By John O. “Dubby” Wynne and Thomas F. Farrell II
To rekindle strong economic growth in our commonwealth, the business community, higher education, and local governments in each region must work together on strategies that will increase the number of high-paying jobs and prepare the workforce needed to fill those jobs.
That urgent message came through clearly at the inaugural meeting of the Virginia Growth and Opportunity Board held in Richmond recently. Created by the General Assembly and Gov. Terry McAuliffe pursuant to the bipartisan “GO Virginia” initiative, the new business-led board is specifically charged with diversifying Virginia’s economy to rekindle job growth.
The chief challenge, as economist Stephen Fuller of George Mason University explained to the board, is the loss of high-paying jobs in the commonwealth due largely to the combined effects of the Great Recession, defense cutbacks, and federal sequestration.
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While Virginia enjoys low unemployment levels, our economy is underperforming compared to national and neighboring state economies. The culprit is the exodus of higher-paying jobs, a trend evident in recent months from sagging income tax revenues leading to another state budget shortfall.
Beginning a year ago, senior business leaders and a broad coalition of community, educational, and business organizations proposed a new framework for private sector-focused economic development in each region of our diverse commonwealth.
To help build Virginia’s “New Economy” and reduce our dependence on federal spending, supporters of the Virginia Initiative for Growth and Opportunity in Each Region (“GO Virginia”) called for targeted investments to enhance collaborative regional economic development, university-based research and development, and education and training leading to marketable job skills.
Earlier this year, the governor and legislature approved the landmark legislation, which passed with large bipartisan majorities. They authorized investing significant new resources in regional incentives, research, and workforce development geared to private-sector job growth.
Rather than a “build-it-and-they-will come” approach, Virginia’s leaders ensured that the new investments were tied to identifiable strengths and opportunities in the private marketplace in each region of the commonwealth. They also leveraged private-sector investment and know-how by providing for business-led collaborative bodies in each region and at the state level.
The emphasis on private-sector job growth in each region comes none too soon, and the focus on high-paying jobs is crucial. All jobs are valuable, but those with high wages have the biggest impact throughout the economy:
- High-paying jobs support not only the wage earners but also their families. The people who hold those jobs in turn invest more and spend more on other goods and services, producing a large multiplier effect that supports many other jobs in the economy.
- Companies with significant numbers of high-earning employees generate additional jobs at the businesses that are their suppliers.
- High-paying jobs are often tied to companies that bring revenue into Virginia from outside the state, rather than just reshuffling existing market share among competitor firms or communities.
- High-paying jobs help attract and retain high-performing employees who otherwise might leave the commonwealth in search of better opportunities. After benefiting from in-migration since the 1940s, Virginia recently began to experience such an exodus, with more people moving out of the state than moving in.
- Because of our state’s progressive income tax structure, high-paying jobs also provide the greatest return to Virginia’s revenue coffers. These are the tax dollars that pay for vital state services such as education, public safety, and healthcare. They also help assure that Virginia retains the advantages associated with our prized, triple-AAA bond rating.
With GO Virginia now being implemented, Virginia has a platform for encouraging local governments, higher education, and the business community to collaborate on ways to create more high-paying jobs in each region and to diversify Virginia’s economy.
While aggressive economic-development marketing and recruitment activities are vitally important and must continue, GO Virginia represents a new paradigm. The public funds provided through GO Virginia are not incentive payments to private companies; instead, they are resources that will be matched by local, federal, and/or private contributions and will foster growth across a range of enterprises:
Think of specialized workforce development programs in industries that are among a region’s identified growth opportunities.
Think of scaling up small and mid-sized companies with a proven track record in industry clusters that have strong growth potential, and further developing supply chains to support their growth.
Think of assistance to entrepreneurs, start-ups, and small businesses that can help them access capital, navigate the maze of regulations and requirements, and reach new markets.
Think of research funding that leverages private investment and collaboration among our universities to commercialize their activities.
Think of localities collaborating rather than competing with each other in securing and developing accessible and economical sites where job-creating enterprises can locate.
Many other examples could be given, and the priorities will vary by region. GO Virginia emphasizes regional collaboration because there is no single Virginia economy; the state’s overall economic performance results from the health and productivity of its highly varied regional economies.
Businesses tap regional labor markets and supply chains, serve customers across a region, and utilize regional infrastructure. New businesses looking for places to locate or expand facilities primarily consider the vibrancy and amenities of regions, with little or no regard for political boundaries. That’s why we need strategies to build up our regions and to encourage them to collaborate.
For our tax-funded investments in education, infrastructure, and economic development to help the private-sector grow — resulting in higher-paying jobs, higher personal incomes, upward mobility for our people, and upward trend lines in our public revenues — we need a market-focused, demand-driven approach in each of our regions. Bringing business to the table as an active participant is a key to this alignment. So is breaking down barriers to cooperation among localities, school systems, and higher education institutions.
This bold vision for a dynamic and robust new economy in Virginia is achievable. The governor and General Assembly have paved the way and lit the path. Now it is up to leaders in business, education, and government in each region to join hands and begin the journey.
John O. “Dubby” Wynne is the retired chief executive officer of Landmark Communications. He is chairman of the Virginia Growth and Opportunity Board, the newly created state board that oversee the state’s “GO Virginia” grant programs.
Thomas F. Farrell II is chairman, president and chief executive officer of Dominion Resources. He is a member of the Virginia Growth and Opportunity Board and chairs the nonprofit coalition supporting “GO Virginia.”
After benefiting from in-migration since the 1940s, Virginia recently began to experience an exodus, with more people moving out of the state than moving in.