During the last decade, the number of people working in the city has dipped from 175,413 in 1994 to 158,916 in 2003 — a 9.4 percent decrease, according to the Virginia Employment Commission. Meanwhile, during the same stretch, the number of those working in Henrico and Chesterfield counties has increased by nearly 30 percent.
“What you are seeing is that as people moved out into the suburbs, jobs, in a sense, have followed,” says Michael Pratt, professor of urban planning at Virginia Commonwealth University. “More and more people are living in those counties and working in those counties.”
People have been migrating to the suburbs for more than a hundred years, but in the last few decades the businesses and jobs have begun to move with them. And now the information age has made the location of many businesses irrelevant. Telecommuting has made it easier to work from a distance. Businesses no longer need to cluster, which means there’s no reason to fight the longer commutes, lack of parking and the higher taxes that come with operating in the city.
What’s more, the steady stream of lost businesses and jobs threatens to sully the city’s minirenaissance. Following a national trend, urban living has come back into vogue with young professionals and younger married couples. More and more people are shunning suburbia to live in places such as the Fan and Church Hill, areas rich in historic architecture and walkable neighborhoods.
But the jobs aren’t following. Many of those new residents are commuting from the city to the suburbs to get to work. The percentage of city residents who also work in Richmond decreased from 67.4 percent in 1990 to 58 percent in 2000, according to U.S. Census data, which means that more residents are driving to work somewhere else.
Subtract the large number of state and federal workers — a stable, albeit slow-growing sector — and the loss of jobs is even more pronounced. Richmond has 34,058 state and federal jobs, according to the most recent payroll figures compiled by the state employment commission. Chesterfield County has 6,120 state and federal jobs and Henrico County has 2,606.
“The state government has been pretty much static for the last two years because of budget cuts,” says Bill Mezger, chief economist with the employment commission, adding that, typically, the state government adds new jobs each year.
It’s an issue that slips under the radar of most politicians and city boosters. And of late, the retention issue has been muffled by flashier news such as the new Stony Point Fashion Park, the new upscale mall on the edge of the city, and Wachovia Securities’ recent announcement that it will bring 1,000 new jobs downtown.
“The only thing we are hearing about is all these new jobs,” Pratt says. “Nobody is talking about all of the jobs we are losing.”
Much of it is unavoidable. And the city hasn’t exactly ignored the problem. Richmond economic-development officials have programs aimed at job retention in addition to business recruitment. The city has been expanding its enterprise zones and has a hugely successful tax-abatement program. But there is simply no room for new buildings and spacious parking lots, which are critical to the business sector.
The city can do more. Businesses leave because of simple economics, Pratt says: It’s cheaper to do business in the suburbs. With more residents — and more retail businesses bringing in more tax revenue — the counties can depend less on commercial business taxes to pay for services. So business taxes are lower.
For example, the city has some of the highest phone utility taxes in the state, a sore subject with business owners. In Richmond, the commercial phone tax is 25 percent of the first $625 a month, and then 5 percent on everything after. In Chesterfield, the tax is 10 percent of the first $200, and then 1 percent from $201 to $10,000. In Henrico, the phone tax is just 10 percent of the first $100.
But it’s not just high taxes, says Robert H. Nicholson, associate economics professor at the University of Richmond. “I’m not sure [city leaders] understand the competition,” Nicholson says. “The city says what we are fighting is our taxes. I think there are things the city can do, a little thing like parking. Do we really want to give 500 parking tickets a day, going car to car just slapping tickets on people?”
Nicholson say city leaders need to think like business owners.
“To them it’s all taxes and subsidies — but it’s quality of life, and quality of work life,” he says. “There is a lot more to it than taxes.”
The city does have some momentum. Richmond’s director of economic development, John Woodward, says that in addition to the influx of young people, he’s seeing more small businesses move back downtown. In the last 10 months, he says, the city’s central business district downtown has experienced a jump in professional and creative firms. “We are getting businesses from the suburbs,” Woodward says.
Real-estate brokers have recently seen this shift as well. Office parks such as Innsbrook, with its city-like traffic and high rent, are losing their cachet.
But even Woodward agrees that the city needs to rethink its tax structure, and do more to give companies such as Carrier, the air-conditioning distributor, a reason to stay.
After 35 years in the same building, Carrier looked all over town for just the right spot to build a new, more efficient building. The company found it in Henrico, which, in addition to having the space to build, also has lower taxes. And it’s just as close to the interstate.
“We’ve been here forever,” Jim Harris, an operations manager at Carrier, says of the old building on Saunders Avenue. “We’re in an antiquated facility.” S