Jobilism Revisited With statistical full employment, luring jobs for jobs' sake doesn't make economic sense. Many localities can afford to be picky.

Prince William County is happy to have companies like Avenir Inc., Covad Communications and America Online Inc. rather than Disney, notes development director Martin Briley. Photo by Mark Rhodes

By Mark Davidson
In the early 1990s, Prince William County was determined to shed its image as a suburban community in the shadow of Washington’s huge federal establishment and Fairfax County’s booming technology corridor. In 1994, Prince William officials thought they had found an answer: Disney’s America.

With Walt Disney Corp. proposing its massive historic theme park near the town of Haymarket, county and state legislators scrambled to put together a package of incentives that would secure Disney and the hundreds of jobs and thousands of acres of rides, restaurants and historical attractions that it would have brought.

Public opposition was surprisingly fierce. Foes expressed a variety of complaints. Among them was concern about the influx of low-wage hourly and seasonal jobs. "The argument of bringing jobs is a sham," one resident proclaimed at the time. "Look at the types of jobs these parks generate: ticket-takers, groundskeepers, popcorn sellers — not exactly living-wage positions in one of the most expensive areas of Virginia."

Ultimately those cries of protest may have been a factor when Disney withdrew its plans. They also served as a wake-up call to Prince William officials, who decided to re-examine their economic development philosophy. Their new goal: steer development efforts toward fancy offices and high-tech companies and — at least in the short run — de-emphasize strip malls, shopping centers and residential development.

So far, that recipe has shown promise. Today, thanks in part to a booming state economy with an unemployment rate hovering near 30-year lows, Prince William is evolving into a high-tech center. In the past two years, several high-tech companies have announced plans to locate facilities there, bringing with them thousands of relatively high-paying jobs. They include Avenir Inc., Covad Communications and America Online Inc., which is building a $520 million complex.

"There’s a whole new environment here than there was just four or five years ago," says Martin Briley, the county’s economic development director. "Prince William County is well on its way to moving from a bedroom community to a high-tech center." As for the county’s role in that transformation, he says, "It’s really a matter of shifting our focus to what the market is delivering. Right now, the opportunity is not in theme parks — it’s in Internet, software, hardware, telecommunications and biotechnology firms. Those are the types of businesses we are targeting."

Prince William is by no means alone in that regard. With the help of Gov. Jim Gilmore’s economic development team in Richmond, localities across Virginia — from the Northern Neck to the Shenandoah Valley, from Portsmouth to Pulaski — are riding the wave of the state’s biggest economic expansion in recent history. Many communities are targeting, and attracting, high-end businesses that just a few years ago seemed unattainable.

Many localities can now afford to break away from "jobilism" — competing to attract jobs for jobs’ sake — and instead are vying for higher-paying positions that will deliver long-term benefits. "With the tight job market, a great deal of cities and counties in Virginia are refining what their target businesses and industries are," explains Roy Pearson, professor of economics at Williamsburg’s College of William & Mary. "They are getting more specific and, in many cases, much more particular.

"Most localities in Virginia are still open to a broad range of businesses," Pearson continues. "Most cities and counties can’t afford to say they are only going to go after companies that pay more than $40,000 a year. However, he adds, "these days they might be more inclined than they have in the past to say they won’t pursue those that pay less than $25,000 a year."

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For decades, Southwest and Southside Virginia have been peppered with coal operations, tobacco farms and light manufacturing but few of the higher-paying industries that other parts of the state enjoy.

That is beginning to change. There are numerous examples of Virginia’s less-affluent communities reaping the rewards of the robust economy and local and state governments’ new concentration on high-end employment.

In early 1999, for instance, Aspen Motion Technologies announced it would bring 200-plus high-tech jobs to the small college town of Radford. Innotech, founded in Roanoke then purchased by Johnson & Johnson, now provides 600 jobs that generally pay well above the median income there.

In economically depressed Richmond County on the Northern Neck, Gannon Technologies announced about a year ago that it would open a plant in the town of Warsaw, employing 400 people.

"That’s just the tip of the iceberg. The list goes on and on," says Barry DuVal, Virginia’s secretary of commerce and trade. "We are really seeing a whole new climate where any community, with a little help, can compete for the high-paying jobs."

DuVal says 45 percent of the jobs created in Virginia during the past few years were related to the high-tech industry, a major shift from just five years ago. While the average annual salary in Virginia is $25,000, the average salary in tech-related fields is $47,000, DuVal notes. "Obviously the earnings potential is much greater in technology-related jobs, and the state has certainly placed an emphasis on bringing those jobs to Virginia."

Five years ago, DuVal adds, only 10 percent of the state’s project managers — those who actively recruit firms — were devoted to technology-related projects. That has grown to 50 percent, indicating a marked shift in the state’s stepped-up effort to seize on the strong national economy and boom in high-paying industries, according to DuVal.

"Let’s face it. If you’re in the position to create one job that pays $47,000 and one that pays $25,000, you’re going to try to get the $47,000 job," DuVal says. Because 60 percent of the state’s operating budget comes from payroll taxes, focusing on higher-salaried jobs is vital to state coffers.

DuVal is quick to point out that "we are not abandoning anybody in the process. Half of our project managers are still devoted to primary industry, services and transportation companies." In fact, one focus of the Gilmore administration is to help less prosperous areas like Southside, which is heavy on tobacco-farming and textiles, become more lucrative. "We need to find new industrial sectors for those less-prosperous regions," DuVal says.

In the past, there were more workers than jobs in Virginia. Today many companies will say there are more jobs than available workers. According to William Mezger, chief economist with the Virginia Employment Commission, the unemployment rate in October 1999 — the most recent figure available — was just 2.6 percent, compared with 3.8 percent for the United States as a whole. That, according to the governor’s office, is the lowest October unemployment rate in 21 years. Because people regularly move in and out of the work force, it’s considered statistical full employment.

Not all areas of the state are equally prosperous — the Martinsville area’s jobless rate was 9 percent. But even those communities reported declining jobless rates from the prior two months. "The numbers tell the story," DuVal says. "Virginia is positioning itself for a strong economic future."

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In the Williamsburg area, where tourism has long been the leading industry, an informal group of business leaders, hospital executives, government officials and scholars have been working hard to give the Colonial area a new look.

Members of the Crossroads Project, formed about three years ago to explore expansion of the region’s economic base, came up with some big ideas. They want a medical research center linked with Eastern State Hospital; a biotechnology complex; a high-tech corporate center; a convention center; and a host of high-end service industries to support the new complex.

With Crossroads, which encompasses York and James City counties, "the Williamsburg area is now focusing on high-tech businesses as opposed to tourism and manufacturing, which had been the main targets in days past," William & Mary’s Pearson explains. "Those, of course, are not generally among the higher-paying industries. High-tech and computer companies generally are."

Pearson notes that the Williamsburg area has the advantage of a top-notch university, which allows for "a broad range of work force training that areas without a university don’t have. Access to that kind of training is crucial" to attracting high-paying jobs to a region, he points out.

Communities trying to evolve into a high-tech center from scratch could face a rough road, however. Generally speaking, localities that already have a cluster of high-end industries and office complexes are more likely to attract similar firms looking for a home.

Even communities that succeed in creating such clusters "must strike a balance" between high-end jobs and lower-paying service industries, Pearson says. That is mainly because of Virginia’s unusual tax system, in which there is no local income tax and the state receives the majority of locally generated sales taxes. A locality’s main sources of revenue are real estate and food-and-beverage taxes.

High-end businesses do attract high-paying jobs, which means employees who can afford bigger homes — and thus generate more real estate tax — are likely to spend more in local businesses. The problem, Pearson says, is that those jobs generate minimal local tax revenue.

"It’s a tradeoff, and one that local governments are very sensitive to," Pearson says. "The tight job market gives them the opportunity to go after the high-paying jobs, true. But those jobs don’t offer the same local revenue opportunities that, say, a hotel or a restaurant chain do."

Jerry Gordon, president of the Fairfax County Economic Development Authority, says "it makes perfect sense that in a strong economy, localities are going to focus on attracting high-end jobs. Part of that is certainly due to change in [recruitment] philosophy. You don’t want to go after low-end jobs if high-end firms are abundant."

Yet localities can’t turn their backs on those service businesses, Gordon says. "A community needs economic diversity," he says. "You cannot throw all of your resources at one type of industry." He points out that Fairfax’s technology corridor also has become a hotbed of shopping centers, restaurants, hotels, theaters and entertainment complexes where the county’s well-off employees "can go and spend that money they’ve earned. That keeps it in the county."

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Prince William has spent the past few years learning from the Disney debacle — and taking lessons from Fairfax and other localities that have carved out effective economic development strategies.

The Board of Supervisors in 1996 "made a conscious decision to be more aggressive in participating in the high-tech boom in Northern Virginia," says economic development chief Briley. "The economy was on fire at that time, but we felt we were letting a lot of that pass us by."

The county of 280,000 people created a separate economic development department by extracting it from a division within the planning department. That move allowed it to hire Briley, a former state economic development official, to increase its budget by 40 percent and to double its staff.

In January 1998, the department charged ahead in its efforts to recruit high-end companies, including the creation of a 1,000-acre business park.

"That’s when we really put ourselves in the marketplace. We went from having five dialogues a month [with potential firms] to 70 a month by mid-1998. And that has paid off. In 1999, investment in the county has been six times what it was for the previous five years combined."

Drawing good jobs to Prince William is important to the county’s residents, 60,000 of whom commute every day to jobs in other Northern Virginia communities or the District of Columbia. "We are a major exporter of workers, and we’d like to turn that around," Briley says. "We have a strong, well-educated work force right here, and there is no reason they should have to commute in rush-hour traffic to another county every day to go to work." In some cases, Prince William and other Virginia counties and cities do find themselves competing with each other for key jobs. But officials say that pattern has faded in recent years with the advent of regionalism.

Rather than compete with each other, communities today are more likely to team up and, with the state’s help, try to snatch jobs from other states. In fact, the General Assembly has passed enabling legislation that will allow neighboring localities to share in the revenues of a business that chooses to locate or expand in an area.

Localities "are not nearly as competitive with one another as they were 10 or 15 years ago," Pearson says. "They all realize that everyone benefits from additional economic development in their region."