Virginia, once again, has been named by CNBC as the best state in the country to do business, extending a reign that began two years ago, before the COVID-19 pandemic triggered a recession that threatened, but failed to cripple the state’s economy.
The pandemic prevented the business news network from naming a winner in the annual sweepstakes a year ago, but managing the crisis helped give Gov. Ralph Northam bragging rights at a crucial political juncture at the end of his term as voters prepare to elect his successor and a new House of Delegates.
Virginia became the first state to win the recognition twice in a row, which the governor credited to the state’s education system, workforce and inclusive public policies.
“I am proud of what this coveted recognition says about the policies we have put in place and how they are driving growth and innovation across our commonwealth,” Northam said after receiving the award during a televised interview in Norfolk on Tuesday morning.
“Our success is a blueprint for creating a vibrant economic climate in the post-pandemic world — and proves that when you lift everyone up, when you treat people right, and when you celebrate diversity, it’s also good for business,” he said.
Two years ago, it was Amazon’s decision to choose Virginia for HQ2, the company’s East Coast headquarters, with a minimum investment of $2.5 billion and at least 25,000 high-paying jobs, that helped the state win the No. 1 slot in the CNBC ranking.
With the pandemic raging and a recession underway, Virginia landed another prize in May 2020, when Microsoft announced it would build a $64 million software development hub in Reston that is expected to create 1,500 jobs. During Northam’s term, the state has attracted $45 billion in capital investment, creating almost 90,000 jobs.
“We are extremely proud of what we’ve accomplished in office, including the managing of the COVID crisis and still doing business deals,” said Secretary of Commerce and Trade Brian Ball, who also cited the Morgan Olson automotive plant for delivery vans in Danville and an advanced manufacturing facility for critical pharmaceutical products in Petersburg.
House Minority Leader Todd Gilbert, R-Shenandoah, who hopes his party regains the majority in the November elections, did not mention the top ranking in his response but warned of dire consequences to Virginia’s economy under Democratic rule.
“We remain deeply concerned about the impact of Democratic policies on Virginia’s core strengths and long-term economic success,” Gilbert said in a statement. “Democrats have attacked the underpinnings of our economy for two years straight.”
“They fought efforts to get schools back open in a timely fashion, and they’ve pledged to repeal right-to-work protections,” he said. “Democrats have given people a raft of new ways to sue their employers, and voted to make energy more expensive.”
Democratic leaders held a jubilant news conference with Northam at the Port of Virginia in Norfolk that touted the ranking as evidence that the policies they enacted have made the state better for business.
“All the naysayers who said it couldn’t be done, we proved them wrong,” Senate Majority Leader Dick Saslaw, D-Fairfax, said.
Northam accepted the award two years ago at a state park in the Shenandoah Valley, but this time spoke from the state-owned port, a critical asset for Virginia’s economy and a potential linchpin for an emerging industry for offshore wind power, as well as the supply chain that supports it.
Virginia has won the honor five times since the CNBC survey began in 2007, more than any other state. Virginia previously received the top ranking in 2011, when Republican Bob McDonnell was governor, and in 2007 and 2009, when Democrat Tim Kaine was governor.
CNBC announced the award the same week that Virginia will announce state revenues collected for June, the final month of a fiscal year that is expected to produce a surplus of up to $2 billion.
“What we’re doing works,” Northam told CNBC’s Scott Cohn in a nod toward his predecessor, former Gov. Terry McAuliffe, a Democrat who is trying to reclaim the job in a race against Republican businessman Glenn Youngkin that offers dramatically different views of Virginia’s economy.
“We’re in great shape,” Northam told CNBC. “Our economy is roaring.”
On Twitter, McAuliffe said of the announcement: “Our economy is on a ROLL with Democrats in charge. Let’s keep it up.”
“I’m all for Virginia getting accolades,” Youngkin told reporters Tuesday, following a stop at his new metro Richmond campaign headquarters with Nikki Haley, former U.S. ambassador to the United Nations and governor of South Carolina.
“An unfortunate reality is that Virginia hasn’t performed like the No. 1 state for business over the last eight years.”
While CNBC ranked Virginia second among the states in education, third for workforce and ninth for access to capital, Youngkin noted that Virginia ranked in the bottom half of states in the cost of living (32nd) and in the cost of doing business (26th) and 24th in infrastructure. He said Virginia’s ranking for business friendliness “has dropped materially.” It fell from third in 2019 to 11th in 2021.
“Those are the factors that I think overwhelm almost everything else when it comes to drawing businesses into Virginia and getting our economy running,” Youngkin said.
Matt Wolking, a spokesman for Youngkin, accused McAuliffe of seeking to repeal Virginia’s right-to-work law, “which will cause employers to flee the state in droves.”
The law essentially protects workers in union workplaces from being required to pay membership dues.
McAuliffe’s campaign wouldn’t say whether the former governor supports or opposes the repeal of right-to-work. The state’s Democratic leaders oppose repeal, but the idea has ardent support in the party’s progressive wing.
“We didn’t touch it,” said Ball, a former attorney at a major Richmond law firm.
Senate Minority Leader Tommy Norment, R-James City, said the credit belongs to Republicans.
“We’re pleased that Republican legislators successfully thwarted Democrat efforts to repeal Virginia’s right-to-work law, and that we had a restraining influence on their profligate spending schemes,” he said in a statement that also warned against higher energy costs and payroll taxes because of Democratic policies.
Virginia’s economy also has benefited from tens of billions of dollars in federal emergency aid, including $4.3 billion from the American Rescue Plan Act that Northam and the General Assembly will decide how to spend during a special session next month.
The award provided an opportunity for Northam and General Assembly Democrats to claim vindication for increasing Virginia’s minimum wage and achieving other progressive legislative goals, despite warnings from Republican opponents that the economy would be put at risk and the state’s business reputation damaged.
COVID, racial justice
The COVID-19 pandemic and a push for racial justice reshaped the competition for the top business state honors. The cost of doing business carried the most weight of the 10 categories, but CNBC said it had placed “a new focus” on health care and inclusiveness.
“The pandemic has changed the way we view health care,” the network said last week as a preview of the new rankings, “And the new, national focus on racial and social justice has led to unprecedented demands from corporations for inclusiveness in the locations where they choose to do business.”
In Virginia, 11,450 people died of COVID-19 during a nearly 16-month state of emergency that Northam declared on March 12, 2020, and ended last month. But he did not, like governors in 25 states, end temporary federal unemployment benefits, despite pressure from businesses and political opponents who say the aid has hampered employers from hiring in a tight labor market.
The network reminded Northam that Virginia had not done well with racially inclusive policies when it won two years ago, six months after a scandal erupted over a photograph on the governor’s medical school yearbook page in 1984 that showed a man in blackface and another person in Ku Klux Klan attire. Northam initially apologized for being in the photograph, then denied being in it or knowing how it was published on his yearbook page, but he acknowledged darkening his face for a San Antonio dance contest in 1984 and vowed to devote the remainder of his term to improving Virginia’s record on race.
Since, Democrats took control of both chambers of the assembly and joined the governor in passing progressive priorities.
The state adopted laws in an effort to make the criminal justice system fairer and expand opportunities for racial and ethnic minorities, with additional investments in affordable health care and historically Black colleges and universities, while protecting vulnerable families from eviction and utility bills they couldn’t afford to pay during the pandemic.
Virginia expanded voting rights protections this year, even as states competing for the business honors, such as Texas and Georgia, have moved to restrict voter access, claiming the need to restore election integrity after the contested 2020 presidential race.
“Virginia is making it easier to vote,” Northam told CNBC. “Other states are not.”
A year earlier, Virginia became the first state in the South to extend anti-discrimination protections in the workplace and elsewhere to people based on sexual orientation or gender identity, which Ball said reflects “what kind of state Virginia is to live and to work.”
He also cited big investments Virginia has made in affordable housing, high-speed broadband internet service, clean energy, mass transit and transportation.
Northam reached a $3.7 billion deal with CSX Corp. and Amtrak at the end of 2019 that the state hopes will transform passenger rail service throughout Virginia, which may have benefited both in the “cost of doing business” and “infrastructure” categories.
Northam touted a total 10% increase in teacher salaries over the past three years and investments in higher education, including the new G3 program that he pushed through the General Assembly to give free tuition to students from low- and middle-income households for completing courses in needed trades and fields.
Barry DuVal, president and CEO of the Virginia Chamber of Commerce, said in a statement: “The ranking reflects our longstanding investments in workforce training and our robust education system, while also recognizing the increasingly inclusive nature of the commonwealth.”
Northam told Cohn that after his term is over, he will return to his medical practice as a pediatric neurologist in Norfolk.
“My plan is to go back and see patients,” he said, “and take care of children and their families.”
Staff writer Mel Leonor contributed to this report.