Every year, RIoT holds a State of the Region Address, to take a deep dive look into how the Triangle, and North Carolina are positioned relative to other states and technology hubs across the United States and around the world. The address takes a view through many lenses, including the state of technology, entrepreneurship, investment capital, job creation, economic development policy and other factors. I hope you’ll join Feb. 6 for that free event.
As I researched this year’s address, I was curious about how we compare to our nearest neighbor – Virginia. Last week, I had the pleasure to speak at an economic development summit near the Chesapeake Bay, at which VA Congressman Rob Wittman and Virginia Economic Development Partnership (VEDP) CEO Jason El Koubi also spoke. They shared considerable data about how Virginia is performing at a national level.
Virginia is recognized by CNBC as the No. 2 state to do business in the U.S. Let’s take a look at some of the things that Virginia is doing well and some areas where they are focusing efforts for the future.
The fastest growing states in the US are capturing a disproportionate share of new job growth. Nationally, the top 10 states in the US (20% of states) captured 51% of all new jobs created during the decade from 2012-2022. Virginia is nearly at the middle of the pack at #24 in the US for population growth and has suffered in employment growth rate. Average performance at best. [Note – Utah was the #1 performing state with 34% employment growth over this period].
Where Virginia is shining is in the percentage of their population that is participating in the economy. Nationally, less than 63% of the population is actually working, which remains a full percentage point below pre-pandemic levels. Virginia by comparison has 65% of the workforce participating, with a steep upward trend. The national trend is beginning to plateau and may still be a year or two from achieving pre-pandemic participation.
Economic Development tends to have two flavors. One is to attract companies and jobs to relocate or to expand into your region, often as a result of tax incentives or taxpayer funded site infrastructure improvements. I’ll comment on Virginia’s performance in this area below. The other flavor is entrepreneurial job creation, which is where RIoT operates and is a major topic I’ll cover in the State of the Region Address.
Site development and corporate attraction
Looking at Virginia’s traditional efforts, VEDP completed >800 deals in the past 5 years that promise to create 125,000+ new jobs and $106B in capital investment. It is worth noting that on average, every $1M in corporate capital investment results in $7,000 in annual new tax revenues. So these deals create short-term jobs (construction for example) and long term tax revenues. Virginia is doing quite well in this style of traditional economic development.
Elected officials love ribbon cuttings, which plays a part in why a disproportionate amount of taxpayer funds go towards corporate attraction style economic development budgets compared to funding for entrepreneurial support. Ribbon cuttings are clear examples of economic development “wins” regardless of how balanced or unbalanced the actual tax incentives behind them may be. Virginia has had no shortage of huge wins in the past few years, many of which were won in direct competition with North Carolina. [Note: I’ll discuss NC wins in the State of the Region Address].
Here are a few recent VA wins:
- Amazon – The Amazon HQ2 project is the largest economic development project by jobs in US history.
- Micron Semiconductor – Even before the chips act, Virginia was forward-acting to build semiconductor production capacity. The plan Micron is building is the largest manufacturing project in Virginia history.
- AWS – Virginia is the No. 3 state in the US for data centers and it is arguable that Northern Virginia (Loudon county specifically) is the epicenter of data globally. [Note – while real estate, electricity and water are expensive in this area, there are still massive investments in data centers for low latency performance and proximity to the Defense Industrial Complex in DC where these data centers are critical to national security]. The recent $35B AWS data center announcement is reported to be the largest single capital investment project in Virginia history (and No. 2 in US history if I’m not mistaken).
- Lego – everyone loves Lego and their manufacturing expansion in southern VA is a top 5 manufacturing project in state history.
- Wells Fargo – As Wells Fargo is moving out of high end corporate real estate in Raleigh, they are building service sector office parks and infrastructure in rural VA in one of the biggest service sector capital projects in western VA history.
Virginia believes the future of high paying new jobs will be created in three core segments. Knowledge Work, Advanced Manufacturing and Logistics. The state is positioning itself to lead in these segments.
Knowledge Work – In the past 5 years, VA has seen 560 new tech companies invest $3.7B and create 75,000 new jobs. Investment in trans-Atlantic fiber trunk lines, data centers and other internet and data technologies continue to attract tech sector jobs.
Advanced Manufacturing – Virginia boasts a consistent AAA credit rating dating back to 1938. And the Virginia corporate tax rate has been stable and unchanged since 1972. This creates a predictable environment attractive to advanced manufacturing investment. Virginia is specifically targeting Advanced Materials, Biopharmaceuticals and Food & Beverage manufacturing.
Logistics – Today, this is the weakest segment in Virginia of the 3 areas the state has prioritized. But the state is making massive investments to turn this around. Two quick examples: VA is working on the most expensive tunnel project in world history, to improve transit between Norfolk and Hampton Roads. To complement this is more than $2B in infrastructure improvement in Norfolk, already the largest naval port in the world. Virginia strives to dominate east coast international trade.
As you can see, there are numerous data points that justify Virginia’s No. 2 ranking by CNBC as a best state to do business. It just so happens that North Carolina is No. 1. I look forward to seeing many of you tomorrow (Feb. 6, 5 p.m.) at the State of the Region Address. This is a free event, open to the public, hosted by the great team at Raleigh Founded (509 W. North St., Raleigh).
I’ll dive much deeper into how North Carolina stacks up against our neighbors to the north and competitors around the world. I’ll also consider where we are truly competing and where it makes sense to collaborate across state lines, building a super-region that is authentically the global center of excellence in the Data Economy.
If you’re not able to attend, I’ll publish a transcript of my remarks next week in this column.