When $1 of new payroll is generated in a Hampton Roads city or county, most does not stay in that locality. For example, when $1 of new payroll appears in Portsmouth, only $0.36 stays and is earned by Portsmouth residents, while $0.64 is earned by non-residents, including $0.05 by Peninsula residents and $0.07 by non-Hampton Roads residents. Virginia Beach benefits the most, as when $1 of new payroll appears in another Hampton Roads city, on average $0.24 will be earned by Virginia Beach residents. The interdependence of the localities is illustrated by the flows of payroll between them.

1. AN ECONOMIC ASSESSMENT
for THE HAMPTON ROADS ECONOMIC DEVELOPMENT ALLIANCE (HREDA)
by
James V. Koch
Board of Visitors Professor of Economics
and President Emeritus, Old Dominion University
25 June 2005
ECONOMIC INTERDEPENDENCE OF THE REGION: PAYROLLS
Table Three asks the question, “When $1.00 of new payroll is generated in a Hampton Roads city or county, how much of that money
stays in that city or county and is earned by its residents, and how much is earned by individuals who reside in other cities and counties?” This is
a variant of the question I asked in the previous section, which focused on jobs, but noted that not all jobs are the same. For example, some jobs
pay far more than others. Table Three takes this into account by utilizing U.S. Census data.
Consider the example of Portsmouth. When $1.00 of new payroll is attracted to Portsmouth by HREDA, or facilitated by HREDA,
individuals who reside in Portsmouth will earn $.36 of that dollar and individuals who reside elsewhere will earn the remaining $.64 of that
payroll, including $.05 by individual residing on the Peninsula and $.07 by individuals who do not live in Hampton Roads. Most frequently,
individuals who work in Portsmouth, but reside elsewhere, choose Chesapeake as their residence, followed by Virginia Beach.
It’s apparent in Table Three that Virginia Beach does very well when payroll is considered, not the least because the city’s residents tend
to earn higher than average incomes. When $1.00 of new payroll appears in Virginia Beach, $.77 stays there and is earned by its own residents.
But, residents of Virginia Beach also bring home very substantial amounts of payroll from other cities. For example, $.32 of every $1.00 of payroll
in Norfolk is earned by residents of Virginia Beach, the same amount earned by its own residents. Virginia Beach residents occupy 30 percent of
all jobs in Norfolk, but earn 32 percent of the income there. This implies that the Beach citizens who commute to Norfolk tend to occupy among
the higher paying jobs there.
However, in addition, Virginia Beach residents bring home $.24 of every $1.00 of payroll in Chesapeake. Thus, the prosperity of the
region’s most populous city, Virginia Beach, is directly tied to the other cities within the region. When jobs appear in another city in the region,
chances are that a city such as Virginia Beach is going to benefit significantly from those jobs. It is closely tied to the other cities by virtue of its
residents bringing home the bacon from other cities. The opposite is also true, but to a much lesser extent. Some residents of other cities work
in Virginia Beach and then take their earnings to those other cities. However, this flow is much smaller than the flow of payroll and income into
Virginia Beach.
At the other end of the spectrum, only $.18 of every payroll dollar in Williamsburg is earned by its own residents. The next lowest
number on the Peninsula is York County, where only $.37 of every payroll dollar is earned by its own residents.
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2. TABLE THREE
WHEN $1.00 OF NEW PAYROLL APPEARS IN A HAMPTON ROADS CITY OR COUNTY,
HERE IS THE AMOUNT EARNED BY INDIVIDUALS RESIDING IN VARIOUS LOCATIONS
The Wage Earner Lives In
The $1.00 Is Glou- Isle of James Chesa- Hamp- Newport Poquo- Ports- VA Williams-
York Norfolk Suffolk Other
cester Wight City peake ton News son mouth Beach burg
Earned In
Gloucester 0.78 0.00 0.01 0.03 0.00 0.01 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.13
Isle of Wight 0.49
0.00 0.00 0.00 0.03 0.03 0.03 0.01 0.00 0.04 0.14 0.02 0.00 0.21
James City 0.49
0.05 0.01 0.11 0.00 0.05 0.16 0.01 0.01 0.00 0.00 0.01 0.05 0.08
York 0.37
0.08 0.01 0.11 0.01 0.08 0.23 0.01 0.03 0.01 0.00 0.03 0.02 0.03
Chesapeake 0.51
0.00 0.01 0.00 0.00 0.01 0.01 0.07 0.00 0.08 0.04 0.24 0.00 0.02
Hampton 0.49
0.02 0.02 0.01 0.11 0.02 0.22 0.02 0.02 0.01 0.01 0.03 0.00 0.02
Newport News 0.48
0.04 0.03 0.03 0.09 0.02 0.18 0.02 0.02 0.01 0.02 0.03 0.00 0.05
Norfolk 0.32
0.00 0.00 0.00 0.01 0.14 0.03 0.02 0.00 0.04 0.02 0.32 0.00 0.10
Poquoson 0.59
0.00 0.02 0.01 0.13 0.01 0.15 0.11 0.00 0.00 0.01 0.02 0.00 0.00
Portsmouth 0.36
0.00 0.02 0.00 0.01 0.21 0.02 0.02 0.07 0.00 0.07 0.15 0.00 0.07
Suffolk 0.58
0.00 0.07 0.00 0.01 0.10 0.02 0.02 0.02 0.00 0.07 0.06 0.00 0.05
Virginia Beach 0.77
0.00 0.00 0.00 0.00 0.09 0.01 0.01 0.08 0.00 0.02 0.01 0.00 0.02
Williamsburg 0.18
0.04 0.01 0.34 0.14 0.01 0.05 0.16 0.01 0.01 0.00 0.00 0.01 0.05
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