No More 10 Minute Breaks: How the Hampton Roads, Va., Job Market Became the Most Troubled in the U.S.

The latest U.S. jobs report shows robust hiring and historically low unemployment, though not all parts of the country are enjoying such sturdy growth.

The Hampton Roads area of Virginia has posted some of the steepest job losses in the country this year. The figures stand in sharp contrast to the broader U.S. economy, which has added jobs each month for more than seven years and watched the unemployment rate hold at at a 17-year low of 4.1% for two consecutive months.

As of October, the Virginia Beach-Norfolk-Newport News metropolitan area shed 9,100 jobs over a 12-month span, more than any other metro area in the country, according to Labor Department data.

The defense industry, long an economic mainstay for Hampton Roads, is the main drag on the region’s labor market.

“People are leaving, the ships aren’t there and there’s been a decline in active duty people,” said James Koch, economics professor at Old Dominion University. “When people leave, that diminishes the amount of consumer spending and buying houses. That builds on itself.”

Defense spending, which accounts for about 40% of the value of economic activity in the Hampton Roads region, almost doubled from 2000 to 2011, but has since stagnated and even declined in some years, according to a report issued by Mr. Koch and economics professor Robert McNab. Cutbacks have resulted in fewer military personnel, with Virginia Beach metro-area military employment falling to about 85,900 in 2015, down from a peak of 113,400 in 2003.

That’s spilled over into the metro area’s service sector, especially places quick to feel the sting of falling consumer spending. Retail employment fell by 5,600, and leisure and hospitality dropped 5,000 jobs in the 12-month period ended in October.

The leisure and hospitality sector—hotels, restaurants, spectator sports and the like—has reported employment losses for seven straight months.

Ultimately, the jobs decline circles back to Hampton Roads’s status as a military hub.

Nationally, defense spending fell each year from 2011 to 2015 and was flat in 2016, according to the Commerce Department’s inflation-adjusted figures used to calculate gross domestic product. It’s been up in the second and third quarters of 2017.

Further adding to Hampton Roads’s woes is the movement of ships—and sailors—away from Norfolk to other areas like the South China Sea, Mr. Koch said. That pulls a huge source of spending away from the area’s economy.

The metro area is also losing workers. From 2010 to 2016, about 41,540 people on net left the Virginia Beach region, Messrs. Koch and McNab said.

Want a New Job? This Is What Employers Require From Their Workers (Dec. 4)

Why Are People in Red States Dropping Out of the Labor Force? (Nov. 28)

Hiring Rebounds in October, Unemployment Rate Falls to 4.1% (Nov. 3)

from Real Time Economics http://ift.tt/2kryrjr