With approximately $25 billion in federal disaster recovery and infrastructure funds committed to the U.S. Virgin Islands, lawmakers and business leaders gathered on St. Croix on Friday to ask whether the rebuilding will truly transform the territory’s economy or simply fuel a short-lived construction boom that collapses once federal spending winds down.
At the 2026 Economic Development Summit, hosted by the 36th Legislature’s Committee on Economic Development and Agriculture and chaired by Sen. Hubert L. Frederick, senators, agency heads, contractors, energy executives and nonprofit leaders met under the theme “From Recovery to Renaissance.” Throughout the day, panels examined whether post‑hurricane reconstruction, infrastructure upgrades and economic development projects can translate into lasting gains in jobs, local ownership and economic resilience.
The discussion repeatedly returned to a central concern: whether the Virgin Islands has the workforce, business capacity and infrastructure to absorb and sustain a surge of federally funded rebuilding work. Speakers pointed to three interconnected pressures, a shrinking population, high operating costs and limited local contracting capacity, that they said could determine whether the recovery becomes a turning point or a temporary spike.
One of the sharpest pressure points was the territory’s workforce shortage. Bureau of Economic Research Director Haldane Davies told lawmakers that as peak construction years approach around 2027 to 2029, the Virgin Islands will need thousands more workers on top of an already constrained labor pool, even as population levels have fallen sharply over the past decade.
He attributed the decline to the closure of the Hovensa refinery, the 2017 hurricanes and the COVID-19 pandemic, which together accelerated the loss of residents to the states.
Labor Commissioner Gary Molloy underscored the scale of the gap. He cited a study by the RAND Corporation, a nonprofit policy research organization that provides economic and workforce analysis for governments, estimating that the territory will still be short between 5,000 and 7,000 workers even if every employable Virgin Islander is working. “We are not going to be able to do this ourselves,” he said, arguing that outside labor will be required in the near term as the territory rebuilds its own workforce pipeline.
Contractors said that even when workers are available, structural barriers can still limit local participation in the rebuilding effort. Contractor Jay Benton said many local firms “can do the work … in the field,” but lack the “back of house staff” needed for larger projects, including estimating, project management, marketing and accounting. Without upfront support, he said, companies struggle to scale in time for major contracts.
“You need money to be able to hire people to do all these things,” he said, arguing that on today’s mega‑projects, many local firms are already behind by the time awards are made. Once the contracts land, he said, companies often don’t have enough time to build the internal systems they need to manage them. The territory “needs an incubator program,” he added, to help firms staff up and invest in back‑office capacity before bids are awarded.
Energy and permitting emerged as two additional structural constraints shaping the recovery. Business leaders said electricity costs, several times higher than in many mainland markets, are already a major drag on competitiveness, increasing operating costs for hotels, manufacturers and small businesses.
Steven Adams, chief executive of the Virgin Islands Next Generation Network, said high power prices “stifle growth … across all industries,” noting that hotels here spend a far larger share of their costs on electricity than their stateside counterparts and that the burden also hits education and health care.
Deanna James, president of the St. Croix Foundation, warned that the Virgin Islands is drifting into what she called a “disaster economy,” sustained by a “windfall of resources” rather than lasting structural change. “This disaster economy is not real,” she told the summit, cautioning that “if we don’t start thinking about what happens on the other end of it … we will be in the worst case that the Virgin Islands has ever been at the end of this windfall of resources.”
In the end, the day’s debate left a clear test for the years ahead: whether billions in recovery spending will build a larger, better-trained workforce and stronger local businesses, or leave the territory with new infrastructure but the same structural weaknesses that existed before.
