In late 2021, Old Dominion University issued its annual State of the Commonwealth report, which, among other things, put Lynchburg near the bottom for many of its economic metrics.
The business community in Lynchburg commissioned a Richmond consulting firm to study those numbers and responded that the way the data was collected by the federal government didn’t account for a lot of Liberty University employees and therefore understated Lynchburg’s economic growth.
A federal report from the Bureau of Economic Analysis released in December 2022 showed that Lynchburg has recovered more slowly from the pandemic than any other metro area in Virginia — and that report did cover Liberty employees.
Then came the ODU State of the Commonwealth report for 2022, which showed that the Lynchburg metro was just one of two in Virginia (Staunton was the other) that have seen their gross domestic product shrink over the past decade. (And those figures include Liberty, as well.)
I realize none of this is exactly chamber of commerce-type promotional material for the Hill City but I count it the same way as when your doctor tells you your blood pressure is too high. Nobody wants to hear that, but better to hear it than not hear it so you can do something about it.
In early May, I was on a panel discussion at a state convention of philanthropic foundations in Roanoke. I was there to talk about demographic changes in the state (you can find all that coverage here). One of my fellow panelists was Sonya Ravindranath Waddell, a vice president and economist at the Federal Reserve Bank of Richmond. She was there to talk about economic trends in the state; her theme was that Virginia’s economy is growing more slowly than that of our neighbor to the south, North Carolina. One of the slides she showed off was this one, which broke that slow job growth down by metro area as plotted over 10 years.
My eye went immediately to the two green circles at the bottom: Lynchburg and Roanoke.
The good news is they are in the upper right quadrant, which means they’ve both been growing jobs, over the past year and over the past 10 years. The not-so-good news is that they’ve grown jobs more slowly than any other metros in Virginia, and almost any other metro in the Virginia-North Carolina area.
Here’s a slide that shows those Virginia metros in relationship to North Carolina cities (and the Bristol metro, which ranges into Tennessee).
Consolation: At least we’re not Goldsboro, North Carolina, which may be growing jobs now but hasn’t over the past decade, or Rocky Mount, North Carolina, which has lost jobs both over the past year and the past 10 years. Those North Carolina cities stand in stark contrast to the two big overlapping purple circles at the top: the smaller one is Raleigh, the bigger one is Charlotte.
You’ll see from this how Northern Virginia’s job growth lags behind that of many North Carolina cities, which meshes with the prior reporting I’ve done on the state’s demographic trends — more people are moving out of Northern Virginia than are moving in. Some of that is surely because people are finding better jobs elsewhere, perhaps those North Carolina cities.
Nonetheless, one thing remains the same: Lynchburg shows up as the slowest growing metro area in Virginia. Why is this?
If you ask that question of a Federal Reserve economist (as I did), you’ll get a small truckload of data, so here it is.
From Feb. 20 to April 23, the Lynchburg metro saw employment shrink at the fastest rate of any metro in the state. Most Virginia metros saw employment grow. The nation as a whole and Virginia as a whole saw employment grow. But four Virginia metros saw it shrink, with Lynchburg showing the biggest shrinkage of -1.2%. Before we get to the reasons why, notice the company it’s keeping: the D.C. Metro (which includes Northern Virginia) and the Virginia Beach metro. Once again, this fits exactly with those demographic trends I’ve been writing about: Both Northern Virginia and Hampton Roads are losing population. We can debate the causes of that — Are taxes too high? Are housing costs too high? Are roads too congested? — but ultimately, the jobs there aren’t holding people. For Gov. Glenn Youngkin, who wants to both grow the state’s economy and reverse the state’s net out-migration, all these things are connected. He needs to staunch the flow of people (and jobs) from the state’s two biggest metros. These are demographic — and economic — alarm bells that I know the governor hears, because he’s talked about them. It would be better if more people were engaged in that conversation.
But back to Lynchburg. These unhappy job figures for Lynchburg in the last reporting period aren’t unusual.
This chart shows Lynchburg’s job growth over the past 30 years, as measured against Virginia and the nation. You’ll see that Lynchburg’s job growth has generally run behind both the state and the U.S. overall. You’ll also see that Lynchburg’s job growth fell faster than Virginia or the U.S. during the recessions of the early 2000s and the Great Recession of 2008. Finally, you’ll see that — as reported in previous studies — Lynchburg’s economy has rebounded slowly from the pandemic.
I ask again: Why is this? The answer seems surprisingly simple. It’s rooted in the structure of the Lynchburg economy.
This chart tells several stories.
First, Lynchburg’s biggest share of jobs is in education and health — 18.9% — and that’s a bigger share than the state as a whole, at 13.9%. Education and health covers a pretty wide swath of the economy but Lynchburg isn’t just a college town, it’s a multi-college town, so this heavy reliance on education and health makes sense.
The second biggest sector in the Lynchburg economy is trade, transportation and utilities — again, a big swath of territory, but one that comes in at 17.4%, just slightly higher than the state average of 15.9%.
The third biggest part of the Lynchburg economy is manufacturing — and Lynchburg is twice as dependent on manufacturing than Virginia as a whole, with 14% of its jobs in manufacturing, versus a statewide figure of 5.9%.
Finally notice how Lynchburg has a much smaller professional and business services sector than the state overall — 11.1% versus a statewide figure of 19.6%.
Why do these variations matter? Here’s why.
Over the past four years, Lynchburg’s three biggest employment sectors have all lost jobs. So have some other sectors, but those are the ones that hurt the most. They’re growing statewide but shrinking in Lynchburg. We’d have to dig deeper to explain some of these — there are obviously specific employers whose actions contribute to these figures — but for big-picture purposes, this is why the Lynchburg economy is so sluggish. It’s overly dependent on job sectors that are losing employment. Statewide, the state’s biggest source of job growth is in professional and business services, a sector where Lynchburg is underrepresented to begin with (and where its existing job growth is much slower than the state overall). The state’s second fastest growing sector is information, a sector that’s quite small in Lynchburg and its growth is nonexistent.
That means Lynchburg’s slow economic growth isn’t a seasonal thing that can be blamed on, say, any recent city council or a particular economic development agency. It’s a structural problem that goes back generations. At one time an overreliance on manufacturing might have been good for the economy. Now it’s not. That also means there’s no short-term solution. It’s tempting sometimes to go “whale-hunting,” as the saying goes, in search of a single big employer whose arrival will solve everything. That’s great, but there aren’t many whales out there. Instead, what Lynchburg needs is a restructuring of its economy, which is a much longer task. That work seems underway. The Lynchburg Business Alliance has been focused on creating more construction-ready industrial sites; CEO Megan Lucas said earlier this year that the region has lost out on 65 opportunities over the past six years because it didn’t have the right land or buildings available. The intended development of the former Central Virginia Training Center site also offers opportunities (credit state Sen. Steve Newman, R-Lynchburg, with getting the state funds to pay off those bonds). None of this is unique to Lynchburg — there are lots of cities across the country that once were invested heavily in certain economic sectors and have now found they’re not necessarily what the economy of the future looks like. That may not be much consolation, but this is why Lynchburg’s economic numbers show up at the bottom of the chart.