maryland-College Park.

Rossi agreed that the revised job growth numbers reveal an economy that was weaker than it originally appeared, and that the federal spending cuts proposed by Trump could have a compound effect on the regional economy.

Bacon’s bottom line: Actually, the loss of 1.8% employment and 3.5% income is no worse than what dozens of other metros experienced in the last recession. But have compassion! Washington has never been through anything like this before.

(Hat tip: Rob Whitfield)

For-Profit Colleges and the Student Debt Apocalypse

Graduates from for-profit colleges account for a disproportionate share of student loan defaults.

Graduates from for-profit colleges account for a disproportionate share of student loan defaults.

Tressie McMillan Cottom worked as an enrollment officer at two for-profit technical colleges before she went on to earn a PhD., join the faculty of Virginia Commonwealth University, and write a book, “Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy.”

Cottom says that for-profit colleges get one important thing right: They invest resources in the front-end process of helping students enroll: everything from applying for financial aid to having their textbooks waiting for them on the first day of class. But she, like many other critics of for-profit education, is concerned by the high indebtedness and high default rate of students. Those who attend for-profit colleges represent only 26% of all borrowers but account for 35% of federal loan defaults.

The high default rate is a sign of the trouble graduates have finding quality, high-paying jobs, Cottom told Karin Kapsidelis, higher ed writer for the Richmond Times-Dispatch. For-profit colleges are a varied lot. While some deliver value for the students’ investment, others are marketing machines designed to enroll students and collect revenue with little heed to results. “The profit motive changes everything. It means that instead of helping students, you’re selling students.”

The industry took off when the financial sector figured out how to make money from it, Cottom says. Wall Street underwrote for-profit educational enterprises to “monetize” peoples’ aspirations and their faith in education as the way to improve their lives.

Writes Cottom in the introduction to her book:

Lower Ed refers to credential expansion created by structural changes in how we work, unequal group access to favorable higher education schemes, and the risk shift of job training, from states and companies to individuals and families, exclusively for profit. Lower Ed is the subsector of high-risk post-secondary schools and colleges that are part of the same system as the most elite institutions. In fact, Lower Ed can exist precisely because elite Higher Ed does. The latter legitimizes the education gospel while the former absorbs all manner of vulnerable groups who believe in it: single mothers, downsized workers, veterans, people of color, and people transitioning from welfare to work.

Bacon’s bottom line: No question, the high default rate is a huge problem — student indebtedness is creating a new class of Americans who have little hope of paying back their tuition and, as the law stands now, little chance of discharging their debts through loan forgiveness or bankruptcy like overextended homeowners can do. But I am concerned by how many people, including, Ms. Cottom, it seems, blame the problem on for-profit institutions and the profit motive.

As the Kapsidelis story points out, for-profit colleges account for 35% of all federal loan defaults. But 65% can be traced to non-profit colleges! The driving force behind high defaults isn’t the for-profit status of the school, I would suggest, but the socioeconomic status of the student. Students from poor families are more likely to drop out and default on their debt than students from better-off families. Historically Black Colleges and Universities (HBCUs), which are non-profit, have high default rates, too, as do institutions that cater primarily to lower-income whites and Hispanics.

For-profit institutions are motivated to accept marginal students in order to fill seats and generate revenue. But guess what, so are many non-profit institutions. They, too, have expenses to cover, salaries to pay, and bonds to finance.

The problem, I would suggest, isn’t for-profit versus non-profit, it’s the erosion in lending standards. Anyone who wants a student loan can get one. Because the repayment risk is transferred to the federal government, the college (be it for-profit or non-profit) has no skin in the game. If a college student is unprepared for college, defaults after dropping out, or fails to find a job, the institution suffers no ill consequence. Why would we expect any other result?

 

The Northam/Perriello Rural Poverty Plan

Let there be higher wages! Ralph Northam (left) and Tom Perriello on the campaign trail in Northern Virginia where they promoted a $15 minimum wage.

Let there be higher wages! Ralph Northam (left) and Tom Perriello on the campaign trail in Northern Virginia where they promoted a $15 minimum wage. (Photo credit: Washington Post)

Both Democratic candidates for governor, Ralph Northam and Tom Perriello, have endorsed a statewide $15-per-hour minimum wage, a sign, says the Washington Post, of how much momentum the national “Fight for $15” is achieving. (Virginia hews to the federal minimum wage of $7.25 per hour, which has not increased since 2009.)

Perriello backed the $15 minimum wage shortly after declaring his candidacy, and Northam followed the next day. Both candidates reiterated their support earlier this week when aligning themselves with striking workers at Reagan National Airport. Reports the Post:

“I would challenge anyone out there to go try to support themselves and support their families on $7.25 an hour,” Northam said Wednesday after his meeting with workers. “It is impossible. You can’t do it.” He said he would push to raise the minimum wage as governor by campaigning to unseat Republican lawmakers opposed to it.

“We know we have a long way to go,” Perriello told a wheelchair handler during his Thursday visit, wearing a purple Fight for $15 scarf. “This is about the dignity of work, but it’s also about economic growth in our community.”

Bacon’s bottom line: Economists have haggled endlessly for decades over the effects of the minimum wage, with neither side dealing a knockout blow. But it’s safe to say that the minimum wage would have the greatest impact on labor markets in areas where prevailing wages are the lowest — and in Virginia, those are rural areas.

Start by asking the following question: Why not raise the minimum wage to $30 an hour? Or $100 an hour? Because, even liberal economists will concede, employers will lay off workers who don’t deliver $30 or $100 in economic value. At some point the wages lost by those who lose their jobs will exceed the wages gained by those who received a pay raise. At that point the minimum wage becomes indisputably destructive. The question is at what hourly wage that threshold is crossed.

It is conceivable that a $15 minimum wage will work in the Washington metropolitan area in the sense that wage gains for lower-income workers will exceed the wages lost from employees who lose their jobs. That’s because Washington is already a high-cost-of-living, high-wage labor market, and the differential between prevailing market wages and the $15-per-hour minimum wage is relatively modest. The picture is very different in economically depressed Southside and Southwest Virginia communities where one of the few competitive advantages in the economic-development arena is a lower cost of living and a lower wage base.

The Virginia Employment Commission publishes labor market profiles of the Southwest Virginia Workforce Investment Area here and the Northern Virginia Workforce Investment Area here. Below, I extracted the average weekly wages for the largest occupational categories in Southwest Virginia (excluding government and mining/oil and gas/extraction).

For purposes of comparison, someone earning the current minimum wage and working 40 hours a week would earn $290 per week, while a $15-per-hour minimum wage would equate to $600 per week.

Clearly, such a minimum wage would have a greater impact on SW Virginia workers than NoVa workers where the average weekly wage (and by implication the average hourly wage) is 50% to 75% higher. On the plus side, the pay of SW Virginians would jump more… if they could hang onto their jobs. And there’s the rub. How many could hang onto their jobs after such a massive disruption to labor markets? While some SW businesses might survive by laying off marginal employees, one has to ask, others couldn’t even stay in business. Would a Pizza Hut franchise be able to keep the doors open if its cost of labor doubled? If not, how many business owners, store managers and others earning above the minimum wage also would lose their jobs?

Beyond the immediate impact, what would be the consequences for long-term job development? Would any corporation consider investing in SW Virginia, a region in which 11% of the workforce has an 8th grade education or less and another 12% has “some” high school, if the minimum wage were $15?

The idea of a $15-per-hour minimum wage was born in affluent urban areas with a high cost of living. It is totally inappropriate for poor rural areas with low living costs, low wage structures and high unemployment. I can think of no economic policy that would be more disastrous for Virginia’s rural regions.

Owens & Minor Goes for Millennials, Walkable City

Owens & Minor wants Millennials,and Millennials want 15-minute, livable communities. Graphic credit: Institute for the Future

Good economic news for the Richmond region: Medical supply giant Owens & Minor Inc. announced plans Thursday to open a client engagement center in downtown Richmond that will employ 500 people. Jobs will average about $53,700 in annual pay.

In making the announcement Governor Terry McAuliffe made much of the fact that Richmond competed against 60 other cities in a year-long search process. Less was made of the fact that Owens & Minor, which is located in the Mechanicsville suburb of Richmond, chose to locate in the central city rather than one of the region’s outlying counties.

The reason? “We want to attract the millennial generation,” CEO Cody Phipps told the Richmond Times-Dispatch. “We did our research. The millennial generation is going to be 50-plus percent of the workforce in the next few years, and they want to live in urban areas. They want to be downtown. They want to work in a state-of-the-art space. We like that we can draw from the universities around here.”

Owens & Minor will make Riverfront Plaza in downtown Richmond its newest home.

Owens & Minor will make Riverfront Plaza in downtown Richmond its newest home. Photo credit: Richmond Times-Dispatch

I don’t know who conducted Phipps’ research, but I know of one outfit in town that does specialize in generational marketing — The Institute for Tomorrow, which is affiliated with the Southeastern Institute of Research (SIR). (I worked for SIR about ten years ago.) Two days before Owens & Minor’s announcement, Managing Partner Matt Thornhill tweeted presciently, “Winning communities of tomorrow are 15-minute livable communities.”

By way of elaboration, he blogged about recent research conducted for the Virginia Secretary of Transportation. In a survey of 600 people around the U.S. who had just moved or were considering moving more than 100 miles, four out of five agreed with the statement, “Having access to stores, restaurants, and services close to my home (within about 15 minutes) is very important to me.” Almost as important was living withing a 15 minute commute of work.

It is often said that Millennials want to live “downtown” where it’s hip and cool and there are coffee shops and microbreweries. According to a recent Urban Land Institute study, though, only 37% of Millennial consider themselves to be a “city person,” wrote Thornhill; 36% classified themselves as “suburbanites” and 26% as “small town/country” people.

While there is nothing inevitable about Millennials wanting to live and work downtown, they are “hard-wired to be in community with each other,” Thornhill observed. “Thanks in part to doing school projects in teams from their middle school years onward, Millennials like to collaborate and trust in decisions made by the wisdom of the crowd. … They want neighborhoods where they can walk, bike, and use transit to get around.”

This community mindset, opined Thornhill, will drive the growth of “activity centers” of 15-minute livable communities. Activity centers don’t have to be in traditional cities (although most are).  “Builders, developers, urban planners, and government officials are now catching up to the changing preferences of consumers and looking for ways to in-fill activity centers across their metropolitan landscape.”

Thornhill stops his analysis there. But as I think about the Owens & Minor decision, it’s not clear that urban planners and government officials actually have gotten the message. While most of the City of Richmond fits the definition of a 15-minute walkable community, there are only flyspecks of walkability in neighboring Henrico and Chesterfield counties. In Henrico County the one area that potentially has the critical mass to compete with downtown Richmond, the Innsbrook Office Park, was rezoned for urban mixed use back in 2010. But re-development has stalled for more than six years due to inflexible application of the zoning code.

Absent a dramatic change of thinking and practice in the suburban counties, it looks like the future of the Richmond metropolitan region belongs to the city. Everything old is new again: Richmond possesses the key elements of walkability — moderate density, mixed uses, grid streets and timeless architecture — inherited from a past era of urban grandeur. The counties are stuck with suburban sprawl. Expect to see more headlines like Owen & Minor’s in the region’s future.

Alternate Facts Regarding Virginia Employment

Gallup's Good Jobs Rate for Virginia is 49.2%. Despite sequestration, Virginia employment numbers are robust.

Gallup’s Good Jobs Rate for Virginia is 49.2%. Despite sequestration, Virginia employment numbers are robust. 

Virginia’s economy  may be down in the dumps by Virginia standards, but it still looks buoyant compared to many other states, according to Gallup Organization data based on tracking interviews with nearly 355,000 U.S. adults.

The official state unemployment was 4.1% in December 2016, lower than for 33 other states. But the unemployment rate does not include the under-employed, discouraged workers not looking for jobs, people on disability, or those who have retired early. While four percent has long been regarded as “full employment,” we all know that hundreds of thousands of Virginians who would like to work can’t find full-time jobs.

Gallup compiles what it calls a “Good Jobs” rate which expresses the total number of 18-and-older adults with full-time jobs (more than 30 hours) as a percentage of the adult population. The metric excludes part-time and self-employed time workers. Virginia scores 49.2%, which means that almost half of all adults are working in full-time jobs.

Gallup views the Good Jobs rate as an indicator of economic vitality. It’s important to note, however, that a state with a large population of the elderly and retirees will look worse by this measure. Thus West Virginia, a state with an aging population where only 36.6% of adults are fully employed, fares the worst in the country. Likewise, Florida and Arizona, states with otherwise robust economies, also rank in the bottom 10 states by this measure.

Still, a high Good Jobs rate indicates that a high percentage of the adult population is contributing to economic activity.

Nationally, there are two clusters of very high Good Jobs scores — one in the northern plains states and the other in the two states bordering Washington, D.C.: Virginia and Maryland. Whatever harm sequestration has inflicted upon Virginia’s economy, the employment rate remains high by national standards.

Gallup also compiles an “underemployment” metric, which adds both unemployed people looking for jobs and those working part time but desiring full-time work. This number is expressed as a percentage of the adults in the workforce (not the entire adult population, as with the Good Jobs indicator).

Gallup did not publish the Virginia number for this metric, but in the map reproduced below, the company classified Virginia among the “low” underemployment states, meaning that it scored between 11th and 20th — ahead of Maryland, heh, heh.

Bacon’s bottom line: By both these alternative measures, the Virginia employment picture looks better, relatively speaking, than the official unemployment rate. They may be “alternate facts,” but they’re real facts. The economy is not as vibrant as it should be… but as a working man, I’d rather be in Virginia. (Hat tip: Tim Wise.)

Many Virginians Prefer Training over Incentives

Graphic credit: VCU

The Douglas Wilder School of Government and Public Affairs has published a public opinion poll delving into Virginians’ attitudes toward a wide range of issues relating to K-12, higher ed, and workforce training. The poll appears to be methodologically sound. I will use the poll results as stepping stones to address several topics.

Workforce training: When asked how to prioritize the spending of state economic development dollars, according to the poll results shown above, Virginians were evenly split between expanding workforce training and education programs over providing financial incentives to recruit new business or retain existing business.

I construe these results as evidence of potentially strong public support for my proposal, elaborated upon here, to scrap the Commonwealth’s Opportunity Development Fund, which is used to dish out financial incentives to corporations expanding in Virginia, and beefing up the state’s targeted workforce training program. The idea: Instead of attracting corporations with cash, we entice them with a skilled workforce.

As I noted in that column, addressing the jobs-skills mismatch is arguably the greatest economic challenge facing Virginia today. If a corporation can’t find the workers it needs, it won’t consider a community no matter how big the incentives. Furthermore, it makes more sense to invest in Virginia workers than subsidizing out-of-state companies that may or may not be willing to make a long-term commitment to the state.