WINCHESTER — The John Handley High School marching band and color guard led former Gov. Terry McAuliffe to an educational training center he hopes will be a model for Virginia and a winning argument for his reelection as governor.
McAuliffe, perched at the back of an open convertible, was greeted at the end of the recent parade by former state Sen. Russ Potts, a Winchester Republican who said he had gone to McAuliffe, then governor, “on bended knee” in early 2017 to get his support for what became the Emil & Grace Shihadeh Innovation Center.
“He is a master of marrying up the private sector and government,” said Potts, now executive director of the Winchester Education Foundation, who has led the push for the center, built with nearly $16 million in state, local and private funds at the site of a former elementary school behind Handley.
Joining McAuliffe at the celebration were a half-dozen state legislators from both political parties, a Democratic congresswoman and Gov. Ralph Northam, a fellow Democrat who shares the legacy of the “new Virginia economy” that McAuliffe aimed to build in his first term.
Republican Glenn Youngkin, in a tight race for governor with McAuliffe, says Virginia has performed poorly in creating jobs during the two Democrats’ administrations and lags behind more business-friendly states, including neighboring North Carolina.
“Right now, we’re heading in the wrong direction,” Youngkin said at a workforce and education conference the Virginia Chamber of Commerce and other business groups held on Wednesday in Richmond. “Virginia will fall further and further behind those states around us that we compete with every day unless we have that course correction.”
Potts, an irrepressible former sports promoter who ran for governor as an independent in 2005, says McAuliffe and Northam deserve credit for the Shihadeh Center and the vision it embodies for training young talent to stay in Virginia for good-paying jobs.
“This would not be possible without either of them,” Potts told the crowd outside of the center on Oct. 13.
McAuliffe and Northam say an educated, trained work force was a big reason that CNBC ranked Virginia as “best state for business” this year for the second straight time.
They say they have tried to build on that strength — with a bipartisan group of legislators — by making big public investments in higher education and degrees in highly sought technical fields.
That includes a commitment of $1.1 billion over 20 years to colleges and universities for a “Tech Talent Pipeline” that was a pivotal incentive for Amazon to choose Arlington County for its coveted East Coast headquarters in 2018.
“You’ve got to have a skilled work force,” said McAuliffe, who called Shihadeh Center a model that should be followed “in every single region in the commonwealth of Virginia.”
Northam reminded the audience that he has championed a new state program called G3 — for “Get Skilled, Get a Job, Give Back” — to provided tuition-free community college courses for students from low- and middle-income families to study in many of the same high-demand fields, such as health care, technology and skilled trades.
“If you ask people, ‘What is the most important thing to you?’, most of them will respond, ‘It’s a job,’ “ he said.
Northam recently said that his administration has attracted $77 billion in capital investment in 850 economic development projects that will create more than 98,000 jobs.
Those numbers include the Amazon headquarters, a planned $2.5 billion investment with at least 25,000 high-paying jobs — and up to 37,500 if the company expands the project. Amazon already has filled more than 3,000 of those jobs and recently posted openings for 2,700 more.
McAuliffe’s jobs record has come under scrutiny because some of the economic development deals he sealed never materialized, using an economic development grant program he helped to reform near the end of his term.
Brian Ball, secretary of commerce and trade under Northam, said the administration’s numbers don’t include any failed projects and many of them didn’t require state incentives.
“You can’t just say these are all promises,” Ball said. “These are financial contracts and they’re commitments.”
Mark Vitner, senior economist at Wells Fargo Economics in Charlotte, North Carolina, and a member of the Virginia Joint Advisory Board of Economists, said, “My sense is that Virginia has become more competitive in economic development.”
Youngkin, former co-CEO of a private equity firm, argues that Virginia hasn’t been competitive in creating jobs and retaining talent under the two Democratic governors.
He questions whether Virginia earned the CNBC top ranking, which also showed the state lagging behind others in key categories, such as the cost of doing business and the strength of the economy.
“The reality is we are not performing like the best state to do business in,” Youngkin said at the chamber conference on Wednesday.
North Carolina finished second in the ranking, despite placing 11 spots ahead of Virginia in the cost of doing business and nine places ahead in overall economy. However, the Tarheel State lagged far behind the Old Dominion in the heavily weighted category of “Life, Health & Inclusion,” where Virginia ranked third in the country.
Fletcher Mangum, a Henrico County economist who has served on the Joint Advisory Board of Economists under three governors, called that category “a new and rather hazy metric” that obscures Virginia’s relative weakness in other areas.
In addition to Virginia placing 26th for “Cost of Doing Business” in the CNBC survey, Mangum noted that the Tax Foundation ranked Virginia 26th in its State Business Tax Climate Index.
He said the General Assembly has been less friendly to business under Democratic control the past two years and warned that if the state repeals its “right-to-work” law — forbidding compulsory dues in unionized work forces — “that will go from bad to catastrophic.”
“I think our biggest issue right now is an anti-business policy environment that is leading to a spiraling degradation of our business climate, with all the attendant ills that come from that,” Mangum said in an email response to questions from the Richmond Times-Dispatch.
McAuliffe has a reputation as an exuberantly pro-business Democrat. “He has been a friend to business and a friend to the commonwealth of Virginia in job creation and job investment, and has invested in work force training and education,” Virginia Chamber of Commerce President and CEO Barry DuVal said in introducing the former governor at the conference this week.
But Youngkin says the job numbers don’t add up under McAuliffe and Northam, especially compared with the numbers produced by North Carolina and other Southeastern states.
Virginia added a net 56,966 jobs from December 2013, the month before McAuliffe took office, through August, for a growth rate of 1.4%. North Carolina added a net 424,770 jobs during that period at a rate of 9.7%.
The net job gain does not reflect that Virginia added 325,825 jobs from the end of 2013 to the end of 2019 — before the COVID-19 pandemic turned the state’s economy upside down. Nor does it reflect the disproportionate impact that federal budget sequestration had on Virginia in the first two years of McAuliffe’s term because of the state’s reliance on federal spending, particularly on defense.
“We had an economy that was in chaos, primarily because of the Great Recession and sequestration,” McAuliffe said at the Chamber conference.
From December 2013 to December, 2015, Virginia added almost 133,000 fewer jobs than North Carolina, a difference of 3 percentage points in growth.
“Being dependent on federal government spending is a big difference between Virginia and North Carolina,” said Chris Chung, CEO of the Economic Development Partnership of North Carolina.
McAuliffe, working with a Republican-controlled General Assembly, focused on diversifying the state’s sources of jobs and investment. In the final two years of his term, Virginia added about 139,000 jobs — for a total of 183,000 jobs since he took office — trailing North Carolina by less than 1 percentage point in growth. His campaign says Virginia added 216,000 during his term, using a different set of numbers from the U.S. Bureau of Labor Statistics.
In the first two years of Northam’s term, Virginia added more than 148,000 jobs, 0.6% behind North Carolina.
The biggest difference came after COVID-19 nearly shuttered the economies of both states. In one month, from March to April last year, Virginia lost 437,652 jobs. North Carolina — a more populous state with a larger base of jobs — shed 658,149.
Yet, North Carolina recovered those jobs, and then some, in eight months, with a gain of more than 676,000 by December. Virginia recovered 123,343, but since then has been roughly even with North Carolina, gaining about 4,000 fewer jobs with a slightly higher rate of growth through August.
The states are almost even in their unemployment rates, with Virginia at 3.8% in September, down from 7% at the depths of the pandemic, and North Carolina at 4.2%.
Sonya Waddell, regional economist at the Federal Reserve Bank of Richmond, said employment in Virginia is about 3.5% below its pre-pandemic level through September, compared with 2.2% below nationally and 1.7% below in North Carolina.
Participation in the labor force is declining in both states, as more people retire early or choose not to return to work because of child care and other factors, Waddell said. “The cost of taking a job has gone up.”
Youngkin said many Virginians lost their jobs “unnecessarily because we kept our economy shut for so long.”
Virginia fared better than North Carolina and other Southeastern states in controlling COVID-19, with fewer infections, hospitalizations and deaths, said Robert McNab, an economist who leads the Dragas Center for Economic Analysis & Policy at Old Dominion University.
“It is a tradeoff,” said McNab, who also serves on the Joint Advisory Board of Economists in Virginia. “Public health and economic health are two sides to the same coin.”
States that reopened their economies quickly suffered higher rates of COVID-19 infections and deaths, he said. “The question would be, ‘Would Virginians tolerate such a tradeoff?’ “
North Carolina, with about 2 million more people than Virginia, had about 548,000 more COVID-19 cases and 4,000 more deaths related to the disease through the middle of the week. About 62% of Virginians are fully vaccinated against COVID-19, compared with 52% in North Carolina.
Vitner, at Wells Fargo, describes North Carolina politically as “a purplish state,” led by Gov. Roy Cooper, a moderate Democrat in his second term, and a Republican-controlled legislature. He thinks they’ve done a good job in weathering the pandemic, both in public health and the economy.
“I think they’ve tried to find a better balance than in some other states,” he said.
Some of the differences in how the states have recovered from the pandemic are structural, said Aubrey Layne, who served as finance secretary under Northam and transportation secretary under McAuliffe. “It’s the nature of the economy that’s different.”
Northern Virginia, for example, remains closely tied to the federal government, so it lost fewer jobs during the pandemic than other states, but has had less room for growth.
The region’s leisure and hospitality industries — such as hotels and restaurants — rely more on business travel and conferences than other metropolitan regions, so they’ve suffered more from the delay in employees returning to work in their government and private offices because of the coronavirus delta variant.
“I know that the D.C. area has really been suffering,” said Waddell at the Federal Reserve.
Youngkin sees the differences as mostly political, with Virginia less able to compete with North Carolina and other states because of taxes and other costs of doing business, as well as educational policies that he contends lower standards for students who have to compete for high-skill jobs.
“If we don’t compete with everything that we’ve got, the states around are going to continue to lap us, to run circles around us,” he said at the Chamber conference.
Youngkin also faults McAuliffe’s approach to educating and training young people to fill jobs in high-demand professions, but some of his proposals are similar — more public investments in every level of education; more opportunities for vocational training, professional credentials and paid internships; and a tighter focus on aligning degrees with industries that need workers.
He talks about the Culpeper Technical Educational Center and its approach to career education in much the same way McAuliffe does of the Shihadeh Innovation Center in Winchester. “This is what we need to expand across Virginia,” Youngkin said.
The idea for the Shihadeh center was conceived at Handley, a stately, white-columned high school that will be a century old next year. The school’s career technical education program was operating in the basement with few resources.
Supporters raised almost $3.3 million privately, along with nearly $11 million in bond proceeds from the city to go with almost $1.4 million in state and GO Virginia grants. The center is named after the immigrant parents of Karen Schaufeld, a Loudoun County woman whose husband, Fred, is a partner in the ownership groups for the Washington Nationals, Capitals, Wizards and Mystics, among other enterprises. Her father was a welder, her mother a nurse.
The center includes three academies for training in professional skills, health sciences and advanced technologies. Handley students must take at least one course in a skill curriculum, which the center will couple with core academic subjects.
“You can take [advanced placement] English and a welding class in the same building,” Winchester Public Schools Superintendent Jason Van Heuklelum said at the dedication.
The center also is open to high school students from nearby Clarke County and works in partnership with Laurel Ridge Community College (formerly Lord Fairfax) to offer career training opportunities to its students and adults.
McAuliffe, who attended the ground-breaking for the building four years ago, pushed a combination of academic and skills education as governor. He helped to create the New Economy Workforce Credentials Act, which he estimated has helped 26,000 Virginians obtain credentials for high-demand jobs.
McAuliffe said he invested heavily in education as governor “because I knew that education is the key to job creation.”