Economy

Employment Growth

Employment Growth

Employment growth reflects the rate at which the economy is creating and filling new jobs. Virginia continues to add new jobs to its economy, although the speed at which they are added has slowed recently. This reduced pace indicates both that Virginia experiences lower levels of unemployment and also that the rate of growth has declined.

Why is This Important?

Employment growth is an indicator of expansion in the economy and represents an increase in the economic opportunities available to the citizens of a region or state. Employment growth is generally tracked as a percentage change from a previous year.

How is Virginia Doing?

Between 2000 and 2007, Virginia's employment grew at a faster rate than the national average, except for 2005. Growth peaked in 2004 at 3.02 percent; it then fell below the national average to 1.8 percent. But in 2006 and 2007, employment growth picked up again to 2.38 percent and 2.18 respectively, which again exceeded the national average.

As for regional employment growth, data in 2007 indicate that the Northern region (2.71 percent) had the fastest growing rate in the state over the previous year. The Central region exhibited the second highest employment growth at 2.64 percent, while the West Central region registered 1.76 percent employment growth. Virginia's remaining regions all saw rates at or below 1.64 percent. 

Wages and Salaries

Average annual wages and salaries, coupled with employment growth, give an even better measure of Virginia's economic health. In 2007, Virginia's average wage of $45,910 exceeded the national average ($43,889). New York led all states with an average wage of $58,481. Maryland's average wage ($48,113) was higher than Virginia, while North Carolina ($38,556) and Tennessee ($38,467) fared worse.

Regionally, Northern Virginia ($60,427) led the state in 2007. The Southside ($28,314) and Southwest ($29,623) regions were the lowest in the state.

What Influences Employment Growth?

The three most important factors influencing employment growth are national business cycles (expansions and contractions in the economy), the mix of industries, and the relative attractiveness (competitive advantages) of the region.

Although underlying business cycles may be similar across the nation, it is the mix of industries that affects the magnitude of the variation in any state or region's employment growth. For example, through most of the last 10 years, employment growth in Virginia and the nation has been significantly influenced by two trends: 1) reduction in manufacturing employment due to global competition and labor-saving technology enhancements, and 2) strong employment gains in the professional and business services industry.

As a result, states and regions with a high number of manufacturing jobs experienced downward pressure on employment growth, while those with a higher percentage of professional and business services experienced upward pressure on growth.

Finally, states and regions with competitive advantages relative to other regions are more likely to maintain their existing businesses and to experience growth. Because business is the driving force behind job creation, an attractive business climate is more conducive to higher levels of employment growth.

What is the State's Role?

The state's primary role in employment growth is to provide the infrastructure -- education and training, workforce development, transportation, and other public goods -- that reduces the transaction costs associated with economic activity. Adequate infrastructure allows private business to better respond to emerging economic opportunities. In addition, the state can assist in employment growth by fostering a competitive business climate.