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The State of the Region HAMPTON ROADS 2018

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The State of the Region HAMPTON ROADS 2018 The State of the Region HAMPTON ROADS 2018 DRAGAS CENTER FOR ECONOMIC ANALYSIS AND POLICY | STROME COLLEGE OF BUSINESS | OLD DOMINION UNIVERSITY Gloucester Mathews County County James City County Williamsburg VIRGINIA BEACH-NORFOLK- NEWPORT NEWS, VA-NC York County METROPOLITAN STATISTICAL AREA Newport News Poquoson Hampton Isle of Wight County Norfolk Portsmouth Virginia Beach Suolk Chesapeake VIRGINIA NORTH CAROLINA Gates Currituck County County Last update 5/30/13 October 2018 Dear Reader: his is Old Dominion University’s 19th 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 The report maintains the goal of stimulating thought and discussion that will ultimately make Hampton Roads an even better place to live. We are proud of our region’s many successes and the key role we play in national security. We also realize that it is possible to improve our performance. To do so, we must have accurate, objective information about “where we stand” so we can move to “where we want to be.” The 2018 State of the Region report is divided into seven parts: Is It Morning Again in Hampton Roads? Welcome to Your New Home: International Migration and The three pillars of our regional economy (defense, the port and tourism) have Hampton Roads improved and prospects for growth are looking up. We ask whether Hampton Most new international migrants to Hampton Roads are educated, married and Roads has finally emerged from a “lost decade” and if the future is bright. gainfully employed. We examine the impact of international migration and look at how immigrants are contributing to economic growth in our region. A Complicated Subject: The Impact of Medicaid Expansion on Hampton Roads Hampton City Schools: The Next Generation of Learning in Virginia will expand Medicaid, a health insurance program for low-income Hampton Roads adults and children, on Jan. 1, 2019. Medicaid expansion will reduce the Hampton Roads needs skilled workers. With unemployment approaching number of uninsured in Hampton Roads, but future costs remain uncertain. historical lows and the demand for a skilled workforce increasing, Hampton City Schools is engaging in an experiment to transform high school education. We Craft Brewing in Hampton Roads delve into this effort and its potential benefit for our region. The number of craft breweries in Hampton Roads has increased dramatically in recent years. We trace the development of this trend and explore the impact of Hampton Roads: In Search of a Social Media Identity craft brewing on our regional economy. Facebook, Instagram, Twitter and Snapchat. These platforms define the lives of many Americans. We inquire to what degree Hampton Roads has an identity on Too Much of a Good Thing? Multifamily Housing in social media and discuss the potential benefits of a social media brand. Hampton Roads Over the past decade, Hampton Roads has seen an increase in the construction of multifamily units, leading some to question whether there are too many apartments. Vacancy rates have started to decline and rent increases remain moderate, especially compared to many other cities in the United States. THE STATE OF THE REGION | HAMPTON ROADS 2018 i 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 Chartway Federal Credit Union Helen Dragas Thomas Lyons The Aimee and Frank Batten Jr. Foundation Arthur A. Diamonstein David and Susan Goode Patricia and J. Douglas Perry Jane Batten Dragas Family Foundation Edward L. Hamm Jr. Anne B. Shumadine (in memoriam) R. Bruce Bradley George Dragas Jr. Hampton Roads Chamber of Commerce Dr. Jitendra Swarup Ramon W. Breeden Jr. The following individuals were instrumental in the writing, editing, design and dissemination of the report: Vinod Agarwal J. Andrew Hansz Feng Lian Michael Phelps Barbara Blake Saloni Jain Sharon Lomax Aiden Thompson Chris Colburn Elizabeth Janik Janet Molinaro Jay Walker Steve Daniel Nikki Johnson Brendan O’Hallarn Hannah White Ericha Forest James V. Koch Maximilien Peker Ziniya Zahedi Ross J. Gore Tim Komarek All 19 State of the Region reports are available at www.ceapodu.com. If you have comments or suggestions, please email us at [email protected]. Individual copies of the 2018 report may be purchased for $25 each. Sincerely, Robert M. McNab Director, Dragas Center for Economic Analysis and Policy Professor of Economics, Department of Economics Strome College of Business ii THE STATE OF THE REGION | HAMPTON ROADS 2018 Table of Contents Is It Morning Again in Hampton Roads? . 3 A Complicated Subject: The Impact of Medicaid Expansion on Hampton Roads . 53 Craft Brewing in Hampton Roads . 73 Too Much of a Good Thing? Multifamily Housing in Hampton Roads . 99 Welcome to Your New Home: International Migration and Hampton Roads . 123 Hampton City Schools: The Next Generation of Learning in Hampton Roads . 147 Hampton Roads: In Search of a Social Media Identity . 163 TABLE OF CONTENTS 1 Is It Morning Again In Hampton Roads? IS IT MORNING AGAIN IN HAMPTON ROADS? n 1984, President Ronald Reagan, seeking re-election to a second term against his opponent, former Vice President Walter Mondale, ran a political commercial that started with the optimistic phrase, “It’s morning again in America.” The spot ended with a simple question: “Why would we ever want to return to where we Iwere less than four short years ago?” Fast forward to 2018 in Hampton Roads. Perhaps it’s time to be more Atlantic United States. There are gaps between the needs of employers and optimistic about our regional economy. After a lost decade of stagnant the skills of the labor force. Wages and earnings have yet to rise significantly, economic growth and watching rival metropolitan areas prosper, is it, in fact, which is good news for employers, but a situation that also leads many to morning again in Hampton Roads? seek their fortunes elsewhere. Several of our cities have lost population due to domestic out-migration over the last decade. The causes of our region’s underwhelming economic performance are well known: the debilitating effects of the Great Recession, tepid increases in Our region must also contend with an environment that is influenced by defense spending due to sequestration, and the out-migration of talent as a external actors. The ongoing global trade disputes have not only increased result of anemic private job creation. Impacting each of these was limited the price of steel but also lowered demand for some agricultural exports that regional collaboration. We did not present a unified regional front to those move through the Port of Virginia. The favorable increases in defense spending in Washington, D.C., Richmond and elsewhere who might have made a may be temporary as federal deficits bloom in Washington, D.C. International difference. All too often, to quote Pogo, “We have met the enemy and he is migrants, however, are “voting with their feet” and moving to Hampton Roads. us.” The influx of talent not only adds to our economy but also to the vibrant culture of our region. Perhaps, however, we are beginning to turn over the proverbial new leaf. Economic data suggest that Hampton Roads has mostly recovered from the How can we make sense of these conflicting economic data? Instead of picking Great Recession, which began in December 2007 and ended in June 2009. one individual thread and proclaiming a conclusion, we argue that the overall Our unemployment rate has fallen to almost 3 percent; more people than ever tapestry of the economy is what is important. We need to take a step back and before are reporting that they are employed; and we finally have exceeded let the economic picture come into focus. the number of jobs last seen prior to the recession. The federal defense budget has increased substantially, and the U.S. Navy is embarking on a shipbuilding As English playwright John Heywood noted in 1546: “Whan the sunne shinth and maintenance plan that will increase the demand for skilled workers in the make hay.” Let’s review the economic data and decide whether it’s truly trades. Housing prices are increasing and there has been a sustained rise in morning again in Hampton Roads. multifamily construction. The Port of Virginia is having another strong year and tourism continues to bolster the regional economy. Yet, as economists are wont to say, on the other hand… Job creation in Hampton Roads lags that of other metropolitan areas in Virginia and the mid- 4 THE STATE OF THE REGION | HAMPTON ROADS 2018 Real GDP growth in Hampton Roads ranked 312th among 382 Growth In Output metropolitan areas from 2011 to 2016. The proverbial light at the end of the tunnel is that our regional economy appears to And Incomes have reversed this trend last year and accelerated into 2018. We estimate the economy of Hampton Roads grew only 0.9 percent (inflation-adjusted) in 2017 (see Table 1). However, our current forecast for 2018 is 2.2 percent. This improved outlook TABLE 1 is due to increases in defense spending, the performance of the Port of Virginia, improvements in the housing sector NOMINAL AND REAL (INFLATION-ADJUSTED) GROSS and continued strength in the hotel and tourism industry.
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