Budget Beat – July 25, 2014

Our Children Our Future Policy Workshops Joining All Corners of the State

policy workshop logo

This month people from across the state who want to see policy change have come together in Lewisburg, Clarksburg and Hurricane. There is one more Our Children Our Future Policy workshop to go, next week in Martinsburg. With 23 ideas for positive change up for discussion, and multiple policy wins under our belt, there is a lot of momentum building as we head toward the 2014 Policy Symposium on September 9 and 10.

leg panel policy workshop 7.24.14

Legislative and Leadership Panel at the Our Children Our Future Policy Workshop in Hurricane on July 24, 2014. Photo by Sean O’Leary.

Walk-ups are welcome at next week’s policy workshop in Martinsburg on July 29. Read more about the recent workshops here and here.

Registration is now open for the 2014 Policy Symposium September 9 and 10 in Charleston. The Our Children Our Future Policy Workshops and Symposium are supported by local and regional sponsorships, the West Virginia Healthy Kids and Families Coalition, the West Virginia Community HUB and the West Virginia Center on Budget and Policy.

Voluntary Employee Retirement Accounts Would Help Workers Save for the Future

With one of the nation’s oldest populations, West Virginia has many residents quickly approaching retirement. Unfortunately, many of them are not prepared financially. One reason is that they lack access to a retirement plan at work that would make it easier for them to save for the future. The WVCBP, along with the WV-AARP and other coalition partners, will work during the next legislative session to make Voluntary Retirement Accounts (VERA) a reality.

VERA infographic

Obamacare Bringing Refunds to West Virginia

West Virginians will receive almost $1 million in refunds from health insurance companies thanks to the Affordable Care Act. The companies being required to make the refunds did not spend 80% of health care premiums directly on health care, as required under the law, so are now required to refund it to their customers. Read more in today’s Charleston Gazette.

Budget Beat – July 11, 2014

Here’s Why You Want to Be a Part of This Month’s Our Children Our Future Policy Workshops

policy workshop logo

1. This cool three-minute video. Check it out, you’ll feel inspired.

2. You care about the future of West Virginia.

And part of that means taking care of the state’s workers. We can do a better job at that by passing legislation to create a paid sick days and family leave policy. This is good for workers and their employers.

We can also help those same workers prepare for retirement with Voluntary Retirement Accounts (VERA).

Lack of retirement assets is one of the leading causes of poverty among the elderly. Learn more about how Voluntary Retirement Accounts can prevent this on July 22 at the Northern Regional Workshop, Gaston Caperton Center, Clarksburg, WV.

Every day workers are faced with the impossible choice of going to work sick or staying home, losing pay and risking job loss. Just three and a half days of missed work because of illness is equivalent to an entire month’s groceries for the average family. Find out how we can make paid sick days and family leave the law in West Virginia on July 24 at the Central Regional Workshop, St. Timothy in the Valley, Hurricane, WV.

There is a wide variety of workshops taking place not only in Clarksburg and Hurricane but also in Lewisburg and Martinsburg.

Help bring an end to child poverty in West Virginia. Need more reasons? Check out this week’s editorial in the Clarksburg Exponent Telegram.

Our Children Our Future with Children Silhouette

Why is West Virginia GDP Up and Employment Down? Fracking?

Workforce West Virginia recently released 2013 data on employment and wages that show West Virginia has about 7,000 fewer jobs (on average) in 2013 than it did in 2012. In contrast, two weeks ago the U.S. Bureau of Economic Analysis released state data for real Gross Domestic Product growth that showed West Virginia’s economy grew by 5.1 percent from 2012 to 2013 (after adjusting for inflation), which was higher than all but two states. 

How can West Virginia’s economy be growing when jobs are declining? Let’s take a closer look to find out why.

First, let’s look at West Virginia real GDP growth compared to job growth provided by the Quarterly Census of Wages and Employment (which included workers that are covered by unemployment insurance) that is released by Workforce West Virginia. As you can see in these two charts, the relationship between the growth of the economy (real GDP) and jobs has been tenuous over the last several years. While real GDP grew by 16.2 percent since 2002, job growth was an anemic three percent.

real gdp vs job 1

real gdp job 2

The gap in growth in 2012-2013 was especially large, with real GDP growing 5.1 percent while job growth was down one percent. To help explain this disparity, it important to first look at why real GDP grew in the first place. As this next chart shows, it is overwhelmingly due to the the mining sector, which is primarily the coal and natural gas industries. Without this growth of $3.3 billion (40 percent), West Virginia would have experienced negative real GDP growth from 2012 to 2013. 

mining real gdp

The mining sector is also becoming a much larger piece of the state’s economy, accounting for nearly 17.8 percent of the state’s GDP compared to just 6.5 percent in 2002. The recent uptick in the mining sector is due to the boom in shale gas extraction in the north-central part of the state. Meanwhile, West Virginia coal production has declined over the last several years and so has its share of the economy.

Interestingly, the huge jump in mining GDP was not the product of higher wages or employment. Total mining wages declined slightly from $2.6 billion in 2012 to $2.5 billion in 2013 and total mining employment fell by 1,830 (natural gas gained 567 jobs, but looking more broadly at other natural gas sectors like pipeline construction and transportation, distribution, and field machinery, it fell about 173 jobs).

There could be several reasons for the dramatic one-year change in mining real GDP. It could be that the mining real GDP data are wrong, which is always subject to revisions over time, or that the new and more comprehensive revisions of state GDP captured something new in 2013. Or it could be that there was a glut in natural gas storage in the state and that it was finally sold in 2013 at a higher price that boosted productivity and GDP. Another thing to keep in mind is that the natural gas industry is very capital intensive, meaning that it relies less on workers and more on machinery and equipment to produce its value-added product.

While we cannot say with certainty why mining GDP is growing rapidly at the same time wages and employment are stagnating, we can say that it has not translated into broader economic growth in the state in 2013. We can also say that the link between GDP growth and wage growth is not as strong as it used to be. As the chart below shows, wages used to make up over 50 percent of West Virginia’s GDP. Today, they are only 40 percent. There has also been a similar decline in total compensation, which includes pensions, health care, social insurance, and profit-sharing. This means that workers are not benefiting from productivity growth and that more money is flowing to the top via profits and capital income.

Over the last several years, West Virginia has exacerbated this problem by cutting corporate taxes and gutting its estate tax while investing less in higher education and other budget priorities. Reversing this trend in inequality and boosting quality job growth will require policy action at both the federal and state level.

gdp wages and comp