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Old Dominion University released its annual State of the Region report looking at Hampton Roads’ economy.
Here are the highlights from the report:
First, the good news — the job market has bounced back from COVID-19
ODU economist Bob McNab said at an event going over the report that the labor force participation rate was at a record high.
Before COVID-19, there were 869,000 people working or looking for work in Hampton Roads. In August 2023, that number reached 878,000, McNab said.
The rebound from COVID-19 is good, said McNab, but the employment rate is now so high that the applicant pool has shrunk to nearly nothing.
“We solve this problem by getting more people back into the labor force,” he said.
People on the “sidelines” of the labor force will thrive in the new market atmosphere.
The hospitality and shipping industries are booming.
Vinod Agarwal of ODU’s Dragas Center said the Port of Virginia moved record amounts of cargo in 2021 and 2022 and fueled those gains in the transportation industry.
He also said the hospitality industry is outstripping state and national levels.
Their challenge, he said, will be from the short-term rental market.
“Airbnb and virtual revenues have been increasing every year faster than increases in hotel revenues. So hoteliers need to understand they have competition from nontraditional companies like online rental companies, and they simply cannot keep on jacking up the rates because they're going to lose business there,” Agarwal said.
Department of Defense spending is also high, but the money flow levels may not be sustainable.
The Defense Department spent approximately $66-67 billion in the state. Hampton Roads was roughly $26 billion of that.
More than 40% of Hampton Roads economic transactions are connected to the Defense Department. The fraught politics around the budget may mean the defense money coming into Hampton Roads will stall. McNab and his colleagues said the area’s economy needs to diversify so that if that happens, there isn’t a region-wide slump.
Veterans have more of an effect on the economy than we might think.
One in eight adults in Hampton Roads is a veteran, and roughly 5% of working-age adults are military retirees.
McNab called veterans the fourth pillar of the area’s economy. The federal pensions and benefits they receive per month total about $200 million and they spend it in Hampton Roads.
“If you think about that, that is literally free money flowing into the region,” McNab said.
Public transportation in the area is suffering post-pandemic.
Hampton Roads is 32nd out of 41 in similarly sized cities in terms of public transit ridership.
“You can probably use transit to get where you need to go — if you have plenty of time,” the new report reads.
The regularity of hourly service and poor integration of three different transportation authorities means drivers in Hampton Roads aren’t likely to give up their cars.
Only 4.7% of the area’s jobs are reachable by public transportation within 60 minutes.
