Youngkin Wants to Jump-Start Economic Growth

By James A. Bacon and originally published on Bacon’s Rebellion. Shared here by agreement. 

Governor Glenn Youngkin addressed many topics in his State of the Commonwealth address last week, ranging from the meltdown in K-12 education to the surge in suicides, drug overdoses, and homicides. But he spent the most time talking about Virginia’s declining economic competitiveness.

Once upon a time, making the Commonwealth economically competitive globally and within the U.S. was a primary preoccupation of Virginia governors and lawmakers, both Democratic and Republican. There was a bipartisan consensus that a rising tide lifts all boats, that the path to prosperity was attracting corporate capital, fostering technological and business innovation, creating jobs, and raising wages.

In the Age of Wokeness, you don’t hear the term “economic competitiveness” much anymore. For instance, at the University of Virginia the unremitting emphasis is on achieving “social justice” and, secondarily, combating climate change. The terms “wealth creation” and “economic prosperity” have dropped out of the vocabulary. UVa is hardly unique. The same priorities can be seen in the media, across higher ed, and, remarkably enough, in some of Virginia’s leading business lobbies.

Ironically, the more Virginia’s new ruling class has focused on social justice, the less of it we have gotten. In large measure that’s because Virginia is falling behind in economic competitiveness. The biggest losers in a stagnant economy are the working poor. Youngkin’s diagnosis of what ails Virginia is worth recounting.

The following passage comes from the State of the Commonwealth speech:

Our success is not gained in isolation – we face relentless competition from surrounding states.

We have to compete to win.

Despite the progress we have made over the past year, our path forward is directed by an undeniable set of disturbing facts.

Since the start of the pandemic, Virginia has been in the bottom ten for net OUT migration in the country.

The states we compete against for jobs and investment are on the opposite end of that spectrum. North Carolina, South Carolina, Tennessee, Georgia, Florida and Texas are all in the top ten for net IN migration.

These states have grown by more than 1.7 million people while Virginia has lost over 32,000.

Make no mistake, this trend started before the pandemic. Virginia has seen out migration for nine straight years.

2013 was when the states we compete with for people, talent, and jobs started lowering tax rates for businesses or for families, or both and started moving aggressively to make their business climates more competitive.

Virginia fell behind.

When I took office, Virginia was 47th in the nation for job recovery from the pandemic. Since then, more than 85,000 more Virginians are working – placing Virginia now in the top 20 of states for job growth since the turn of the year.

But we still have 125,000 fewer Virginians working than before the pandemic.

And those states that we compete with most directly — North Carolina, South Carolina, Tennessee, Georgia, Florida and Texas — have not only recovered all of the jobs lost during the pandemic, but they’ve actually added a collective 1.3 million jobs.

That data tells an undeniable story.

Virginians are moving to states with lower taxes and lower cost of living and as those Virginians pack up and move away so go the jobs, investments, and tax revenue they drive.

Across the United States in the last fiscal year alone, economic development projects were announced representing over 600,000 jobs and nearly $400 billion in capital investment.

What was Virginia’s share of those projects? Just 3.4%

All of our competitor states did better than Virginia, some more than double.

As I said in December, our competitor states won those projects because we weren’t cultivating our talent fast enough, because we weren’t building the business-ready sites, and because our tax burden was increasingly uncompetitive.

We were not competing to win. If we are honest, we were not even in the ballgame.

But that can – and must – change.

Virginia was a leader in economic growth in the 1980s and 1990s, and we can be again. The first step is recognizing that we have a problem. The second is diagnosing why we have a problem. Only then can we begin to devise strategies to address the problem.

Aside from raising more money for industrial and commercial site preparation, Youngkin is not asking to expand traditional economic-development programs. He wants to reform the public schools, the source of tomorrow’s workforce, tackle the high cost of living that’s pushing human capital out of the state, and address the high cost of business that’s pushing corporate capital out of the state. The quickest way to do that is to lower taxes, which is the centerpiece of his strategy. There’s more to be done, but cutting taxes is a good start.

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