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- Poverty is a persistent problem in West Virginia, where tens of thousands of West Virginians live in poverty because their jobs do not pay a living wage. Read the full report. This 10th annual State of Working West Virginia focuses on low-wage work, including demographics of those who do the work; the industries that employ them; geographic factors; the role of public programs supporting low-wage workers; and policy recommendations to improve economic well-being. The report reveals the shifting role of low-wage work in the state’s economy, now its main source of job growth, and a path no longer confined to young workers entering the workforce. The complete picture of West Virginia’s economy shows growth in low-wage industries, while non-low wage industries decline, and wages stagnate for both. "Low-wage work has a profound impact on West Virginia's economy, from the capabilities of workers to provide for their families, to their health and well-being, all the way to the sate budget," said Sean O'Leary, Interim Executive Director for the West Virginia Center on Budget and Policy. "As low-wage jobs become more prevalent in the state's economy, we must consider public policies that support these workers and their families, recognizing their importance to the state." Key Findings
- Twenty-three percent of the state’s workforce is employed in low-wage jobs.
- Forty-four percent of West Virginia’s workers with less than a high school diploma earn low wages, while the rate of low-wage workers who possess a high school degree or some college is 28 percent.
- Compared to the rest of the economy, employment in low-wage industries is growing very rapidly, by 14.5 percent since 2001. In comparison, employment in non-low wage industries declined by 2.8 percent, and overall employment has only grown by 0.1 percent.
- Overall, real average wages in West Virginia have grown by 9.7 percent since 2001, and 11.8 percent in non-low wage industries. In contrast, average wages in the state’s low-wage industries have only grown by 7.4 percent.
- More than one-quarter of workers in low-wage jobs in West Virginia (25.3 percent) live in poverty, compared to just two percent of non-low wage workers.
- Fifty-five percent of children live in a house with a low-wage worker.
- Over half - 57.6 percent - of low-wage workers in West Virginia earn at or below the minimum wage.
- A majority - 75.8 percent - of the state’s low-wage workers (123,970 workers) would benefit directly from an increase in the state’s minimum wage.
- The vast majority - 77 percent - of the state’s low-wage workers live in a county where housing is unaffordable for them.
- No longer a stepping stone, low-wage jobs are becoming lifelong employment, while industries that provide low-wage jobs have become the state’s dominant source of job growth.
- A living wage for low-wage workers would strengthen West Virginia’s economy, boost demand for goods and services provided by local businesses, and help increase the state’s chronically low workforce participation rate.
In addition to WVCBP Executive Director Ted Boettner's budget presentation, Senate Finance Chair Mike Hall (R-Putnam), Nick Casey, Chief of Staff for Governor Jim Justice, and Delegate Matthew Rohrbach (R-Cabell) participated in a panel discussion on the budget at the event.
The legislature is once again facing a tremendous budget gap, you can try your own hand at balancing the state budget with this budget calculator tool.
Many states have legalized the use of marijuana for medical or recreational use, and several states have similar measures on their ballots in November 2016 election. Tara Holmes presented her findings at the July 2016 Lunch and Learn at the WV Covenant House on what legalizing marijuana could mean for West Virginia's budget, the corrections system and tourism.Her full research report, Modernizing West Virginia's Marijuana Laws: Potential Benefits of Decriminalization, Medical Marijuana and Legalization, was released on August 18, 2016.
Marketplace (National Public Radio) - West Virginia holds its primary Tuesday amid another war of words over coal mining. Democratic front-runner Hillary Clinton has said, "We're going to put a lot of coal miners out of business." And Republican Donald Trump recently retorted, "We're going to put the miners back to work." Read
The reality of the market, however, suggests many West Virginia mining jobs — whoever is president — will never come back.
For West Virginia coal, cheap and efficient natural gas is leaving it behind as a fuel for generating electricity. Many analysts project natural gas could remain in the range of $5 per unit of energy longer term.
"Forget the clean power plan. You cannot build a coal plant that meets existing regulation today that can compete with $5 gas," Charles Patton, president of Charleston-based Appalachian Power, told a state energy conference recently. "It just cannot happen."
This report is the eighth in an annual series that examines the state of West Virginia’s economy. While previous editions examined data on employment, income, productivity, job quality and other aspects of the economy as they impact working people, this issue is an in-depth look at one specific economic measure - West Virginia’s labor force participation rate. Read PDF.
The labor force participation rate (LFPR) is the measure of people 16 years or older either working or seeking work, expressed as a share of the adult population. Labor force participation is a complementary measure of labor market conditions to the conventional unemployment rate. The LFPR captures the share of the total adult population that is available to work, whereas the unemployment rate captures the share of the labor force that is unable to obtain employment at a given point in time. Labor force participation varies across demographic characteristics such as age, gender, and race, and can be affected by numerous economic characteristics and public policies. A healthy LFPR is a key driver of a society’s economic output per capita and overall standard of living in the long run.
Nationally, labor force participation peaked in the early 2000s at 67 percent, and has been falling since. The nation’s current rate of 62.9 percent is its lowest since 1977. Historically, West Virginia has had the lowest labor force participation rate in the United States. West Virginia has ranked last among the 50 states every year since 1976, and the state’s labor force participation rate has never lagged the nation by fewer than nine percentage points over this period. In 2014, West Virginia’s labor force participation rate stood at 53 percent, compared to the national rate of 63 percent.
West Virginia shares its low labor force participation rate with much of the Appalachian region. For the 2008-2012 time period, the prime-age (ages 25-54) labor force participation rate in the Appalachian region was 74 percent, compared to the national rate of 78 percent. Only 35 of the 420 Appalachian-region counties had a prime age labor force participation rate above the national rate, while 46 counties had a prime-age rate below 60 percent. Labor force participation rates in the Appalachian region are lowest in rural areas and in Central Appalachia, which contains much of West Virginia.
A number of factors have contributed to the general decline in labor force participation nationally. Consider long-term demographic trends: Aaronson (2012) estimates that just under half of the decline in labor force participation since 1999 is due to shifting demographics, particularly the overall aging population and the retirement of the baby-boom generation. These trends are projected to persist beyond the next decade as the baby-boom generation continues to retire. Men and women over the age of 65 are much less likely to work compared to men and women aged 25-64, and naturally labor force participation declines as the population ages.
The 2007-2009 recession and weak recovery have also contributed to the falling labor force participation rate. An ongoing weak job market can discourage unemployed men and women who cannot find work, driving them to quit looking for work altogether and thereby exit the labor force – termed the discouraged worker phenomenon. The labor force participation rate for prime-age workers fell by 1.5 percentage points between 2007 and 2012, which has been attributed primarily to this phenomenon.
A weak economy can also affect labor force participation by preventing workers from ever joining the labor force. Nichols and Linder (2013) estimate that the drop in labor force participation during and after the recent recession has also been driven by a decline in labor force entry rates.
Returning specifically to West Virginia, a few studies have focused on uncovering the reasons for West Virginia’s, and its Appalachian neighbor’s, low levels of labor force participation. In examining Kentucky data, Berger (1989) found that the primary contributor to Kentucky experiencing employment-to-population ratios – which are related to labor force participation rates - below the national average was relatively low levels of educational attainment in Kentucky in comparison to other states. Other factors included differences in industry structure and an overall weak economy.
A similar analysis yielded different results for West Virginia. Dorsey (1991) concluded that West Virginia’s low rate of labor force participation cannot be attributed to economic or demographic factors, and instead is probably explained by its Appalachian culture, a preference for working informally outside of traditional markets, and high levels of federal disability benefits. Using more sophistical econometric methods compared to Dorsey, Isserman and Rephann (1993) found no statistical evidence of an Appalachian cultural effect. They further concluded that the county-level labor force participation rates in Appalachia were no different from the U.S. average when controlling for demographic and economic conditions.
This study has three components. Section One compares of trends in labor force participation in West Virginia and in the nation and examines how labor force participation in West Virginia varies by demographic, socioeconomic, and health factors. Section Two provides a more in-depth evaluation of the determinants of labor force participation and their contribution to the deviation of West Virginia’s LFPR rate from the national average. Section Three provides various policy solutions to improve labor force participation.
- Labor force participation in West Virginia, and in the nation, rose substantially over the latter half of the 20th century, but has declined since 2000.
- Despite broad movements in labor force participation over the last six decades, labor force participation in West Virginia has lagged the nation by a consistent margin.
- Labor force participation varies widely across West Virginia’s 55 counties and tends to be lowest in the southern part of the state.
- Labor force participation in West Virginia lags the nation across all age groups. Labor force participation among prime-age workers (ages 25-54) in West Virginia is also the lowest among the 50 states, indicating that the fact that West Virginia has an older population cannot solely explain the state’s labor force participation deficit.
- Of the 700,000 West Virginians who are not in the labor force, only 39 percent are age 65 or older. In contrast, 15 percent of labor force non-participants are between 15 and 24 and 27 percent are of prime working age. Policies that target men of women in these age groups have the most potential to improve labor force participation.
- Data suggest that labor force participation increases rapidly with higher levels of education. This finding, coupled with low rates of educational attainment in the state, suggests that effective efforts to improve high school completion and the attainment of a college education would likely be fruitful in enhancing labor force participation.
- Data for both the nation and West Virginia suggest that health is an important determinant of labor force participation. This finding, coupled with the fact that West Virginia suffers from poor health outcomes, suggests that effective policies to improve access to health care and encourage a healthy lifestyle would improve labor force participation.
- Men and women with a disability that limits or prevents them from working comprise 44 percent of those not in the labor force (prime age). This suggests that effective efforts to improve disability outcomes and to promote efforts to match the disabled with more physically-appropriate work might substantially improve labor force participation.
- A statistical analysis shows that the factors that play the most important role in explaining why West Virginia has a lower labor force participation rate than the U.S. average are that the state’s population is older, has completed less formal education and is in relatively poor health.
- Policies that could improve West Virginia’s low levels of labor force participation include enacting a state earned income tax credit, enhancing childcare access, and increasing access to higher education.
The development of the Marcellus Shale has led to a boom in West Virginia’s natural gas production. But aside from the increase in drilling activity and state and local tax revenue, the natural gas boom has not brought with it the jobs and economic growth that many predicted. While the state’s natural gas production has increased dramatically over the past several years, West Virginia has lagged behind the rest of the country in terms of job growth and fewer West Virginians are employed today than before the boom. Even in the counties where production has increased the most, job growth has been lackluster. PDF of report
The capital intensive nature of natural gas drilling can dampen its economic impact, creating fewer jobs than other more labor-intensive industries. However, there may be bigger economic and job opportunities related to chemical-based manufacturing that needs the raw materials found in natural gas liquids, abundant in the Marcellus Shale region.
West Virginia and countless other states have a long history of using tax incentives to boost economic development and jobs. But the impact of the incentives is unclear, including the case of West Virginia’s so-called “cracker bill,” which failed to encourage the development of an ethane cracker plant or other major downstream activity.
With no large-scale ethane cracker facility and associated chemical-based manufacturing from natural gas liquids produced in West Virginia, other states are profiting on the state’s natural resources. As West Virginia Secretary of Commerce Keith Burdette said, after Chesapeake Energy signed a contract to ship 75,000 barrels of ethane a day out of the Marcellus Shale region, “They’re shipping out gas that could support investment here.”
West Virginia can avoid these past failures while still using tax policy as a tool to encourage economic development. This brief proposes a modification of West Virginia’s severance tax that would increase state revenue and also help realize the economic potential of the state’s natural gas liquids.
Given that the Marcellus Shale region extends beyond West Virginia, and the overlap of West Virginia’s shale economy with those of Pennsylvania and Ohio, policymakers should encourage a three-state dialogue about common severance tax policies that encourage processing within the region.
- While natural gas production is booming in West Virginia, the boom has not led to greater economic development. Overall, West Virginia lost jobs during the boom, and growth has been disappointing in the counties that have seen the biggest increase in gas production.
- With little success, West Virginia has offered large tax incentives to encourage chemical-based manufacturing plants to locate in the state and use its natural gas liquids. Instead, companies pipe the liquids out of West Virginia to be used elsewhere, taking jobs and economic growth with them.
- A new severance tax incentive, based on a higher rate for natural gas liquids, with a credit to related in-state industries, may encourage ethane cracking and other chemical manufacturing to create in-state jobs while generating additional tax revenue for investment in infrastructure and human capital.
- If West Virginia increased its severance tax on natural gas liquids from five to ten percent, it would increase revenue by an estimated $168 million over the next five years.
The Hill Blog - For more than a century, Appalachian coal communities have given more to the American dream and received less in return than any other region of our country. They’ve fueled our expansion westward, driven the industrial revolution, and powered our way to victory in two World Wars. At the same time, Appalachians have suffered from painful boom and bust cycles, risked their lives on a daily basis, and live in an area that remains one of the poorest regions in our nation. Read
While we can’t undo the past, we can build a brighter future that honors the sacrifices and hard work of Appalachian coal mining communities by ensuring everyone prospers from a growing America and cleaner energy. That’s why senators and House members representing Appalachian areas must strongly push for investments to help coal communities diversify their economies in the 2016 federal budget.
Historically, Appalachia and its residents have relied heavily on the coal mining industry whose operations are now fading. While debates will continue on the exact cause of coal’s decline in the region – declining coal reserves and productivity, competition from cheap natural gas and western coal, and public demand for clean energy - this should not hold us back from making the critical investments necessary to propel Appalachia forward.
Appalachian coal communities are ripe for regeneration. People across the region are moving forward on a variety of initiatives, but often lack the capital necessary to take them to scale. Federal investments in things like small business development, education and job training, and sustainable forestry would bring new opportunities to hard hit areas of the region that have been struggling for decades to diversify their economies. Funding for these economic development programs could come in part from Abandoned Mine Land reclamation funds, which has a balance today of $2.5 billion.
We must also put more effort into protecting the legacy of those miners who have already given decades to the coal industry by protecting their pensions and healthcare benefits. Ensuring that coal miners and their families can enter retirement with financial dignity should be at the top of the priority list for the members of Congress that frequently speak on the need to stand with coal workers. And in a true showing of good faith, we’ve seen some members make real efforts toward that end.
Reps. David McKinley (R-W.Va.) and Peter Welch (D-Vt.) in the House, for example, recently cosponsored a bipartisan bill aimed at assisting displaced coal miners with retraining programs that can help in their transition to new opportunities. The McKinley-Welch bill would not only help young, healthy miners compete in their changing economic landscapes, but would also give a lifeline to workers that have spent decades working for the coal industry that have families to support and retirement to save toward. On the Senate side, there is also the much-lauded bipartisan legislation from Sens. Shelly Moore Capito (R-W.Va.) and Joe Manchin (D-W.Va.), which goes even further in helping coal workers and their families by funding pension health benefits to retired miners.
These members aren’t doing anything new, federal policies to support economic transitions have been happening for decades. There is a long history of federal investments to help support workers and communities adjust to transition - including transition assistance for railroad workers, tobacco farmers, communities dependent on military bases that had to be closed, and timber harvesting regions in the Pacific Northwest.
In light of this history, the urgency to spur economic diversification and help regenerate the West Virginia coalfields could not be greater. In my state of West Virginia, the impact of coal’s decline is leading to thousands of job losses, falling state and local revenues, and more communities in distress. We now have the highest unemployment rate in the nation and are the leading nation in population loss.
This is why we need the continued support of our Congress - especially the delegation from the Appalachian region, including Sens. Manchin, Capito, Mitch McConnell (R-Ky.), and Lamar Alexander (R-Tenn.), as well as influential congressmen like Rep. Hal Rogers (R-Ky.) - to put strong transition plans to work in order to help revitalize our communities. While there is no silver bullet to solving our problems, investments that provide a foundation for future economic success while respecting the legacy, and the pensions, of workers across the region are a vital step forward.
Yesterday, the Obama administration's Department of Labor proposed a new rule that will raise the overtime salary threshold from $23,660 to $50,440 by 2016, and index it for the future. This change will extend overtime protection to about 5 million workers in its first year, including 20,000 in West Virginia.
Under the Fair Labor Standards Act, workers eligible for overtime must be paid "time-and-a-half" or 1.5 times their regular pay rate for each hour of work per week over 40 hours. Currently, hourly workers in most service and blue-collar jobs are guaranteed the right to overtime pay.
For salaried workers, the right to overtime is determined by their pay and nature of work. Currently, salaried workers who earn below $455/week ($23,660/year) are eligible for overtime, but workers who earn more than $455/week can be exempted from overtime if their occupations are considered professional, administrative, or executive.
The current salary threshold has not kept pace with inflation or the changing economy. In 1975, the overtime salary threshold covered about 62 percent of all salaried workers, compared to just 8% today. Had the threshold kept pace with inflation since 1975, it would be about $52,000 today. The proposed threshold largely restores its lost value.
This calculator allows workers to see how much extra they can earn each week under the new rule.
Working West Virginia moms are never off the clock. From packing lunches in the morning to tucking kids in at night, moms put in a lot more than a full day’s work. And every dollar they work for is hard earned. That’s why we are celebrating moms on Sunday. Read
But this Mother’s Day, it’s also important to watch what’s happening in Washington: Congress can help moms right here in West Virginia by making permanent key improvements to tax credits that put money back into the pockets of moms who’ve earned it.
For more than 21 million working moms across the country, including 98,000 in West Virginia, the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are important tools to help them make ends meet for their families. By offsetting payroll and income taxes, these credits support work, increase wages and reduce poverty.
Boosting income means that moms are better able to pay for the very things that allow them to work and improve their family’s situation, such as child care and transportation. Combined, the EITC and CTC lifted 38,000 West Virginians out of poverty in 2012 and added about $312 million to the state’s economy.
That’s an incredible success story on its own, but evidence also shows that the EITC and CTC have long-term benefits for moms and their kids.
Children who benefit from the tax credits perform better in school and mothers and their children who benefit are healthier than families that do not. Larger tax refunds, like those provided by these important credits, also boost college enrollment by making college more affordable for low- and moderate-income households.
And some of the best news is that the boost in work effort and earnings extends into the next generation, with more work and higher earnings for children raised by moms who benefit from added income the tax credits provide.
It’s no surprise that the credits have enjoyed strong, bipartisan support in Washington over the years.
Legislators in West Virginia can do even more by enacting a state version of the EITC to give moms additional help beyond the federal program. With one in three young West Virginia children living in poverty, West Virginia needs to join the 26 other states already giving families relief from an upside-down tax system so they have more money for day care, food and education for their children.
It’s time to help working moms right here in West Virginia this Mother’s Day. Call our elected officials in Congress and ask them to support moms and kids by making these key provisions of the EITC and CTC permanent. And contact West Virginia legislators, currently looking at ways to overhaul the state’s tax system, to ask them to establish a state program to give low-income working families and our economy more support.
Too many working families in West Virginia are paid low wages and have trouble making ends meet, with basic living expenses stretching family budgets beyond their limits. With tax overhaul a main topic in front of the legislature, a bottom-up tax cut like a state Earned Income Tax Credit that would help people who work hard for low pay should be central to the discussion. Read PDF of report.
The federal EITC is a common-sense tax break that helps working families. It is available only to people who work, and helps them keep working despite low wages -- which benefits families and local economies. It grows in size with each additional dollar earned, up to a modest income level, to reward and encourage more work. And because it reduces hardship, it has lasting benefits for children in struggling families, putting them on a path to a better future. States can build on the successes of the federal credit by adopting their own version of it, as 26 have already done.
A pro-work, West Virginia EITC modeled after the federal credit would allow low-paid families to keep more of what they earn, reduce the substantial state and local taxes they pay, and give a boost to local businesses. Relative to other kinds of tax cuts, it’s a targeted and modest investment that can make a big difference for thousands of working West Virginia households in every corner of our state.
- EITCs provide a bottom-up tax cut for working families. The federal EITC benefited 157,000 low and moderate income tax filers in West Virginia in 2014, with an average benefit of $2,214. Working West Virginians across the state, in fields as diverse as health care, retail, and construction, stand to gain from creating a state EITC.
- State EITCs make upside down state tax systems fairer. While the federal EITC offsets federal income and payroll taxes, low- and moderate-income families in West Virginia pay more of their income and state and local taxes than wealthier families. A state EITC would help those low-income families who are paying more in state and local taxes.
- State EITCs are popular and have broad support. 26 states have enacted state versions of the EITC, making their tax systems fairer, and building on the federal credit’s success at reducing poverty and encouraging work.
- A state EITC would boost small businesses, local economies, and West Virginia’s future workforce. Set at 15% of the federal credit, a West Virginia EITC would benefit 141,000 low- and moderate-income households, including 161,000 children, across all 55 counties, pumping millions into West Virginia’s communities and giving customers more disposable income to spend in their community. It would also strengthen the foundation for young people who make up West Virginia’s future workforce, as research shows that children in families who receive the EITC are likelier to excel in school, graduate high school, attend college, and earn more as adults.