The ODU State of the Commonwealth report.
The ODU State of the Commonwealth report.

When the General Assembly reconvenes next week, the governor will deliver his State of the Commonwealth address. That will, by definition, be a political statement.

For a more dispassionate – and economic-focused – account of things, I refer you to the annual State of the Commonwealth Report from the Dragas Center for Economic Analysis and Policy at Old Dominion University.

The ODU report is full of charts and graphs that attempt to measure the state of things in Virginia, much like how a doctor takes your blood pressure and other vitals during your annual checkup.

Last year’s report showed, among other things, that the Lynchburg metro ranked surprisingly low in many key measures. Business leaders in Lynchburg didn’t much like that. They commissioned a study by Richmond consultant Christine Chmura, who recently told them that the Bureau of Labor Statistics numbers that ODU uses are incomplete because they don’t capture the economic impact of Liberty University.

Specifically, the employment figures are incomplete because Liberty, as a religious institution, doesn’t have to participate in unemployment insurance. “Because they don’t participate in unemployment insurance, we don’t see them in the [U.S. Bureau of Labor Statistics metropolitan statistical area] numbers that come out monthly,” Chmura said, according to an account by The (Lynchburg) News & Advance. “So most organizations participate in the unemployment insurance, you have to pay unemployment insurance counting the people that work in your firm, and that’s where these numbers come from.” If you add in Liberty, she said, Lynchburg’s growth rate doubles.

I asked ODU about this before I read the most recent report. The response from Robert McNab, director of the Dragas Center: It’s true that the BLS data doesn’t capture everything. He also says this may not be that big a deal: “For nonfarm payrolls (jobs), the reported level may not sufficiently capture a large non-covered employer, but the question we are more interested in is how nonfarm payrolls have changed over time. We tend to examine percentage changes so we can compare different metro areas. If there is a large non-covered employer, it would have to be hiring (or firing) at a different rate than the metropolitan area to significantly alter the percentage change in nonfarm payrolls over a given period. Of course, this is possible and is why we rely on more than one measure of economic performance.”

Far be it from me to get in the middle of a fight between economists. And they’re not really fighting; they just have different statistics. “We have traded emails with Chris Chmura and will chat about the Liberty data in late January,” McNab says. “She has graciously offered to make the data available to us and we look forward to comparing the adjusted payrolls series with the data from BLS.”

So, point one: Stay tuned. Point two: Keep this underreporting in mind whenever there is BLS data regarding Lynchburg. Point three: Not all economic data relies on the BLS data that doesn’t incorporate Liberty. For instance, the Commerce Department’s Bureau of Economic Analysis recently released figures on the Gross Domestic Product for counties and cities in 2021. Those numbers don’t rely on BLS employment data; the Commerce Department says they take into account other measures that would incorporate Liberty – and those figures weren’t pretty ones for Lynchburg either. You can read my previous column on that.

Anyway, that’s a long caveat before we get into this recent report.

The population chart from the ODU report. Courtesy of ODU.

Population: Northern Virginia losing population; Lynchburg metro growing faster than Roanoke metro

This report uses data I’ve previously written about, the annual Census Bureau population estimates, so if these numbers seem familiar, that’s why.

Still, they’re worth repeating: From 2020 to 2021, Northern Virginia lost population. Now, a one-year blip does not a trend make, but this is a trend. The Census Bureau reports that Fairfax County, in particular, has been losing population since 2018. To the extent that population growth or decline reflects underlying economic trends (people move to where jobs are; they move away from where jobs aren’t), this should be a big, flashing bright neon warning sign for the state. Northern Virginia has been the state’s economic engine. Rural schools get most of their funding from the state, but where do you think that state funding comes from originally? Northern Virginia. If Northern Virginia is losing population, that has profound implications for the state economy.

Again, these figures aren’t new but they’re still important. The reason Northern Virginia lost 29,280 people from 2020 to 2021 is that 66,811 people moved away. “Natural change” – a demographer’s way of saying births outnumbering deaths or vice versa, but in this case births outnumbering deaths – added 25,250 back. So did some 12,600 immigrants. But that still wasn’t enough to make up for all those people moving out. I never thought we’d be in a position to worry about people moving out of Northern Virginia, yet here we are.

Closer to home, the Lynchburg metro area (officially defined as Lynchburg, Amherst County, Appomattox County, Bedford County and Campbell County) added more people than the Roanoke metro area (Roanoke, Salem, Botetourt County, Craig County, Franklin County and Roanoke County). The Lynchburg metro added 850 people in 2020-2021; the Roanoke metro lost 561. It’s important to look deeper at why Lynchburg grew and Roanoke didn’t. The short version is that the Roanoke Valley has a lot more people dying. Lynchburg has a relatively high birth rate, so while deaths outnumbered births, they didn’t do so by as much as they did in the Roanoke metro. The Roanoke metro has more people moving in than moving out, it’s just that low birth rates and high death rates (the function of an older population) cancel out that in-migration.

We see this in lots of places: The population decline looks bad but that doesn’t suggest a problem with the economy; it just underscores what happens when you have an older population. In any case, the Lynchburg metro has about three times as many people moving in than the Roanoke metro does. Lynchburg has nothing to worry about here. Roanoke may not, either. Again, this is just a one year snapshot and over time these one year figures bounce around. What really matter are the long-term trends and over time the Roanoke Valley has been gaining population. One-year changes are certainly worth keeping an eye on, but they don’t, in and of themselves, sound an alarm bell.

Another metro area that shows up with a one-year losing population record is the New River Valley (Blacksburg-Christiansburg on the chart), but demographers caution that we should be wary of population estimates in college towns, particularly during the pandemic. Lynchburg is a college town in a way, too, and it wound up on the plus side, but its colleges don’t dominate the Hill City the way Virginia Tech and Radford University do in the New River Valley. Bottom line: Be wary of reading too much into those New River population stats, based on what demographers tell me.

Take a closer look at the statewide figures, though. More people moved out of the state than moved in. That’s not new; it’s been the case since 2013, but it has become a major talking point for Gov. Glenn Youngkin as he promotes his economic agenda, which he says will help reverse this. Here’s what I notice, though: We’ve always said that the only reason Virginia is gaining population is because births outnumber both deaths and that out-migration. That’s no longer true, though. Births outnumbered deaths but not by enough to make up for out-migration. Instead, the only reason that Virginia gained population from 2020-2021 is because of international migration – immigrants.

Job growth: The New River Valley leads the state

The ODU report attempts to measure how well the state – and its various regions – have recovered from the pandemic. In three different ways, the New River Valley is the only bright spot, when you compare data from February 2020, before the pandemic hit, with September 2022, which is the most recent data the report had.

How civilian labor force changed. Courtesy of ODU.

In measuring the change in the civilian labor force over that time period, only the New River Valley hasn’t lost ground – and it’s just stayed even. Every other metro has shrunk. The best way to think about this is in terms of recovery. Based on this data, the New River Valley has recovered its labor force but hasn’t grown. Nobody else has gotten back to pre-pandemic levels, with Charlottesville and Roanoke being the furthest back.

How individual employment has changed. Courtesy of ODU.

By another measure – percentage change in individual employment – the New River Valley stands out as the state’s star. It’s the only metro to record growth from February 2020 to September 2022. Charlottesville and Hampton Roads have been the slowest to recover.

How non-farm payrolls changed. Courtesy of ODU.

Finally comes the percentage change in non-farm payrolls. Here only two metros have recovered – Winchester and the New River Valley, which leads the state. Roanoke and Charlottesville bring up the rear here. If you’re keeping score that means Charlottesville is at the bottom in all three of these measures, with Roanoke at or near the bottom in two of the three. The differences here, though, are generally pretty small so while the chart above looks bad for those on the lower end, a percent or so may not be a very meaningful change. It’s probably more important to pay attention to that big growth in New River. That does look meaningful.

Ten years of GDP growth. Courtesy of ODU.

GDP growth: New River led the state in 2021

Finally, we have those GDP numbers, which, as previously noted, are based on different data than the employment stats that are said to skip Liberty University and therefore undercount Lynchburg. I mention that because these figures show good news for the New River Valley and not-so-good news for the Lynchburg metro.

In terms of the past year, New River posted the fastest GDP growth in the state. Now, not to be a downer or anything, but all things are relative. In 2020, New River also had one of the biggest GDP declines in the state, so in percentage terms, it’s easier to post a big rebound after a big decline. Roanoke, by contrast, showed slower GDP growth but also declined less during 2020. If we’re going to look at GDP in percentage terms (and that’s how the ODU report does it), then it’s best to look over a much broader swath of time than a single year. Conveniently, ODU does that.

While my earlier column focused on the past four years, the ODU report goes back 12 years – from 2010 to 2021, the most recent year available. While I focused on individual cities and counties, ODU focuses on metro areas. It finds that the New River Valley had the fastest GDP growth of any metro in Virginia in 2021 – 8.5%. The slowest in the state was in Lynchburg – at 3.1%.

Going back over 12 years, the biggest GDP growth in Virginia in percentage terms has been in the Richmond area, at 2.1%, although that’s still below the national average of 2.3%. Richmond is followed by Winchester at 1.9%, Charlottesville at 1.7%, New River at 1.6% and then Northern Virginia at 1.5% – all above the state average of 1.4%. Roanoke was below the state average at 0.5%. Meanwhile, two metro areas have seen their GDPs shrink over the past dozen years – Lynchburg and Staunton. (And by metro area, we mean Amherst County, Appomattox County, Bedford County, Campbell County and Lynchburg for Lynchburg and Staunton, Waynesboro and Augusta County for Staunton).

Robert McNab, director of the Dragas Center at ODU shares these numbers:

Lynchburg’s GDP in 2010 was approximately $9.69 billion. That fell to $9.56 billion in 2019, the last pre-pandemic year, then to $9.07 billion in 2020 and was up to $9.35 billion in 2021, but still lower than before the pandemic, and lower than 2010. “If we observe growth in Lynchburg similar to that estimated for the Commonwealth in 2022 (between 2% and 3% real GDP growth), the level of real GDP is likely to approach that last observed in 2010,” McNab says.

Staunton’s GDP in 2010 was $4.9 billion. That fell to $4.71 billion in 2019, then $4.56 billion in 2020 and in 2021 came back up to $4.78 billion, so slightly higher than pre-pandemic but still lower than in 2010. McNab says the same thing here as he does about Lynchburg: “In 2022, if Staunton grows roughly the same (or slightly faster) than the Commonwealth as a whole, it should approach the level of economic activity last observed in 2010.”

These seem like two prosperous communities from the outside. They certainly aren’t mistaken for Rust Belt cities. So why have their GDPs shrunk? That seems a good line of inquiry for another report.

Dwayne Yancey

Yancey is editor of Cardinal News. His opinions are his own. You can reach him at dwayne@cardinalnews.org.