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Ranking Reality

Does Richmond face more serious economic challenges than business boosters are willing to acknowledge?



Holy Innovation! The Capital of Creativity is a low-ranking dullard in the eyes of one of the country’s most prestigious think tanks.

Richmond scores low in two recent reports by the Brookings Institution, which tracks the world’s metropolitan areas by collecting such data as economic growth, housing price fluctuations and household income. The low scores fly in the face of the cheerful propaganda about the region put out by economic development officials, the Greater Richmond Chamber of Commerce and the Richmond Times-Dispatch.

In a survey of 200 metropolitan areas around the world, Richmond ranks an abysmal 191st in economic growth, beaten only by Sacramento, Calif., as the worst U.S. performer on the list. In December, another Brookings survey showed that Richmond was among the 20 worst performers of 100 U.S. metropolitan areas struggling out of the recession.

Richmond’s principal flaws, says Alan Berube, a senior Brookings fellow and co-author of the global report, are “its weak real estate market and overreliance on the finance sector that serves it.” Cutbacks in local and state government jobs also were contributing factors, he says.

If Brookings is right, its findings raise questions about why the Greater Richmond Chamber of Commerce concentrates on such feel-good marketing campaigns as branding the city as the capital of creativity while it faces serious economic challenges.

While Richmond struggles past the failures of three major corporations in the 2008 recession and the loss of thousands of jobs, the city’s business leaders push such sideshow endeavors as the chamber’s i.e.* The program’s launch trotted out goofy props and touchy-feely group therapy to boost the idea, especially to business people in their 20s and 30s, that Richmonders are truly innovative — a story that isn’t exactly buried.

Asked to comment on Brooking’s results, Lesley Bruno, a spokeswoman for the chamber, sent a copy of a Times-Dispatch editorial. The article boosted the town and the state’s business climate while sidestepping Brookings’ complaint that Richmond was too dependent upon government jobs. Bruno also says that i.e.* “is a long-term effort to help attract and retain bright minds in Richmond by highlighting the region’s creative capital.”

Brookings, however, suggests that Richmond has far greater problems than making bright young people feel empowered. Its December report tracking how metro areas are recovering from the recession noted that problems seemed especially acute in Southern cities.

Richmond, along with Atlanta, Augusta, Ga., El Paso, Texas, and others, suffered because of their high dependence upon government and military jobs that reflect large number of state office workers, public university employees or workers at nearby military bases. Metro areas that gained government jobs did well, but those with losses did poorly. Govs. Tim Kaine and Robert F. McDonnell have cut state jobs, many of which are based in Richmond, but President Barack Obama’s federal stimulus program saved 7,100 jobs. According to Berube, Brookings did factor in the large increase of federal jobs at the expansion of Fort Lee near Petersburg, but the region still came up short with local and state cutbacks.

Some of the best economic performers, the Brookings report notes, are manufacturing or technology centers such as Boston, Detroit, Grand Rapids, Mich., San Jose, Calif., and Youngstown, Ohio. “High technology centers and Great Lakes auto-producing areas are recovering strongly from the Great Recession,” the report notes. Cities such as Austin, Texas, Pittsburgh, San Diego and Tulsa, Okla., all gained jobs.

Richmond also does poorly in the second Brookings study examining performance of 200 global centers according to gross domestic product, per-capita income and job growth. The shining lights are Asian and Middle Eastern cities with a heavy dose of state capitalism such as Shanghai and Hangzhou in China and Riyadh, Saudi Arabia. U.S. cities don’t show up until No. 40 with oil-heavy Houston. Revived Rust Belt towns such as Buffalo, N.Y., (No. 68) and Detroit (72) are in the top 100. Virginia cities don’t show up until Virginia Beach (No. 159) and Alexandria (No. 185). Bringing up the rear in the Old Dominion at No. 191 is the Capital of Creativity.

According to Brookings, Richmond really took a drubbing from 2007 to 2010, with a negative 3.8 percent employment change and a negative income change of 1.1 percent. The years 2010 and 2011 were only slightly better with a negative 1 percent employment change and a 0.2 percent increase in income.

Economic development officials seem dismissive of the findings. “It’s apples and oranges,” says Greg Wingfield, director of the Greater Richmond Partnership, an organization run by the city and adjacent counties to attract new industries. Wingfield questions the global study, saying it’s difficult to make comparisons considering different national currency exchange rates and how economic statistics are gathered. Brookings’ Berube says that such factors were considered in the data.

Wingfield also raises the news, apparently not covered in the report, that Chesterfield and Dinwiddie counties will get 1,350 new jobs as builds two new distribution centers. Yet those jobs are a drop in the bucket. Chris Chmura, of Chmura Economics and Analytics, estimates that from September 2007 to this past October, the Richmond region lost 40,000 jobs. Of these, 4,500 came from the failures of three of the biggest businesses in town — Circuit City, Qimonda and LandAmerica.

If Richmond wants to get ahead, Berube says, its economic development officials need to concentrate “on making goods or providing services that are going to be attractive to buyers on the global markets. Providing consumers with local homes and government services won’t help very much.” Nor, presumably, will lots of happy talk from the business elite or whimsical Chamber of Commerce marketing initiatives.

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