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Va. job creation up in July, but filling jobs remains challenge

Total payroll employment in Virginia grew by 4,800 jobs in July, the Federal Reserve Bank of Richmond reported in its regional economic snapshot Friday, but some employers are having difficulty filling jobs. A U.S. Bureau of Labor Statistics survey released Tuesday said that the number of hires in Virginia in June dropped by 33,000 since May.

The state’s unemployment rate stayed the same at 2.7% in July for the third consecutive month, according to the Richmond Fed report, and the lion’s share of new jobs were in the leisure and hospitality sector, totaling 4,600 statewide, followed by 2,100 jobs in the professional and business services sector and 800 jobs in trade, transportation and utilities. These gains are offset by job losses in financial services (1,800 jobs) and information (600 jobs) last month.

“With businesses steadily hiring and expanding and consistent unemployment, we’re on a stable path to continue Virginia’s growth,” state Secretary of Commerce Caren Merrick said in a statement. “Our focus remains on continuing to foster a business-friendly environment that attracts investment and promotes long-term economic growth across all sectors of the commonwealth.”

The BLS Job Openings and Labor Turnover Survey (JOLTS) noted that although the number of hires in Virginia dropped to 147,000 in June, down from 180,000 in May and 186,000 in June 2023, it’s comparable with the hiring rate from five years ago, in pre-pandemic times. On the last business day in June, there were 250,000 job openings in Virginia, a seasonally adjusted number that remained the same as May’s revised figure, and the June job openings rate was 5.5%, also similar to May’s rate, and up from 4.9% job openings nationally, which stayed steady from the previous month.

The survey reported that the labor force in Virginia decreased by 0.1% since May to 66.1%.

Virginia’s sectors with job growth over the past year include education and health services topping the list with 24,900 jobs, followed by 14,500 jobs in professional business services, 11,900 government jobs and 11,300 construction jobs, according to the Richmond Fed.

In the Fed’s Fifth District, which covers Maryland, North and South Carolina, Virginia, Washington, D.C., and West Virginia, the commonwealth’s job creation rate was in the middle, with South Carolina and Maryland reporting the addition of 8,400 and 6,100 jobs, respectively, in July, and North Carolina with 700 new jobs. Washington’s job rate was unchanged, and West Virginia’s number decreased by 700 jobs.

Lego breaks ground on $1B Chesterfield facility

The Lego Group broke ground Thursday on its $1 billion Chesterfield County manufacturing facility — launching the Danish toymaker’s first U.S. manufacturing plant and one of Virginia’s biggest economic development projects.

The Billund, Denmark-based toy company known for its brightly colored plastic toy bricks and construction sets plans to hire 1,761 people to work at its plant in Chesterfield’s Meadowville Technology Park over the next 10 years, with production, including molding plastic toys, expected to begin in the second half of 2025.

“We are not just building a factory, but we are building a culture of diverse, inclusive and playful workplaces for more than 1,700, or to be exact, 1,761,” said Lego Chief Operating Officer Carsten Rasmussen.

Lego is initially hiring 500 people to package toys in a temporary facility in Chesterfield’s Walthall Interchange Industrial Park and plans to begin those operations in the first half of 2024. So far, the company has hired about 20 people, Rasmussen said. Lego’s Virginia careers website shows several open positions, including construction project manager, director of human resources, facility director, materials planner and senior procurement manager.

“This is an iconic company,” Gov. Glenn Youngkin said during the groundbreaking ceremony. “…Together [we] are committed to invest [in] and grow … [a] workforce that is truly best in class.”

Lego plans to select a general contractor for the facility in the next few months, Rasmussen said, and the company has contracted with George Nice & Sons Inc. to conduct groundwork currently occurring at the site.

When complete, the Lego facility will have 13 buildings comprising 1.7 million square feet, including office spaces, molding, processing and packing buildings and a high bay warehouse. The property spans 340 acres.

A Lego model in the Chesterfield facility's visitor center shows the planned layout. Photo by Rick DeBerry
A Lego model in the Chesterfield facility’s visitor center shows the complex’s planned layout. Photo by Rick DeBerry

Lego is eligible for incentives approved by the General Assembly’s Major Employment and Investment Commission. During the ceremony, Youngkin signed Virginia HB 2238 and SB 1134, establishing the Precision Plastic Manufacturing Grant Fund. The bill provides up to $56 million in grants between July 1, 2027, and July 1, 2035, “to a qualified company that engages in the manufacture and distribution of precision plastic products in an eligible county and that between June 1, 2022, and Dec. 31, 2035, is expected to make a capital investment of at least $1 billion and create at least 1,761 new full-time jobs related to or supportive of its business.”

Thursday’s event was celebratory, but Virginia’s economic development officials have acknowledged that Lego’s plant is a one-of-a-kind deal in the commonwealth, while neighboring states have won many more high-dollar industrial projects since 2015. Youngkin has blamed a lack of shovel-ready industrial sites and focused on allocating more state funds toward site preparation in hopes of winning more megaprojects.

Lego is also using the Virginia Economic Development Partnership’s Virginia Talent Accelerator Program, a discretionary incentive program that provides free customizable workforce recruiting and training services for eligible businesses locating or expanding in Virginia.

Lego has touted its commitment to the Richmond community. On Thursday, the company announced it will donate more than $1 million to charities that support local children from disadvantaged backgrounds with learning-through-play programs. In 2022, Lego donated $300,000 to the Children’s Museum of Richmond and the Science Museum of Virginia, but the company and its foundation won’t announce recipients of the remaining $700,000 until this summer.

“Children are our role models because they have boundless creativity and natural curiosity about the world and they’re a constant source of inspiration,” said Skip Kodak, Lego’s regional president of the Americas.

Lego has also emphasized its commitment to sustainability. By 2032, Lego Group aims to reduce its global carbon emissions by 37% of its 2019 output. The Chesterfield facility will be carbon-neutral, with ground and rooftop solar panels and a 35- to 40-megawatt solar plant onsite. The toymaker is also aiming for a Gold LEED certification for the facility once complete.

The Chesterfield factory is Lego’s first U.S. manufacturing facility and its second in North America, the first being in Monterrey, Mexico. The Danish company plans to open another facility in Vietnam by 2024 and is expanding its facilities in Mexico, Hungary and China.

Lego established its American subsidiary, Lego Systems Inc., in 1973. Although its Americas headquarters have been in Enfield, Connecticut, since 1975, the company is moving its U.S. headquarters to Boston in 2026. The toymaker employs more than 3,000 people in the U.S. and has more than 100 stores, including three in Virginia — in Arlington, McLean and Woodbridge. Worldwide, the company has more than 27,000 employees.

Va. labor market stayed strong in February

Virginia’s labor market remained strong in February, although growth is slowing, according to employment data from the Federal Reserve Bank of Richmond.

Virginia had a net gain of 3,200 jobs in February. The Virginia state government employment was previously 12,000 jobs below the February 2020 level, but the state government nearly halved that deficit last month by adding 6,200 jobs becoming the sector with the largest employment increase. Total private employment fell by about 3,000 jobs, however.

The data pointed to slowed job growth. Virginia had stronger job gains in January, with more than 16,000 jobs added that month.

“The gain in February is considerably less than we saw in January, but it may not be altogether a bad thing for the overall economy and the inflation situation,” Richmond Fed Regional Economist Joe Mengedoth said Friday. “Slower job growth and less turnover should help ease pressure on wages, and then in turn, overall inflation.”

Two private sectors added jobs: Health care added 2,200 jobs, and transportation and warehousing added 1,000, according to Mengedoth. The Virginia Employment Commission adds utilities to its categorization of the transportation sector and counted 1,100 new jobs in trade, transportation and utilities.

The professional and business services, leisure and hospitality, and construction industries shed jobs last month. The administrative and support subsector accounted for most of the 2,600 jobs lost in the professional and business services sector.

In January, the quits rate in Virginia fell to 2.3%, according to preliminary data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. That’s the lowest level since February 2021, close to the pre-pandemic rate, Mengedoth said.

Although Virginia employers saw less turnover in January, the labor market remains tight, Mengedoth said. Job openings haven’t dropped significantly, and there are more than two job openings per unemployed person seeking a job.

In February, Virginia’s seasonally adjusted unemployment rate was 3.2%, according to VEC data released Friday.

The Virginia labor force participation rate — the proportion of the civilian population ages 16 and older that is employed or actively looking for work — ticked up in January and February and is almost equal to the pre-pandemic rate, Mengedoth said. In February, Virginia’s labor force participation rate stood at 65.6%, according to the VEC.

Rising inflation doesn’t seem to be having much effect on employment in Virginia, Mengedoth said: “There’s a lot of talk about a possible slowdown, but we haven’t really seen any sort of indicators that are pointing to any kind of recession,” and that seems to hold in the labor market.

Businesses don’t seem to have a large appetite to cut employment, even if business slows, because of the difficulty of recruitment, he added.