Barry Pless and his wife Lindsay had been eyeing the solid-wood bedroom furniture set for some time. Scouting stores had turned up nothing that the couple liked as much. Still, the price tag gave them pause. Yet after receiving the biggest pay raise in his 14-year Navy career, Petty Officer 1st class Pless rushed back to the Value City Furniture store in Virginia Beach for the $4,000 set of their dreams. "This was a purchase we were looking forward to making for a year," he says. Like many of the 100,000 military personnel and their families living in the Hampton Roads region, the Plesses are finding that military pay raises that took effect in January mean a big difference in their standard of living. They are eating out more, taking better and longer vacations and buying big-ticket items like homes and cars. They're feeling better about the economy, and they're more likely to spend their increased discretionary income.

The increased spending provides a real shot in the arm to the Hampton Roads economy as well as the state economy, which is seeing few other bright spots these days. The pay raises - the largest in nearly a generation - will pump an additional $350 million annually into the economy and provide the equivalent of 9,000 new jobs paying $40,000 each, according to one study by Old Dominion University.

The military pay raises average 5 percent for officers and 6 percent for enlisted personnel. But some service members received as much as a 15 percent jump in pay when housing allowances and bonuses are included. Most increases in the area topped out around 10 percent. While other studies are more conservative than ODU's, even a 5 percent raise for military personnel and reservists at the 11 area bases will add $200 million to the economy. "We're doing well. ... It has a lot to do with that defense spending is rising, and the primary reason is military personnel," says John Whaley, an economist and deputy executive director of the Hampton Roads Planning District Commission.

Even before the pay raises went into effect, Hampton Roads was faring better than much of the state and nation during the last year because of the military presence. Sales of existing homes and new home construction remain strong. Area auto dealers, helped by post-Sept. 11 rebates and zero interest financing, posted record sales in October and have had strong sales in the last six months. Retail sales are down, but not nearly as much as the rest of the nation. The unemployment rate for January was also nearly 2 percent below the national average.

The war in Afghanistan is not hurting the region the way the 1991 Gulf War did when at least 40,000 area personnel were deployed, and many of their families left the area temporarily to stay with other relatives. Current deployments are normal and most family members have stayed in the area.

Even at the higher end of economic forecasts, the pay raise is a fairly modest amount of money in the overall size of the Hampton Roads economy, but it is important to the families receiving it and is likely to have a far-reaching impact on the region. The raises and planned future increases in housing allowances are part of an effort to boost the quality of life for members of the military. As retention and enlistment rates rise, areas like Hampton Roads can only benefit.

Identifying how the pay raise is affecting a region can be tricky, however. Business has picked up at popular eateries such as the Duck-In & Gazebo in Virginia Beach, but manager Helen Beale isn't sure whether it's because of the extra cash military personnel may be carrying around or the $9.99 "retro buffet" promotion the restaurant offered over the winter. "That brought a lot of people in," she says on a recent weekend when the Shore Drive restaurant was packed with family of some of the 7,000 sailors and Marines who returned with the U.S.S. Theodore Roosevelt battle group on March 27.

Auto and motorcycle dealers say they, too, have seen strong sales, but it's difficult to pin anything on the pay raise. Many military personnel deployed or stationed overseas often make their auto and motorcycle purchases through a program between the military and the Big Three auto manufacturers and Harley-Davidson. Service members get steep discounts and are guaranteed their vehicle is ready for delivery when they return.

One area where Southside Harley-Davidson in central Virginia Beach has seen a huge increase is in accessories, says military sales coordinator Steve Conrad. Sailors and Marines are "jumping all over the military program" and then dressing up their bikes with chrome covers and buying complete outfits such as jackets, boots and rain gear. "These guys are very happy with their pay raise," he says. Realtor Tommy Alphin of RE/MAX West Inc. in Chesapeake is sure the extra money being pumped into the local economy is helping sales, but he says it's often hard to quantify. Sales are up 6 percent to 8 percent annually, but "being a military town, stuff churns here so much because people come and go so often" that it's difficult to credit the pay raise, he says.

Late winter and early spring are usually peak times for residential real estate business as homeowners splash on new paint and ready their properties to be listed, and prospective buyers start looking around. Alphin says business remains strong, but this spring doesn't seem as busy to him. One reason may be the war on terrorism with the attention of military families focused more on the conflict and the safety of loved ones than house hunting. Alphin serves the areas around Portsmouth, Chesapeake and Suffolk. "Usually when these guys get more money, they like to spend it," he says.

Service members tend to want to make sure their families live in nice homes and good areas so they have fewer worries if they are deployed. They also like to have a nice place to go home to at night when their ships are being overhauled. That's exactly what Petty Officer 1st Class Julius Hayes and his wife, Kelley, want. Hayes is saving the extra $200 he takes home each month to buy a home later this year. The pay raise isn't enormous, but it is noticeable. "We really don't get paid a lot, so $200 is a sizable pay raise," says Hayes. "It was substantial enough for us to begin making some investments for our future. The pay raise won't allow for me to get a $250,000 house, but something suitable for us."

The 13-year veteran stationed at the Atlantic Fighter Wing at Oceana Naval Air Station has also started a college fund for his 8-year-old daughter and expects to have a few bucks left over each month to take the family out for an extra dinner and movie. After purchasing the bedroom furniture and a 2002 Toyota Highlander sport utility vehicle, Pless of Virginia Beach is done purchasing big-ticket items. He's opened his first retirement account and is now able to stash away most of the extra $200 he takes home each month from a 7.5 percent raise without cutting his standard of living. "It's the first time in my 14- year-career that I've started saving for retirement. I now have an account with my name on it that I control," the 40-year-old assigned to the carrier Enterprise says with pride.

Return to Virginia Business - May 2002