U.S. Secretary of Commerce Wilbur Ross is scheduled to be in Roanoke today for a roundtable with Roanoke Valley business leaders.
Here are some questions we’d like to see posed. These are, by the way, the same questions we’d pose to any Democratic candidates for president who might pass through here.
1. What can be done to reverse “the great divergence?” That’s what economists are calling the trend for jobs to cluster in a relative handful of high-tech cities while the rest of the country sees its economy hollowed out. Last year, a Washington think tank, The Third Way, released a report that showed over a 20-year span, two-thirds of the localities in the country lost jobs — even as the nation as a whole was gaining jobs. The economy right now might be fairly strong, but that doesn’t change the fundamental trends. The economy is being reshaped in ways that don’t help rural and small-town America. Bigger cities always have prospered more, of course, but in the industrial age, there was still an economic connection between cities and rural areas — the factories of the industrial Midwest ran on coal from Appalachia, the shipyards of San Francisco depended on lumber from the Pacific Northwest. As those cities thrived, so did smaller cities along their supply chains. In the so-called “knowledge economy,” that connection has been broken. The tech companies in the Silicon Valley aren’t buying algorithms assembled at digit factories in Martinsville. Economically speaking, they don’t need the rest of the country.
Roanoke is a good place from which to observe this “great divergence.” Once, we were the headquarters for the Norfolk & Western Railway. In 1982, that headquarters moved to Norfolk to become Norfolk Southern. Now it’s moved on to an even bigger city — Atlanta — and many of our jobs have gone with it. We might think we’re doing reasonably well, but a report last year by the Brookings Institution said Roanoke still hadn’t recovered from the loss of the railroad headquarters: “Inflation-adjusted median household income in Roanoke today is still about 9% lower than in 1989.”
2. What can be done to reverse the concentration of venture capital in a handful of cities? Here’s one reason we’re seeing this “great divergence:” In 2012, almost 58 percent of the nation’s venture capital went to just five “superstar” metro areas — San Francisco; New York; Boston; San Jose, California; and Los Angeles, in that order. By 2017, that figure was close to 81 percent. The rich really are getting richer. This concentration of venture capital is a problem neither party wants to talk about, albeit for different reasons. President Donald Trump seems focused on rebuilding a 1950s-style manufacturing economy and shows scant interest in the technology sector. Plus, any solutions might involve more government intervention in the marketplace than Republican ideology allows. Democrats might have different reasons to be reluctant to talk about this. Bernie Sanders is a socialist, so venture capital isn’t in his vocabulary. And why would Bill de Blasio, Kirsten Gillibrand, Kamala Harris and Elizabeth Warren warn against a concentration of venture capital when it’s their states that benefit the most?
3. What can be done to dramatically raise the skill level of the work force in rural America? The new economy puts more emphasis on education than ever before. Here’s a statistic that’s pretty shocking: The State Council for Higher Education in Virginia reported last year that 99% of the jobs in the state since the recession have gone to workers with more than a high school diploma. Not all those have gone to people with four-year degrees, of course. But the point is that a basic K-12 education is no longer sufficient for success in the marketplace. Trump’s focus is on manufacturing jobs but even many manufacturing jobs now require at least some community college education — one of the reasons the Eldor Corp. auto parts plant located in Botetourt County was the highly regarded mechatronics program at Virginia Western Community College. Some states — most notably Tennessee, not exactly a state of free-spending liberals — have responded by trying to make community college free, or something close to it. When the agricultural economy gave way to the industrial economy, we responded by making K-12 education free. Should we now look at providing a free K-14 education?
Whether we do or not, it’s clear that the skill level of the rural workforce does not fit the needs of the modern economy. In Southwest and Southside Virginia, only 15.5% of working-age adults have a four-year degree. The national figure is 34%. In some communities in Northern Virginia, the figure tops 70%; in Falls Church, it’s 78%. One of our former governors — Gerald Baliles, a Democrat — says we need a “Marshall Plan” to raise the skill level of rural Virginia. His observation surely applies to all of rural America. Is he right? If so, what, if anything, can the federal government do about that? Or are we simply on our own? That brings us to this question:
4. How much should the federal government do to intervene specifically to help the rural economy? Now, Roanoke’s not rural. But we have lots of rural areas around us. U.S. Sen. Mark Warner, D-Va., wanted a provision in the tax bill that would have given tech companies a bigger tax break if they invested in economically distressed regions such as Appalachia. Republicans defeated that. One of the congressional representatives who represents the Silicon Valley — U.S. Rep. Ro Khanna, D-California – has proposed what amounts to a “rural set-aside.” He suggests that “when awarding federal software contracts, agencies should give favorable consideration if at least 10 percent of the work force is rural.” His goal is to “spread the digital wealth” and try to jump-start a tech-based economy in rural communities. Is either of these a good idea? If not, what, if anything, should the government do to encourage the growth of technology jobs in places that aren’t currently considered “tech hubs?” Or should that even be a goal? Stanford University economist Enrico Moretti says dispersing technology jobs would result in a less-robust technology sector; the economy benefits from companies being clustered together — there’s more synergy from having the workforce in just a few places. By that math, the nation benefits, but large parts of the nation do not. That brings us back to the first question: Does either party have a solution for the “great divergence?” We have yet to hear one.