Sept. 24, 2007 — The largest percentage of Virgin Islanders work for the government, yet hundreds of government jobs go unfilled. A construction boom could lead to more hospitality jobs, but is that work enough to keep the economy healthy?
The entire V.I. workforce consists of about 54,000 workers. Government in general — and the V.I. Government in particular — is by far the largest single employer. As of this July, federal and local government combined employed 13,300 in the territory, or one in every four workers, according to Labor Department figures. Of those, the federal government employs 830 and the V.I. government 12,470. Within the government, 4,000 work for the Department of Education.
By comparison, out of 153 million workers in the U.S. as a whole, there are just under 20 million working for the federal, state and local governments, according to U.S. Department of Labor statistics. That’s a little more than one in every eight workers.
Factors contributing to the high proportion of government employees in the territory include the small total population, the need to duplicate services on two and sometimes three islands, and the relative weakness of other areas of the economy, along with historical factors and past government policies.
Few Virgin Islanders will be surprised to discover the Hovensa refinery is the single largest private employer in the territory. Hovensa by itself has 1,400 employees, and the core, nominally independent subcontractors they use on a daily basis employ another 1,200, according to Hovensa vice president and spokesman Alex Moorhead.
Hovensa is also the single largest contributor to the V.I. treasury.
“The refinery generated approximately $161 million in tax revenues for the V.I. Government in 2006,” Moorhead said. “That includes $14 million in real property taxes and $102 million in corporate income taxes by Hovensa’s owners and contractors at the refinery.”
The refinery’s payroll is about $107 million, and the income tax from that payroll also boosts the government’s coffers, he said.
Cruzan Rum is another big contributor to the tax coffers, if not to the employment rolls. Last year the company sold nearly 7.5 million gallons of rum, according to Vice President and CFO Marvin Pickering. Excise taxes are paid on most of that rum, which the federal government remits back to the local government.
“Perhaps $88 or $89 million will be remitted to the territory this year,” Pickering said. A few million of that will go back to Cruzan Rum to pay for advertising under a rum-promotion agreement passed by the Legislature last December.
Cruzan Rum pays few other taxes, as it receives broad tax breaks under the Economic Development Authority’s tax-incentive program. Cruzan Rum and Hovensa are the largest manufacturing and exporting concerns in the territory. Other local manufacturing concerns include the territory’s two dairy-product companies, Trans Caribbean Dairies and Island Dairies. Coca-Cola and Ivax Pharmaceuticals both have plants on St. Croix. V.I. Cement and V.I. Asphalt and Paving manufacture construction materials.
The Innovative Communication family of companies — including TV2, Innovative Cablevision, Vitelco and the Daily News — employ more than 400 people. They too receive broad EDA tax breaks, but their employees still contribute income taxes to the government coffers.
The hospitality industry as a whole employs more people than any segment of the economy besides government. As of this July, 7,430 — or roughly one in every seven — workers are officially listed as employees in the territory’s restaurants, hotels, bars and other leisure and hospitality venues. Retail sales are a close second, with 6,170.
Looking at employment trends, Lauritz Mills, director of the Bureau of Economic Research, wrote in her quarterly economic summary for April that the financial and information-technology sectors have declined in recent years. Finance, because of changes in federal residency requirements for the Economic Development incentive program; and information technology, for that reason and because the information-technology industry as a whole has been in a slump.
Construction and retail are currently the prime movers of the economy, Mills wrote. Although tourism was relatively flat, even without strong growth hospitality will remain a major source of employment, she said.
Construction has been fueled by government spending on roads, public housing and a regional record center on St. Thomas, and by waterfront and other redevelopment projects in Frederiksted. Private hotel projects such as Yacht Haven Grand and Marriott Frenchman’s Reef have also generated numerous construction jobs. When finished, the facilities themselves will hire non-construction employees. Mills expects this trend to continue as one or more of the several proposed resort projects on St. Croix eventually begin. At Hovensa, about $380 million in capital projects are underway at the moment, but they will mostly be complete by the end of the year, Moorhead said.
Much of the construction that has been or will soon be underway is either infrastructure, such as roads, or hotel and resort building. As the construction boom — or boomlet — tapers off, hiring by some of the resorts will likely increase the number of hospitality-industry jobs.
Cruzan Rum is ramping up its advertising and promotional efforts, Pickering said, and he anticipates continuing growth in its exports. This will fill government coffers but generate few jobs. Hovensa will continue to be a major employer and contribute large sums to the territorial treasury.
An enormous Global Crossing underwater fiber-optic cable has a beachhead on St. Croix, putting that island in a good position to take advantage of what amounts to a sea of super-fast Internet bandwidth. The University of the Virgin Islands is trying to take advantage of this by constructing a research and technology park. (See "High-Powered Communications at UVI's RTPark Expected to Bring High-Paying Jobs.")
Bringing the V.I. workforce up to the needs of new jobs is a much more pressing challenge than creating those jobs, according to Labor Commissioner Albert Bryan.
“In the next 10 years, 90 percent of jobs being created will require some form of advanced degree or certificate,” Bryan said at his confirmation hearing this spring. “If 40 percent haven’t graduated high school, where are they going to work? … We are trying to promote the mindset of having a career, not a job. It is not enough to get a GED or a college degree. To be competitive, the key is ongoing learning and training.”
There are good, decent-paying jobs to be had in the territory, but there is a mismatch between the jobs available and the qualifications of the people who need jobs, Bryan argued.
“The EDA (Economic Development Authority) board has a listing of 458 jobs they are having trouble filling,” he said. “Divi (Carina Resort) has a full-time ad in the paper for jobs and training because they cannot keep their staff full. I know employers who can’t expand solely because they cannot find workers who want to work.”
Bryan also noted the V.I. government had more than 1,500 jobs funded and available, but was having great difficulty filling them.
“And that is only the public sector,” Bryan said. “I want to emphasize we don’t have a fully prepared workforce to fill those positions from.”
In particular the territory faces a large shortage of teachers and nurses, hiring many on a temporary basis from outside the territory.
Next: Who are the unemployed in the Virgin Islands, and what are we doing to prepare them for work?
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