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Hampton Roads 2019 The State of the Region HAMPTON ROADS 2019 DRAGAS CENTER FOR ECONOMIC ANALYSIS AND POLICY | STROME COLLEGE OF BUSINESS | OLD DOMINION UNIVERSITY Virginia Beach- Norfolk-Newport News Metropolitan Statistical Area October 2019 Dear Reader: his is Old Dominion University’s 20th annual State of the Region Report. While it represents the work of many people connected in various ways to the university, the report does not constitute an official viewpoint of Old Dominion, its president, John R. Broderick, the Board of Visitors, the Strome College of Business or the generous donors who support the activities of the Dragas Center for Economic Analysis and Policy. T While the enthusiasm we have for our work remains high, it has been dampened by the recent passing of George Dragas, the individual most responsible for perceiving the region’s need for the report and procuring the financial support to sustain it. George was a very successful businessman, who simultaneously exhibited marvelous foresight and a keen sense of civic duty. Without George and his family, there would be no State of the Region Report and no Dragas Center for Economic Analysis and Policy. We and the Hampton Roads community are indebted to him. The 2019 State of the Region Report is divided into six parts: Full Speed Ahead: The Regional Economy Continues to Improve The State of Soccer in Hampton Roads For the first time in a decade, the Hampton Roads economy is poised to grow The “beautiful game” is thriving in Hampton Roads. Two new professional soccer for the third straight year. Unemployment has declined, incomes have increased teams now play in the region and thousands of children, teenagers and young and output has risen. Increases in defense spending, tourism, and education and adults play on pitches from Williamsburg to Virginia Beach. We look at the health services have fueled our recent growth. Yet, there are storm clouds on the demographics of soccer, how the model of youth sports has changed in America horizon. How long can the good times last? and the prospects for growth in the coming years. 420 in the 757: Marijuana and Hampton Roads Can Defense Save Us? More than 30 states permit the personal use of marijuana for medical purposes Sequestration is blamed for many of our region’s problems. In this chapter, and 11 states have legalized the possession of small amounts of marijuana we assess what would have happened to the Hampton Roads economy if for personal use. Over 50 percent of Americans have used marijuana in their sequestration had never occurred. We compare the impact of sequestration with lifetimes and young adults in Hampton Roads use it at a higher rate than their the drawdown from the Cold War. We ask whether it is time to prepare for the peers in all other regions of the Commonwealth. We take a look at how a next downturn in defense spending. change in the status of marijuana could affect Hampton Roads. The Economic Impact of a Hurricane on Hampton Roads Mind the Gap: Women’s Leadership in Hampton Roads In 1821, a Category 3 hurricane made landfall in Hampton Roads, flooding We examine whether there is a leadership gap between women and men Norfolk before moving on to New York City. What would be the impact of a in Hampton Roads. While a gap in earnings can be explained partly by similar hurricane today on the region’s economy? We find that a major hurricane occupational choice, part-time versus full-time employment and the risks of would cause almost $20 billion in property damage, create more than 2 million certain occupations, there remains the challenge of women being able to ascend tons of debris and reduce economic output by over $20 billion in the first year to the higher levels of their chosen profession. We explore the extent of the following landfall. leadership gap in our region and discuss what can be done to narrow it. THE STATE OF THE REGION | HAMPTON ROADS 2019 i Hampton Roads is an increasingly diverse community that simultaneously plays a significant role in national security, is home to a busy deep-water port, hosts over 90,000 college students and is home to world-class tourism opportunities. There are challenges, of course, but, as the adage goes, challenge and opportunity are two sides of the same coin. To adapt, improve and overcome, we must understand where we are and where we want to go. Our work seeks to contribute to this conversation. The Strome College of Business and Old Dominion University continue to provide support for the State of the Region Report. However, it would not appear without the vital backing of the private donors whose names appear below. They believe in Hampton Roads and the power of rational discussion to improve our circumstances, but are not responsible for the views expressed in the report. Richard F. Barry III Ramon W. Breeden Jr. George Dragas Jr. (in memoriam) Hampton Roads Chamber of Commerce The Aimee and Frank Batten Jr. Foundation Chartway Federal Credit Union Helen Dragas Thomas Lyons Jane Batten Arthur A. Diamonstein David and Susan Goode Patricia and J. Douglas Perry R. Bruce Bradley Dragas Family Foundation Edward L. Hamm Jr. Dr. Jitendra Swarup The following individuals were instrumental in the writing, editing, design and dissemination of the report: Vinod Agarwal Saloni Jain Tim Komarek Brendan O’Hallarn Barbara Blake Elizabeth Janik Feng Lian Bailey Park Ethan Crouson Nikki Johnson Sharon Lomax Emily Steinhilber Steve Daniel Kiran Karande George McLeod Jay Walker Addie Gregory James V. Koch Janet Molinaro Hannah White William Heffelfinger Previous State of the Region Reports are available at www.ceapodu.com. Individual copies of the 2019 report may be purchased for $25 each. If you have comments or suggestions, please email us at [email protected]. Sincerely, Robert M. McNab Director, Dragas Center for Economic Analysis and Policy Professor of Economics, Department of Economics Strome College of Business Old Dominion University ii THE STATE OF THE REGION | HAMPTON ROADS 2019 Table of Contents Full Speed Ahead: The Regional Economy Continues to Improve . 3 420 in the 757: Marijuana and Hampton Roads . 53 Mind the Gap: Women’s Leadership in Hampton Roads . 83 The State of Soccer in Hampton Roads . 99 Can Defense Save Us? . 117 The Economic Impact of a Hurricane on Hampton Roads . 145 TABLE OF CONTENTS 1 Full Speed Ahead: The Regional Economy Continues To Improve FULL SPEED AHEAD: THE REGIONAL ECONOMY CONTINUES TO IMPROVE Failure is simply the opportunity to begin again, this time more intelligently. – Henry Ford very challenge is also an opportunity for change. An optimist will see a glass as half full, a pessimist will see it as half empty and a pragmatist will ask why no one is filling up the glass. Patience is its own reward. The road less traveled has made all the difference. The tortoise will eventually beat the hare. The Eproverbial check is in the mail. Over the last decade, numerous clichés have been uttered to illustrate the to amplify our weaknesses. We watched as other regions sprang ahead in performance (or lack thereof) of the Hampton Roads economy. While other terms of economic growth. regions in the country have prospered, Hampton Roads has had to wait outside the promised land, looking toward Washington, D.C., or Richmond to Yet, like a fighter who picks himself up off the mat, the story does not provide the needed economic spark. After a lost decade, however, the regional end in 2016. Economic data illustrate that the Hampton Roads economy economy is not only growing, it is accelerating and appears to be poised for has recovered from the twin blows of the Great Recession and defense continued growth in 2020. sequestration. The number of residents in the labor force is higher now than any point this century. Unemployment is nearing 3% and the number of jobs By now, the causes of our region’s anemic economic performance from 2007 continues to rise. Manufacturing, once seen as a sector that had fallen on to 2016 are well documented and ingrained in our collective consciousness. hard times, is rapidly expanding and adding jobs. Housing prices continue to Hampton Roads’ dependence on federal spending, normally a strength in increase as distressed properties approach prerecession lows and inventories economic downturns, became a vulnerability with the passage of discretionary continue to shrink. This year’s inaugural Something in the Water festival spending caps (commonly referred to as sequestration) in 2011. The lingering in Virginia Beach, April 26-28, not only highlighted the importance of the impact of the Great Recession and the slowdown in federal spending in the region’s travel and tourism industry but also, for the first time perhaps in a long region reverberated through the housing market, depressing prices and time, made Hampton Roads the place to be. increasing the number of distressed properties. The large number of distressed properties delayed the recovery of the housing sector. Most of the economic news is positive but we would be remiss if we did not point out that challenges remain. Private-sector job creation here lags that of Consequently, private-sector job creation in Hampton Roads lagged the state peer metropolitan areas in the United States. Business growth continues to lag and the nation. Domestic outmigration increased as residents sought their in many parts of our region, highlighting the concentration of economic activity economic fortunes elsewhere. Throughout these trying times, a lack of regional in the “Seven Cities.” Population growth has slowed dramatically this decade cooperation hindered efforts to leverage our strengths and allowed competitors and younger residents are seeking their fortunes elsewhere.
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