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- West Virginia bucks the national trend with its high confinement rates. It was one of only five states where the rate of detention increased, despite a drop in both crime and population.
- In 2013, West Virginia confined juveniles at a rate of 510 per 10,000. By contrast, Massachusetts, with nearly four times the population of West Virginia, had just 393 youth in confinement.
- African American youth were nearly three times as likely to be confined as their white counterparts. West Virginia’s youth confinement rate for African Americans was 1.5 times higher than the national average.
- West Virginia was second only to Wyoming to confining young females. With a rate of 175 per 100,000, the Mountain State far exceeded the national rate of 47.
- Incarceration or other forms of detainment early in life are a major life disruption in the ordinary life course, which can have ripple effects into the future. Prior incarceration was a greater predictor of recidivism than carrying a weapon, gang membership, or poor parental relationships.
- In 2013, only one out of every eight committed youth in West Virginia was locked up based on a violent crime, such as homicide, aggravated assault, robbery, or sexual assault.
- Community-based programs were more cost-efficient and effective with recidivism rates than DJS facilities.
- In 2014, Governor Earl Ray Tomblin convened the West Virginia Intergovernmental Task Force on Juvenile Justice, which brought together legislative and judicial leaders as well as system experts to conduct a comprehensive analysis of the state’s system and to produce policy recommendations.
- West Virginia’s juvenile justice system has made real progress, however, it continues to face significant problems, particularly in the area of juvenile mental health.
- Looking at the system through a mental health lens could lead to more constructive solutions and positive outcomes for youth offenders. Some next steps include: creating a task force to address juvenile mental health; build the infrastructure to help public schools address mental health issues before a student is suspended or sent to court; and a long-term goal should to build an infrastructure which would ensure that students in danger of entering the system are assessed and referred to appropriate community-based programs whenever possible and appropriate.
- West Virginia’s communities, families, and youth will benefit if the only young people who are confined or detained in out-of-home facilities are those who constitute a threat to the public or themselves.
This West Virginia Center on Budget and Policy report, Repealing the Affordable Care Act: Hurting Our Health and Our Economy, provides a detailed analysis of the human and economic impact of repealing the Affordable Care Act (ACA) in West Virginia. Read the full report. Repealing the ACA would have far-reaching effects throughout the Mountain State, including the dismantling of Medicaid expansion and the individual Marketplace, which would cause 184,000 West Virginians to lose their health insurance. West Virginia’s weak economy could falter with billions in federal funds evaporating, causing the loss of 16,000 jobs by 2019 and nearly $350 million in lost tax revenue over five years. Vital consumer protections for hundreds of thousands of West Virginians are at risk, including pre-existing conditions; insurance plan lifetime limits or caps; and free preventive care. An ACA repeal could also decrease access to substance abuse treatments to battle the state’s opioid addition crisis with changes to Medicaid. As the debate in Washington about repealing the ACA continues, Congress and the President should continue deliberation while carefully evaluating any changes to the ACA that could increase health-care costs or lower the number of people with health insurance. Key Findings - At least 184,000 West Virginians could lose health insurance coverage, many of whom are working in low-wage jobs such as food services. - An estimated 29,000 West Virginians could lose their premium subsidies in the Marketplace, which totaled $135.8 million in 2016. Nearly 19,000 people in this group also received cost-sharing reductions (CSRs), which lowered deductibles and other out-of-pocket costs for them by roughly $23.9 million that year. - West Virginia’s budget crisis could worsen if ACA provisions that provide direct savings to the state are repealed. - The Commonwealth Fund estimates that the loss of federal dollars flowing into West Virginia from the ACA could result in the loss of 16,000 jobs and $9.1 billion in state economic output (State GDP) in 2019. - West Virginia will lose an estimated $349 million over five years in state and local taxes as a result of reduced economic activity generated by the ACA. - Vital consumer protections could be at risk, including for about 800,000 West Virginians with pre-existing conditions; 581,000 state residents who saw an end to annual and lifetime limits on insurance plans; 773,000 who received free preventive care; and about 12,000 young adults who were able to stay on their parents’ insurance until age 26.
Balancing the state budget has meant year after year of cuts to higher education funding in West Virginia. Public colleges and universities have been forced to respond with year after year of tuition hikes while the state’s Promise scholarship has remained flat, putting college affordability out of reach for some West Virginia families.
Policymakers are divided on how to solve the state’s continuing budget crisis; so divided that an expensive and lengthy special session in June was necessary to give them time to agree on solutions. While they were able to patch the $250 million hole in this year’s budget, they heavily relied on the state’s Rainy Day Fund and were not able to fix the problem permanently. This means the state will likely face another budget gap of over $300 million, with legislators likely to call for even more cuts for the upcoming fiscal year. It’s doubtful that higher education funding will be spared, despite already having been slashed by 32% since 2008.
On Tuesday, September 6, WVCBP Executive Director Ted Boettner presented at the Mountainlair at West Virginia University on the impact on higher education by years of budget cuts. Read his presentation here. Watch it here.
This report card evaluates the current policies of Ohio, Pennsylvania, and West Virginia in a range of policy areas informed by the research of the Multi-State Shale Research Collaborative (MSSRC). It compares policies across the three states that address the social and economic issues that unconventional drilling delivers to the communities in which it occurs. The Scorecard thus informs policy-makers about the strengths and weaknesses of their respective policies. The three states can enhance their overall prosperity, and that of shale gas communities, by improving their grades – adopting policies that better mitigate the unanticipated negative impacts of unconventional gas drilling and that take better advantage of new economic activity and revenue generated by natural gas extraction. Read report.
This report card’s grading of state policies is limited to areas in which MSSRC has expertise. For example, we do not address environmental policies and, except for policies related to tracking health impacts, we do not address public health issues.
The table below shows the grades. In two of the nine policy areas, severance and property taxes, West Virginia earns an A: Ohio and Pennsylvania could score higher by emulating West Virginia policies. In four other areas at least one state receives a B. In three areas no state receives more than a C. All three states receive at least one F. These grades mean that all three states could achieve a solid report card if they adopted the policies of the state with the highest grade in each area. A report good enough to make the honor roll would require lifting grades in some areas above the current grade of any of the three states.
This handbook provides recommendations to county and local governments, human and social services, police and emergency services, and other local officials dealing with unconventional gas drilling. These recommendations are based on previous research conducted by the Multi-State Shale Research Collaborative (MSSRC) to document the human and social service impacts of increased drilling. Read PDF of report. The MSSRC brings together non-partisan, independent research and policy organizations from Pennsylvania, West Virginia, Ohio, New York and Virginia to monitor trends in employment, tax policy and community impacts from unconventional gas drilling. Prior research focused on the impact on jobs of drilling in six states; case studies of four counties in West Virginia, Ohio and Pennsylvania; and the human and social service impacts across these three states. Throughout this report, we pull from lessons learned from these studies, especially information we gathered from our case study counties — Tioga and Greene counties, Pennsylvania; Wetzel County, West Virginia; and Carroll County, Ohio.
Last week, Governor Tomblin finally issued the call for the legislature to come back into a special session to balance the FY 2017 budget. The special session will begin today, May 16th, and the governor will once again submit a budget proposal for the legislature to consider.
During the regular session, Governor Tomblin proposed $130 million in new revenue, including applying the sales tax to telecommunication devices and increasing the tobacco tax from $0.55 per pack to $1.00 per pack (along with increasing wholesale price on other tobacco products and taxing electronic cigarettes). These revenue measures, however, did not pass the legislature, and worsening fiscal forecasts now leave a $270 million budget gap to be filled, either with further cuts or new revenue.
Governor Tomblin's spokesperson has indicated that the governor will once again propose a tobacco tax increase, and that the telecommunications tax will once again be on the table, as well as a 1% increase in the state's sales tax.
As we've noted before, while producing enough revenue to balance the budget, these tax proposals would make the state's tax system more regressive, with the proposed tax increases falling more heavily on low- and moderate-income families. States should strive to have more progressive tax systems which exemplify the "ability to pay" principle and are also better for the economy. Increasing progressivity in the tax system stimulates the economy, since low- and middle-income individuals and families are more likely to spend most of their money. When the tax burden on low-income people is higher, they spend less, which lowers demand and hurts the economy. In contrast, higher-income individuals spend only a small fraction of their income, meaning a higher tax burden on them is less likely to decrease economic activity.
The biggest proposal, raising the sales tax from 6% to 7% would fall heaviest on low-income families. Those in the lowest 20% of individual and family income would see their taxes as a share of income increase by 0.6% and those in the middle income range would see an increase of 0.5%, compared to just 0.1% for the top 1%. The sales tax increase would increase revenue by an estimated $196 million.
Raising the tobacco tax would also make the state's tax system more regressive. On average, those in the lowest 20% of individual and family income would see their taxes as a share of income increase by 0.6% and those in the middle income range would see an increase of 0.3%, compared to just a 0.01% increase for the top 1%. The tobacco tax increase would increase revenue by an estimated $71.5 million.
The same is true for applying a 6% sales tax to telecommunication devices. On average, those in the lowest 20% of individual and family income would see their taxes as a share of income increase by 0.2% and those in the middle income range would see an increase of 0.1%, compared to just a 0.03% increase for the top 1%. The tobacco tax increase would increase revenue by an estimated $60 million.
Altogether these tax increases would raise an estimated $327.5 million, but would do so in a very regressive fashion. Overall, taxes on the poorest 20% of West Virginians would increase by 1.4%, on middle income West Virginians by 0.8%, and on the wealthiest in the state by only 0.2%.
These regressive tax increases could be partially offset by pairing them with a State Earned Income Tax Credit (EITC). If all three tax proposals are passed, revenue would increase by an estimated $327.5 million, $57.5 million more than what is needed to close the $270 million budget gap. This leaves room for a sizable Earned Income Tax Credit, that would make the tax increase more fair. A state EITC set at 20% of the federal credit would decreases taxes as a share of income by 1.1% for those earning less than $19,000 in West Virginia and by 0.7% for those earning between $19,000 and $33,000.
While making the tax proposal less regressive, a 20% state EITC would cost an estimated $65.9 million, which combined with the other tax proposals, would leave the state about $8.4 million short of closing the $270 million budget gap. A more progressive tax increase could easily close that gap. For example, West Virginians are provided a $2,000 personal exemption from their state income tax for each household member. Unlike the federal government, which phases out personal exemptions as income rises, West Virginia does not. If the $2,000 per person exemption were phased out for joint filers between $150,000 and $200,000 and eliminated for those over $200,000, it would increase revenue by an estimated $9.9 million and help make the state's income tax based more on the ability to pay.
Phasing out the personal exemption would result in only a minor tax increase for the wealthiest West Virginians. Taxes as a share of income would only increase by 0.05% for those making more than $333,000 and by only 0.08% for those making between $168,000 and $333,000.
Adding a 20% state EITC and phasing out the personal exemptions to the other proposed tax increases brings the total estimated revenue increase to $271.5 million, enough to close the FY 2017 budget gap without further budget gaps, and it does it in a less regressive way than tax increases alone. With the ETIC and exemption phase out added in, those earning less than $19,000 would see their effective tax rate go up by 0.3%, compared to 1.4% with the tax increases alone. Those in the top 1% would see a tax increase of 0.21%, compared to 0.15% with the tax increases alone. For those in the middle of West Virginia's income distribution, their taxes go up by about the same amount under both scenarios.
It is important that West Virginia takes a balanced approach to closing its budget gap that includes additional revenue, rather than a cuts-only approach that threatens our state's struggling economy. While the tax proposals on the table are regressive, adding a 20% EITC and phasing out the personal exemption go a long way to ensuring that we are not balancing the budget on the backs of the poor while asking little of anyone else. Other, more progressive options should also be considered to improve the state's fiscal health and to ensure that more cuts to public investments do not further damage the state's economy.
If one wanted to see a revenue package that balanced the budget in a largely progressive way, there are some options. Here's what such a package could look like:
- 1% sales tax increase: $196 million
- $1 per pack tobacco tax increase: $115.3 million
- Phase out personal exemptions at $150,000, eliminate at $200,000: $9.9 million
- Change corporate net income tax from current flat rate of 6.5% to a tiered system: $0-$10k at 3%; $10-$25k at 3.75%; $25-$40k at 4.25%; $40-$60k at 5.75%; $60-$150k at 6.25%; and $150k+ at 8%: $40.1 million
- Create a new top bracket of 8.3% starting at $120k; cut 3% rate to 2%; cut 4% rate to 3.5%; cut 4.5% rate to 4.3%; cut 6% rate to 5.9%; cut 6.5% rate to 6.3%: -$16.4 million
- Enact State EITC set at 20% of the federal EITC: -$65.9 million
- Total Revenue Increase: $279 million
Here's what that tax increase would be across income levels:
When lawmakers reconvene this spring to address the state’s looming budget crisis, it is clear that West Virginia should take a balanced approach that includes additional revenue, rather than a cuts-only approach that threatens our state’s struggling economy. Our state’s worsening revenue situation isn’t due entirely to plunging energy prices. Rather, that situation exacerbates the impact of past state tax cuts – including the elimination of the business franchise tax and grocery tax on food, and lowering the corporate net income tax rate from 9% to 6.5%. Those actions are playing a substantial role in our persistent inability to find the resources needed to invest in essential public services. Read PDF of report.
The Governor’s new revenue estimates make clear that lawmakers will need to address a revenue shortfall of $239 million for the state budget year that begins July 1st. This revenue shortfall comes on top of deep budget cuts over the last several years. For example, investments at our state’s four-year colleges have plummeted while tuition has grown by one-third since 2008. A balanced approach to addressing the state budget deficit cannot rely on cuts alone or more one-time appropriations that shift our budget problems to the next fiscal year.
While some lawmakers may be concerned about raising taxes when our state’s economy is relatively weak, additional budget cuts could do more harm to West Virginia’s economy. During the Great Recession, several prominent economists warned that spending cuts could be more damaging to a state’s economy that certain tax increases and that same rational applies today to West Virginia. Budget cuts can reduce the total level of spending in the state’s economy, while raising taxes – especially on the highest-income households and large, profitable businesses – results in less economic loss. This is because some of the money used to pay for additional taxes would come from reduced savings and out-of-state consumers.
Since West Virginia has already made large budget reductions – budget cuts in the fiscal year that ends June 30 alone included $41.5 million to Health and Human Services, $16.5 million to public education, and $13.8 million to both higher education and public safety – the common-sense choice for West Virginia is to raise additional revenues to address growing public needs and promote a strong economy. This approach makes sense in light of the fact that tax responsibilities in West Virginia are already the lowest they have been in years. General Revenue Funds as a share of the state’s economy are at their lowest point in over 25 years at just 6.4 percent, compared to a 6.8 percent average from 1990 to 2015 and a high of 7.4 percent in 2005. There are a number of revenue options worth considering to improve the state’s fiscal health and to ensure that more cuts to public investments do not further damage the state’s economy.
Apply the sales tax to digital downloads: West Virginia has not updated its sales tax to reflect today’s economy. A good step is to cover various goods and services sold and delivered on the Internet – including books, music, movies, and other digital products downloaded electronically. There is an element of equity here because West Virginia taxes the sales of identical items sold in stores. This change would also slightly reduce the extent to which the sales tax falls disproportionally on lower-income households, since most digital goods are more likely to be purchased by higher-income households that make more online purchases. According to the West Virginia Tax Department, the revenue forgone from this exclusion is $10 million per year.
Apply the sales tax more widely to personal services: The sales tax now excludes the money paid to barbershops, beauty and nail salons, massage and tattoo parlors, and private fitness centers. While West Virginia taxes more services than most states, these personal services remain exempt for no discernable reason and should be part of the state’s sales tax base. According to the West Virginia Tax Department, the revenue forgone from this exclusion is $2.0 million for personalized fitness and $3.8 million for other personal services.
Scale back personal income tax exemptions: West Virginians are provided a $2,000 personal exemption from their state income tax for each household member. Unlike the federal government, which phases out personal exemptions as income rises, West Virginia does not. If the $2,000 per person exemption were phased out for joint filers between $150,000 and $200,000 and eliminated for those over $200,000, it would increase revenue by an estimated $9.9 million and help make the state’s income tax based more on the ability to pay.
Modernize Personal Income Tax Rates and Brackets: West Virginia’s personal income tax schedule has not changed since 1987, when the state’s top personal income rate was reduced from 13 to 6.5 percent. Adjusting brackets and rates would better reflect modern income levels. This could include adopting a new bracket for higher-income earners and perhaps even lower rates for low- and middle-income residents. For example, a new top bracket of 7.4 percent on taxable income above $150,000 would increase revenue by an estimated $44.8 million.
Increase tobacco taxes: Governor Tomblin’s proposal of a modest tax increase on various tobacco products won’t be enough to provide long-term funding for services such as Medicaid nor will it help reduce health care costs and save lives associated with tobacco use. Increasing the cigarette tax to $1.55 per pack from 55 cents, the wholesale tax on other tobacco products to 50 percent from seven percent, and instituting a 7.5-cent per milliliter tax on electronic cigarettes would provide an additional $61 million beyond Governor Tomblin’s tobacco tax proposal, bringing the total to $139 million.
Enact a higher severance tax on natural gas liquids and/or natural gas: West Virginia now produces over 1 trillion cubic feet of natural gas, with most of it flowing out of state. Research shows that severance taxes have little impact on natural gas extraction and that the tax falls primarily on out-of-state energy companies and customers. If West Virginia increased its severance tax on natural gas liquids to 10 from five percent, it would increase revenue by an estimated $18 million in the next fiscal year. If the severance tax on all natural gas were increased to six percent from five percent, it would increase revenue by an estimated $18.5 million in the next fiscal year.
Apply the sales tax to telecommunications services: The governor’s proposal to apply the state’s sixth percent sales tax to telecommunications services (cellphone, telephone, and some ancillary services) would raise approximately $60 million per year in revenue. According to a 2014 report by the Tax Foundation, West Virginia has the fourth-lowest wireless state and local tax and fee rate on wireless communications in the nation.
Increase the Soda Tax: West Virginia levies an excise tax of one cent on each 16.9 fluid ounces of bottled soft drinks, 80 cents per gallon of soft drink syrup, and one-cent per 28.35 grams of dry mixture for making soft drinks. Bipartisan legislation introduced in the state Senate (SB 604) in 2016 would have raised these taxes five-fold and increased state revenue by an estimated $50.5 million in the next fiscal year. While a soda tax is not a silver bullet for addressing the state’s childhood obesity epidemic, it can, by raising the price of unhealthy beverages, reduce consumption, improve health – especially among low-income populations – and provide much needed revenue for Medicaid in West Virginia.
Because many of the above revenue options would fall harder on households with lower incomes, policymakers should couple any of these tax increases – including excise taxes and sales tax increases – with a bottom-up tax cut for working families.
Here’s how -- Enact a West Virginia Earned Income Tax Credit (EITC): Twenty-six states and the District of Columbia have enacted Earned Income Tax Credits for working people to help them offset the cost of the various state and local taxes they pay. The EITC is a proven tool to fight poverty, increase labor force participation, and help low-income working families afford necessities. The benefits are lasting, such as improving the health, educational achievement, and earnings of children who are EITC recipients. A state EITC at 15 percent of the federal credit would cost approximately $47 million and could be paired with a tobacco tax increase or a sales tax increase to help offset the impact of other taxes that hit hardest at low income levels.
When all state and local taxes are considered, low-income households pay a higher share of their income in taxes than the wealthy. West Virginia has the opportunity to turn that upside-down system right-side up and raise resources needed to invest in broad prosperity. That is a far better option than more cuts to services essential to West Virginians.
Ted Boettner and Sean O’Leary, “Confronting the Fiscal Gap,” West Virginia Center on Budget and Policy, February 16, 2016. Retrieved from PDF-FY17-Gov-Budget-Brief-2.16.16-FINAL1.pdf
See Peter Orszag and Joseph Stiglitz, “Budget Cuts vs. Tax Increases at the State Level: Is One More Counter-Productive than the other during a recession?” Center on Budget and Policy Priorities revised November 6, 2008, Retrieved from http://www.cbpp.org/archiveSite/10-30-01sfp.pdf; and John Buhl, “Economist Tells Governors to Consider Tax Increases to Balance Budgets,” Tax Analysts, February 23, 2010.
Boettner and O’Leary, “Confronting the Fiscal Gap”
West Virginia Tax Expenditure Study, “Consumers Sales and Service Tax and Use Tax Expenditures,” West Virginia Tax Department, January 2016. Retrieved from http://tax.wv.gov/Documents/Reports/ConsumersSalesAndServiceTaxAndUseTaxExpenditures.2016.01.pdf
Mark B. Muchow and Mark S. Morton, “Consumer Sales and Use Taxes.” WV Department of Revenue, presentation to Joint Select Committee on Tax Reform, August 31, 2015. Retrieved from http://www.legis.state.wv.us/legisdocs/2015/committee/interim/TAX/TAX_20150831132032.pdf
Estimates provided by the Institute for Taxation and Economic Policy.
Boettner and O’Leary, “Confronting the Fiscal Gap”
See Sean O’Leary, “Investing in the Future: Making the Severance Tax Stronger for West Virginia.” West Virginia Center on Budget and Policy, December 13, 2011. Retrieved from SeveranceTax022812.pdf
Steven L. Gortmaker et al, “Three Interventions That Reduce Childhood Obesity Are Projected To Save More Than They Cost To Implement,” Health Affairs, November 2015. Retrieved from http://content.healthaffairs.org/content/34/11/1932.long
Boettner and O’Leary, “Confronting the Fiscal Gap”
The West Virginia Senate votes today on a bill to drug test welfare recipients. SB 6 would create a three-year pilot project to drug test TANF (Temporary Assistance for Needy Families). Last year, a similar bill stalled in the Senate Finance Committee, never making it to the floor.
The bill's sponsor, Senator Ryan Ferns, describes the bill as a way to "...assist individuals who need help and get them help," and, while West Virginia does face a substance abuse problem, there is no evidence that targeting the state's poorest with expensive and unnecessary procedures will help solve it.
SB 6 would require drug testing of applicants for TANF for whom WV DHHR employees have determined there is a "reasonable suspicion" of substance abuse. In December 2015, there were 7,715 TANF (also known as WV Works) cases in the state. Of those about 2,882 were adult cases, while 4,833 were child-only cases.
The fiscal note for the bill shows estimated costs of $50,000 in the first year, and $22.000/year after implementation. This only includes the costs of the drug tests themselves, which the bill requires DHHR to pay for, at an estimated cost of $56.50 per test.
While the bill requires applicants who fail a drug test to enter enter rehabilitative and workforce training programs in order to keep their benefits, it does not pay for treatment. Applicants who fail a drug test would be required to pay for treatment on their own to keep their benefits. The fiscal note for last year's version of the bill included the estimated costs of treatment, which were $4,600 for a six-week outpatient drug treatment program. In comparison, the average monthly TANF benefit in West Virginia is $340 per household, making paying for substance abuse treatment prohibitively expensive for most TANF recipients.
While the fiscal note for West Virginia's proposal is small, the experience of the other states with drug testing programs shows that the programs can become very costly to run, with no active program generating any savings for the state.
These programs have also failed at identifying substance abuse among their TANF populations. Reports from Arizona, Florida, Missouri, Utah, Oklahoma, Kansas, and Tennessee all show that their drug testing programs have all failed at identifying any significant number of substance abusers.
Research has shown that the percentage of welfare recipients using drugs is relatively small and consistent with those not receiving welfare. And the experience of basically every state that has tried drug testing TANF recipients has shown that it fails at identifying any significant number of substance abusers. So how are we helping those who need help, as Senator Ferns puts it, by drug testing TANF recipients? The answer is we're not helping anyone.
Proposals like SB 6 are based on stereotypes about prevalence of substance abuse among recipients— not evidence. The fact is that drug testing welfare recipients is a flawed and inefficient way at identifying people who need treatment. No study has shown that denying assistance facilitates substance abuse treatment, and requiring someone who does need help to pay up to $4,600 in order to keep their $340/month in benefits creates only additional barriers to treatment.
Investing in substance abuse treatment is an efficient use of taxpayer dollars, but expensive and unnecessary policies that are based more on stereotype and punishing the poor than on facts and evidence are not. If West Virginia wants to tackle its substance abuse problem, we need to look at what works.
Back in November, the Business Bureau of Economic Research at West Virginia University released a study by John Deskins that concluded that the adoption of a "Right-to-Work" (RTW) law in West Virginia would boost employment and GDP growth, have no discernible impact on wages, and reduce unionization rates.
The problem with the WVU study - and many studies that look at the economic impact of RTW laws - is that it is very difficult to untangle the impact of RTW laws on a state's economy from other important factors (e.g. air-conditioning, infrastructure, quality of life, etc.). Another problem in teasing out the effects of RTW laws is that there are not a lot of natural experiments where you can look at the before and after impact of RTW on a state's economy.
While Indiana (2012), Michigan(2012), and Wisconsin (2015) have recently adopted RTW laws, only two states since 1980 have done so - Idaho (1985) and Oklahoma (2001) - that provide an opportunity to provide some significant correlations between RTW laws and state economic performance. This is precisely why state economic development expert Tim Bartik found that the WVU RTW study offered no conclusive evidence that RTW would boost economic development.
There are only two recent peer-reviewed academic studies (non-think tank studies) that examined the effect of RTW laws in Idaho and Oklahoma - both by Ozkan Eren (Louisiana State University) and Serkan Ozbeklik (Claremont McKenna College). Eren and Ozbeklik's most recent study (2015) on the effects of RTW in Oklahoma found that it decreased private sector unionization and had no impact on employment, private sector wages, or the manufacturing sector. And unlike the WVU study that did not include any caveats about the impact RTW would have on West Virginia, Eren and Ozbeklik conclude that even with these results in mind, that there is "still no clear consensus among policy makers and researchers" of RTW laws on state economies.
An earlier study (2011) by Eren and Ozbeklik that looked the effects of RTW in Idaho and Oklahoma found similar results for Oklahoma (no impact on manufacturing wages or employment or per capita income) while in Idaho it found that RTW increased manufacturing employment but had no effect on per capita income.
These findings are illustrative of why we should always proceed with caution in expressing certainty over the impact of RTW laws on state economic outcomes. This is one of the major shortcomings of the WVU study by John Deskins. For example, the WVU study concludes that RTW "would lead to a decrease in private-sector union membership, and an increase in employment and output growth in West Virginia."
As Yogi Berra said a long time ago, it is difficult to make predictions, especially about the future. And this conclusion illustrates why this study does not rise to the level of scholarship found in peer-reviewed academic journals.
Another problem with the WVU study is that its own analysis seems to contradict its conclusion that passing RTW in West Virginia "would" increase the state's job growth. As economist Tim Bartik notes:
The West Virginia study includes information that undermines the claim that adoption of RTW laws "certainly" increases job growth. The study includes some information on trends before and after RTW adoption in 10 states that adopted RTW laws after 1950. In 5 of these states, job growth increased after adoption of RTW, and in 5 states job growth decreased after adoption of RTW. This very mixed and uncertain result is representative of the overall findings of RTW research. Based on current evidence, it is highly uncertain whether RTW laws have any positive effects on job growth.
Despite promises from RTW supporters in Oklahoma that the law would boost manufacturing job growth, the opposite has happened. Since the adoption of RTW in 2001, Oklahoma has lost over 38,000 manufacturing jobs. While the adoption of RTW in Oklahoma most likely did not cause these manufacturing job losses, claims that RTW would boost manufacturing employment clearly did not materialize.
While the debate about whether to adopt a RTW law is mostly about political power and the ability to "free ride" on the benefits provided by union representation, the economic research - as we highlighted in this earlier report - shows that RTW is unlikely to boost economic growth and it could, as Bartik suggests in this State Journal article, pave the way for a lower-wage economy in the Mountain State. This means less freedom for working families and more economic stagnation.
On December 3, 2015, Ted Boettner presented to the Morgantown Rotary Club on West Virginia's Budget and Tax Reform. Read his presentation to get answers to these questions:
- Why is the state budget important?
- Where does West Virginia invest its money?
- Where does the money come from?
- Who pays?
- How healthy is West Virginia’s budget?
- What tax policy changes are being proposed?