What was the most economically transformative thing the General Assembly set in motion with the budget it recently adopted?
Was it the $25 million to pay off – “defease” is the more exotic technical term – the bonds for the now-shuttered Central Virginia Training Center in Amherst County, which will allow the state to sell off the 344-acre unused property that looms over downtown Lynchburg?
Was it the $15.7 million to create life sciences labs in Roanoke to help accelerate the growth of the Roanoke Valley’s life sciences cluster spinning out of the Fralin Biomedical Research Institute at VTC?
Was it the $200,000 for a study of a possible inland port either around Lynchburg or somewhere between Wythe County and Bristol?
You can make a good argument for any of those. The development of the old Central Virginia Training Center site could change the face of the Hill City. The life sciences sector is already starting to transform the Star City. Virginia’s current inland port near Front Royal is responsible for about 6,000 jobs in the surrounding area; what would even half that growth mean around Lynchburg or Wytheville or Bristol?
Or was the most transformative thing in the budget the $12.5 million that Del. Terry Austin, R-Botetourt County, secured to develop a trail along Craig Creek in Craig and Botetourt counties? That’s a trick question, obviously, but a somewhat serious one nonetheless. That future trail may be way out in the country but it still fits into a larger scheme: the development of an outdoors-based economy in and around the Roanoke Valley – and, to some extent, all of Southwest Virginia.
These thoughts come to mind with tonight’s start of the National Hockey League’s Stanley Cup finals. I’ve made it a hobby to use a major sports championship as the occasion to look at the economies of the two cities represented to see what lessons we can glean from them.
For those are into that sort of thing, here are some previous lessons:
Los Angeles: How advanced manufacturing drives the economy.
Cincinnati: How the city turned a liability into an asset.
San Francisco and Boston: What we can learn from the tech capitals.
And that brings us to the Stanley Cup finals between the Colorado Avalanche and the Tampa Bay Lightning and why I ask about that trail funding.
- Quality of life drives the economy in both Denver and Tampa. This is perhaps the most important takeaway. Both Denver and Tampa are prospering because they’re seen as good places to live – and one reason they’re seen as good places to live is all the outdoors activities available close by.
It’s often easy to dismiss recreation as something not particularly serious because, well, recreation is fun. But recreation is also a heavy-duty economic force. A 2020 study by the U.S. Bureau of Economic Analysis found that the outdoor recreation economy is bigger than the mining economy. Bigger than the agriculture economy. And on a par with broadcasting and telecommunications.
That means two things: The outdoors economy not only helps a community’s livability – which makes it attractive to new people – but it’s an economic force in its own right. Both Denver and Tampa rank high on this, just perhaps in different ways. The outdoors economy accounts for 4.4% of Florida’s economy, the BEA found; only three states ranked higher – Hawaii at 5.8%, Vermont at 5.2% and Montana at 4.7%. Colorado ranks 10th, at 3.1%. Some Denver-based teams have effectively adopted this outdoors-based message through their team nicknames – the Colorado Avalanche in hockey and the Colorado Rockies in baseball.
Virginia, on the other hand, ranks quite low – the outdoors economy accounts for only 1.7% of the Old Dominion’s economy. That’s the lowest rate in the South, and the third lowest on the whole East Coast. Only Pennsylvania at 1.6% and Connecticut at 1.3% are lower. This surprises me, given the variety of outdoors experiences available in the state, from the mountains to the coast.
It’s especially notable then that so many communities in our part of the state have been pushing the outdoors so heavily. Years ago, the Roanoke Regional Partnership, the economic development group for the Roanoke Valley, began promoting an outdoors-themed message, conceptually changing the valley’s identity from a “former railroad town” to a “future outdoors town.” Or even a current one. In far Southwest Virginia, we’ve seen emphasis on the development of the Spearhead Trails as an economic force. In that context then, the money for the Craigs Creek trail is an important investment that underscores the region’s outdoors message. Damascus knows the economic importance of the Appalachian Trail, which it celebrates every year with Trail Days. Elsewhere, we’ve got the Virginia Creeper Trail, the Huckleberry Trail, the New River Trail, all kinds of trails. We might even want to start asking what other trails we should be planning.
- Every locality is focused on developing a more skilled workforce. Here’s where Denver and Tampa diverge. Denver has one of the most educated workforces in the country: 43.9% of Denver workers 25 and older have at least a bachelor’s degree. The national average is 32%. Tampa comes in lower at 28.6%. A 2020 study that several Tampa business groups commissioned dinged the city for that figure. “We either want to be exceptional, or we want to be average,” the CEO of the Tampa Bay Partnership told the Tampa Bay Times. “And if we want to be exceptional, we need to pay attention to these numbers because they compare us to peer communities that have set the bar a little higher.” Now keep in mind that virtually all of Southwest and Southside comes in lower yet. Montgomery County, home to Virginia Tech, clocks in at 46.3%. Lynchburg (33.6%), Radford (34.4%) and Roanoke County (34.7%) also all come in above the national average. But across most of Southwest and Southside, the figures are in the teens, with Dickenson County (9.3%) and Greensville County (7.5%) coming in lowest. Now, a four-year degree isn’t the only measure of a skilled workforce, it’s just the easiest to measure. Increasingly we’re seeing good-paying jobs that only require a community college credential. The point, though, is that while we’re starting to focus on building a skilled workforce, so is every other community in the country. If Tampa is worried, Tazewell County should be, too. This is probably a lesson we can’t stress enough.
- Immigration is good for the economy. Now we get to the more controversial lessons. There are legitimate debates we can have over immigration – it’s probably not a good idea that people can just walk across the southern border, right? But we shouldn’t let that distract us from a larger, and somewhat separate, issue: Immigration helps drive the economy. Right now, we’re seeing inflation. That inflation is driven, in part, by a worker shortage. Why are we seeing a worker shortage? Demographics are one reason – a lower birth rate has produced fewer workers. I explored that in an earlier column. But a reduction in immigration is another. By some estimates, the United States is “missing” 2 million immigrants – a combination of policies under the Trump administration and the pandemic. (This Associated Press story in the Tampa Bay Times explains this in more depth.) Now, if you’re a worker making more money, maybe you like that reduced immigration – but if you’re paying more for everything else, maybe you don’t.
In any case, we often overlook this: Immigrants have a higher rate of creating businesses than native-born Americans. What city has the biggest number of immigrant entrepreneurs? Seattle, according to a study by the New American Economy, with 54,318. Which city comes in second? Tampa, with 33,910. Coming in third is Minneapolis, with 20,413. While Tampa is a big place, that still seems like an awful lot of immigrant entrepreneurs. Broadly speaking, that report the Tampa Bay business community commissioned on its economy found that all that entrepreneurial activity from immigrants was helping make up for Tampa’s relatively low rankings for educational attainment. That’s one of the reasons I thought Southwest and Southside missed both a demographic and an economic opportunity by not attracting more of the 10,300 Afghan immigrants who passed through Fort Pickett. (For the record, Rep. Bob Good, R-Campbell County, disagreed and didn’t think the Afghan refugees should be in the United States at all.) I wrote earlier about how Southwest and Southside have historically been bypassed by large-scale immigration. If we want economic growth, though, we should be encouraging more immigration, not less.
- Legal marijuana is big business. Denver’s nickname, the Mile High City, now might have more than one meaning. Colorado was the first state to legalize recreational cannabis – the preferred scientific term for what we commonly call marijuana, or weed, or pot, or, my personal favorite, the devil’s lettuce. Other states now have bigger markets but when we talk about legal cannabis, many people still picture toked-out Denver hippies. This is relevant to us because Virginia has now legalized cannabis for personal use but has not yet set up a retail market. Had Democrats retained control of the General Assembly, they’d have already done this. They didn’t and the Republicans who now control the House of Delegates couldn’t figure out how to do this – and punted the issue during the recent session. Republicans seem divided between those who don’t think we should be legalizing cannabis at all and those who are fine with legalization but have philosophical differences with Democrats over how that market should be regulated.
In any case, here’s why this is one of the lessons we should draw from Denver: In Colorado, almost half the state’s cannabis crop comes from Denver. That’s because it’s being grown indoors, not outdoors. In fact, Colorado Public Radio reports that nearly 4% of the electricity usage in Denver is for indoor marijuana operations. The National Conference of State Legislatures reports that at one point a few years ago, 45% of the new electricity demand in Denver went to marijuana operations. On the one hand, this makes sense: Denver is Colorado’s biggest city. That’s where the market is. Growing cannabis close to the market reduces transportation costs. It’s hard to argue with the free market. However, as we look ahead to the regulations for Virginia’s future cannabis market, we should ask: Do we want to encourage cannabis cultivation in rural areas, or leave things to chance, which means we’ll probably wind up with lots of greenhouses in the urban crescent? Economically, it makes sense to grow cannabis indoors – more security, longer growing season, all that. But there are still things Virginia can do to make sure rural areas get a piece of this new economic pie (munchies!). I looked at some of those in an earlier column.
Here’s one example: A Joint Legislative Audit and Review Commission study warned that the 11,000 to 18,000 jobs created by legal cannabis would “likely pay below Virginia’s median wage” of $42,000. However, there are lots of localities across Southwest and Southside where that would represent a wage increase. What if the General Assembly mandated that licenses for cannabis growers, manufacturers and wholesalers only be issued in counties where the median income is below that level? Is the General Assembly prepared to go that far? That might be more government regulation than Republicans are prepared to stomach, even though the localities that would benefit most are Republican-voting ones.
So there you go, four lessons for a best-four-of-seven series.