Income Hike on Horizon

Economist predicts earnings in Hampton Roads will grow

Eighty-eight percent is good enough for a B-plus on most tests.

The region's economic development leaders see it as a failing grade. They've bemoaned how the average Hampton Roads worker's earning has slipped to 88 percent of the national average, saying it symbolizes the region's problems competing in the Southeast.

But its 88-percent days might be numbered. For the first time in years, the region's per-capita earnings percentage could start climbing again, said John Whaley, an economist with the Hampton Roads Planning District Commission.

Whaley, at Wednesday's HRPDC meeting, said the figure held steady at 88 percent in 1995, for the fourth straight year. Back in 1983, the percentage was 93 percent.

At the very least, the slide appears to have stopped, he said. But he also believes there's a "pretty reasonable chance" the 88 percent figure will start improving, for three key reasons: slower population growth, fewer defense cuts and more high-tech growth.

First, there's the jobs-population connection. For years, Hampton Roads' overall population expanded more quickly than its pool of workers.

Now Whaley predicts that will change: Employment will start growing faster than population. With a larger percentage of the population working, there will be more money to go around--helping boost per-capita income, Whaley said.

Second, defense cuts have slowed down. At the height of the cuts, the region was losing high-paying defense-related jobs and gaining lower-paying service jobs. Whaley sees that trend starting to wind down.

The dropoff in defense cuts ties into the third reason Hampton Roads may close the income gap: high-tech gains. The region is adding more high-paying, high-tech jobs to replace the lucrative hobs lost in defense cuts.

The region's economy still has a lot of catching up to do. Consider:

  • From 1994 to 1995, Hampton Roads reported the smallest increase in per-capita income among 16 metro areas in the Southeast. The increase: $847.
  • During that same period, Hampton Roads was second to last in job growth, reporting a less than 1 percent increase. Out of 315 metro areas nationwide, Hampton Roads was No. 285. Whaley predicts that will improve. "Our ranking seems to be on the way up, we believe."

Economic development groups have practically put the 88 percent figure on a "most wanted" poster. The Hampton Roads Economic Development Alliance, which markets South Hampton Roads, has made it a priority.

The group wants to boost the figure 0.75 percentage points a year for each of the next five years. A one percentage point improvement is worth about $300 million annually, according to the HREDA.

The Hampton Roads Partnership, a region-wide group of leaders, is also taking on the number. It wants the region's per-capita figure to equal the national average by 2007.

Barry DuVal, president of the Partnership, said he was pleased to hear the income gap appears to have stabilized. "We think it's encouraging that the trend of falling behind is beginning to slow down," DuVal said.

DuVal said the region's per-capita income should get a boost from more jobs in high-tech, the port and even the military, at Oceana Naval Air Station in Virginia Beach.

Sanford Wanner, the James City County administrator, said he thinks the region probably has bottomed out.

"We've got to pull ourselves up," said Wanner, one of the regional leaders who listened to Whaley's presentation.

To improve, the region must promote technology transfer and persuade entrepreneurs to take advantage of Hampton Roads' research centers, Wanner said.

Whaley said high-tech is a promising job source for the region. The average high-tech industry job pays $35,625, versus $22,611 for an average job in other industries. "They're very good jobs, and they're growing rather rapidly in Hampton Roads," he said.

Northern Virginia remains the state's high-tech king. But a Philadelphia-based research firm ranked Hampton Roads No. 15 in "gazelles," or growing high-tech enterprises, in the United States.

Newport News Mayor Joe Frank said the city has focused on high-tech by developing Jefferson Center, a research and development park next to the Thomas Jefferson National Accelerator Facility.

Frank, who's also the chairman of the Hampton Roads Plannning District Commission, noted that Whaley's report, based on federal data, stops at 1995. The city has gained other high-tech firms since that should help boost the numbers in future reports, he said.

Tourism has helped maintain the region's economy, but isn't helping it grow, Whaley said. Travel spending and employment in the region has fallen since 1988, and the region has lost market share in the state's tourism business, he added.

Whaley blamed that decline on fierce competition from other attractions in Virginia.