Sunday, January 09, 2005
Is Roanoke on a slowly sinking ship?
What does the future hold for the regional economy?
The latest from The Ticker blog
It's easy to pile on Roanoke.
So many of our economic vital signs are pointing in the wrong direction, I wouldn't blame even Bristol for doing a little dance in the end zone of Victory Stadium. Some of the reasons behind our atrophy:
• The Roanoke Valley and New River Valley are adding jobs, but much more slowly than other regions, a constant for decades.
• We have fewer college grads than other areas, and those are the people who get the biggest paychecks.
• While other regions and the state overall are adding professional business services jobs, we are losing them. These are high-level jobs that pay well - architects, engineers, lawyers.
During the year that ended this September, Virginia as a whole saw its professional services jobs increase by 5.7 percent. This region's jobs in that category declined by 1.3 percent.
In many valley business leaders, I sense tremendous frustration about the region's economy. While there are great employers here, clusters of promise and some real successes, the anemic growth rate sets a ceiling on how successful many can be.
"This is a great place to own a business, but a bad place to grow a business," one said.
Another said the region's small population growth puts the brakes on significant business growth.
Here's what I hear when I talk with local business community members:
• Some question if people really want progress. Or if they do, it's feared as much as it is embraced. Maybe more importantly, what defines progress?
• We don't have adequate leadership to stimulate much more than the economic growth that happens by itself. Not just a cheap shot at elected officials here. This refers to the kind of corporate leadership a region enjoys when banks, railroads and insurance companies call your town home.
Dr. Ed Murphy of Carilion Health System has shown willingness to take the role of a figurehead in efforts, but what happens next?
• A lack of regional cooperation hurts.
I don't know if these are the key issues or not. Here less than two years now and no economist, I'm still trying to get my arms around the issue.
But I'll say this about the Roanoke region: It's nice the way it is. I would be pleased if the feel of this place did not change. I'd certainly be displeased if it changed to feel more like Hampton Roads or even parts of Richmond.
But it seems unlikely that the region can stay as nice as it now is by continuing down the path of minimal growth. Even if many of us like the way Roanoke feels now, and we think staying like this is not a bad thing, I wonder if it can last.
As the wrong mix of jobs continues, as we continue to lose corporate decisionmakers and professional business services, we will eventually see the good parts of Roanoke suffer.
Donations from the state to charities, arts and cultural organizations are declining. I fear they'll keep going down until some of the things we take for granted are gone.
A region of corporate call centers and "back office" operations can't or won't cough up the kind of money needed to keep all these organizations healthy in the face of lower state funding, will it?
I can't see explaining to my kids that Mill Mountain Zoo has shut down, can you?
Another concern: Roanoke doesn't seem to have the resiliency it once had.
The conventional wisdom is that this economy rarely falls as far as the state's or the nation's during recessions. At the same time, it doesn't rise as high as others when times are booming - like a utility's stock.
During the recession of 1990, employment in our region and in the state overall dropped at about the same rate. They bottomed in 1991 about the same time. (These trends are provided by several sources, primarily the regular economic analyses of economist Christine Chmura.)
By 1994, recovery was in full swing. And this time, the Roanoke and New River valleys actually did better than Virginia, with job growth here rising even faster than the state for a period around 1995.
The region bounced back.
After 1995, our job growth fell behind the state again, but held its own, sticking to the convention that the regional economy didn't rise too high or fall too low.
The conventional wisdom isn't holding up. Like an overused rubber band, our economy seems to be losing its ability to snap back over time.
The latest example, pulled from Chmura's research, suggests that Roanoke hasn't kept pace with the state in regaining jobs lost in the recession of 2001. In this recession, Roanoke did fall farther than the state (as a percentage of jobs lost). With a deeper hole to dig out of, the region hasn't been able to make up for all its job losses yet.
Average wages for the worker in Roanoke always have been lower than average Virginia wages. That's not surprising. But average wages for the state are going up faster than in Roanoke. The gap is widening.
None of this may seem alarming if viewed as a snapshot of conditions at a single point in time. Seen over a period of decades, however, it's easy to be concerned about losing just a little ground from other regions every few years until we're just a speck in their rearview mirrors.
Being a newcomer allows me to say this, too, without overwhelming guilt: I could be wrong about all of this.
Some argue the numbers we often see aren't a fair picture because they're usually based on Metropolitan Statistical Areas. And those MSAs don't currently include Franklin County's or Bedford County's effect on the regional picture.
That's a great point.
Some argue that such a gloomy attitude about the region's economy in general isn't just unfair, it's wrong. Our unemployment is among the state's lowest and our low cost of living makes a $40,000 salary here go a lot further than a $40,000 salary in Richmond or Northern Virginia.
You can't argue either point too much, though low unemployment can make it harder to convince prospects that they'll find enough qualified workers here.
I don't have answers. I'm not sure anyone else would suggest they do, either. My hope is this column might serve as a request to you to help us make the region's economy one of the top story lines of 2005.
Do we need to focus every energy on landing a "home run" prospect that would employ a couple thousand and bring support businesses? Do we even need to do anything extraordinary to sustain the good things we have now for the coming decades?
What do we really have to gain or lose by choosing one or the other?