Drug Testing TANF Recipients a Proven Failure at Addressing Substance Abuse

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.

To Create Jobs, Invest At Home

A  new report from the Center on Budget and Policy Priorities analyzes data about which businesses actually create jobs and where they create them. The conclusions from the analysis contain useful information for states, like West Virginia, looking to create jobs and grow their economy. 

While West Virginia recently underwent a significant tax reform, and is looking to do the same again, this failed to significantly create any new jobs in the state. But, as this new report shows, that shouldn’t have been surprising. While tax cuts and other tax incentives like those enacted in West Virginia are used to lure businesses from other states, the report finds that the vast majority of jobs are created by businesses that start up or are already present in a state. From 1995 to 2013, about 87 percent of private-sector job creation in a typical state was “home grown,” coming from startups, the expansion of employment at existing establishments, and the creation of new in-state locations by businesses already headquartered in the state. In contrast, jobs that move into one state from another typically represent only 1 to 4 percent of total job creation each year.

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The report also found that start-ups and young companies are responsible for most of the job creation when the economy is healthy. This means that economic development strategies that focus on tax cuts and tax incentives are likely to fail. Tax cuts are poorly suited to helping startups and other rapidly growing firms, in part because these businesses often have little income in their early years, after spending heavily on new equipment, product development, and marketing.

Instead of creating jobs, tax cuts end up hurting state investments in education and other services that entrepreneurs need. In a survey highlighted in the report, the most commonly cited reason among entrepreneurs for starting their companies where they did was that it was where they lived at the time, with 31% of entrepreneurs citing access to talent as a factor determining where they launch their business. In contrast, only 5% of entrepreneurs cited low tax rates as a factor in deciding where to launch their company.

All of this suggests that West Virginia should look beyond doubling down on the failed tax cuts of the past as an economic development strategy, and instead invest in schools and colleges, improving workers’ skills, and maintaining communities that are attractive to residents who want to start a business. Successful entrepreneurs report these factors were key to where they founded their companies. More tax cuts and subsidies will only waste state resources that would be better utilized building a skilled workforce and improving the quality of life for local residents, investments that support real economic progress.

“Right to Work” and Prevailing Bills on Their Way to the Governor’s Desk

“Right to Work” and Repeal of Prevailing Wage Both Pass Full Legislature

Yesterday, after five hours of debate, the so-called “Right to Work” legislation passed the full House of Delegates with a 54-46 vote. The bill is now in the hands of Governor Tomblin.

Also passed yesterday was a bill to repeal the state’s prevailing wage. This bill also heads to the governor’s desk. He is expected to veto both bills.

In a statement released by his office yesterday, Governor Tomblin said, “I will veto the (Right to Work) legislation passed today, which received bipartisan opposition but only partisan support.”

While both bills are touted as a way to create jobs, there is no data to support this claim. They both, however, are expected to lower wages in West Virginia. And so-called “Right to Work” has weakened unions in other states where it has been enacted.

Neither measure tackles the huge problem of increasing income inequality in West Virginia (see below from the Economic Policy Institute) with more and more of the share of income going to the top 1% while the wages of working families are stagnant.

Here’s more in Ted’s blog post.


Prevailing wage laws help ensure that government-funded construction projects are done with highly skilled workers from the community, increasing productivity and strengthening the economy with good-paying local jobs. On Tuesday, Sean appeared on West Virginia Public Broadcasting discussing why repealing the state’s prevailing wage is bad policy.

 

Job Creation – Not Tax Cuts

Supporting homegrown startups and young, fast-growing in-state companies is a more effective strategy for states to create jobs and build a strong economy than cutting taxes for small businesses across the board and trying to lure business from other states.

The findings are striking: new data and research confirm that supporting homegrown startups and young, fast-growing in-state companies is likely to be a much more effective strategy for states to create jobs and build a strong economy than the across-the-board tax cuts and attempts to lure businesses from elsewhere being pursued today.

Read more in a report out this week from the Center on Budget and Policy Priorities.

 

West Virginia EITC Would Help Thousands of Families

A West Virginia Earned Income Tax Credit (EITC) would help strengthen local businesses and economies because families struggling to get by tend to spend everything they earn on necessities and at local stores.

And because the additional income helps parents better meet their needs, young children in low-income families getting an EITC tend to do better and go farther in school, and as adults earn more money.

Read more in Seth’s op-ed in the Charleston Gazette-Mail.

What can you do? Ask the House Finance Committee to consider legislation to enact a WV EITC with one quick action.


RECLAIM Act Would Provide Millions for Struggling West Virginia Communities

This week Congressman Evan Jenkins cosponsored a bill to create the RECLAIM Act (Revitalizing the Economy of Coal Communities by Leveraging Local Activities and Investing More). The legislation would release $1 billion in funding from the Abandoned Mine Reclamation Fund over the next five years to revitalize communities impacted by the decline of the region’s coal industry.

The RECLAIM Act comes on the heels of 27 resolutions that have been passed by local governments in West Virginia, Kentucky, Virginia, and Tennessee calling for Congress to take action to help aid coalfield communities. In 2015, the County Commissions of Fayette, Kanawha, and Raleigh, Lincoln, and Wyoming passed resolutions in West Virginia.

 

Organizing Training Available Next Month

The Our Children Our Future campaign will host a two-day organizing training in March. The curriculum will draw from some of the best sessions and trainings from around the country and across organizations–on topics including community organizing, leadership, policy advocacy, team-building, power, etc.

  • March 11-12, 2016 at Camp Virgil Tate
  • Only $50 Registration Fee
  • Spots are limited; some scholarships available
  • More information here.

5 Things You Need to Know about “Right to Work” in WV

The West Virginia Legislature is poised to enact a so-called right-to-work (RTW) law this week. The House of Delegates is taking up an amended version of the “WV Workplace Freedom Act” this afternoon. The law would prohibit unions and employers from negotiating a contract that requires employees who benefit from union representation to pay for their fair share toward those costs.

So far, 25 states have enacted RTW laws, predominantly in the South and Southwest. While right-to-work laws have nothing to do with guaranteeing jobs for workers, some in the business community view it as a strategy for attracting new businesses to locate in West Virginia, despite its downside risks of lowering wages and hurting unions that helped build the middle class in our country.

Here are five important things you need to know:

 1. It’s about lowering wages and eroding workplace protections. As an economic development tool, the professed aim of RTW is to reduce the power of unions by depriving them of resources (dues), which ultimately weakens the union and strengthens the employers’ hand in bargaining for lower pay and benefits. By decreasing the likelihood that businesses will have to negotiate with their workers, this will lower labor costs, reduce the cost of doing business, and will supposedly incentivize out-of-state manufacturers and other businesses to locate in West Virginia. If RTW didn’t lower wages and weaken workplace protections across the board, there would be no incentive for companies to move to West Virginia. This, in a nutshell, is the hope of RTW supporters such as the West Virginia Chamber of Commerce.

 2. Academic research is unanimous that RTW reduces unionization. While there is no strong evidence that RTW laws help or harm a state’s economy, there is a broad academic consensus that it weakens labor unions. If this happens, it could mean even worse economic and social outcomes in the state. This is because unionization is strongly associated with higher economic mobility, less income inequality, higher wages, safer workers conditions, better benefits and larger voter turnout.

 3. The WVU report on RTW is fundamentally flawed. While a recent study by John Deskins at West Virginia University concluded that RTW would boost jobs in West Virginia, the study is fraught with basic design problems. For example, the WVU study misidentifies that Texas and Utah adopted RTW in the 1990s, when both states adopted RTW before 1960. The WVU study also failed to adopt a standard academic practice that accounts for unobserved differences between states, such as the advent of air-conditioning in the South, access to oversees markets, and other important state characteristics. When researchers at the Economic Policy Institute accounted for these problems and replicated WVU’s findings, they found no relationship between RTW status and employment growth. Tim Bartik, an economist with the Upjohn Institute and one of the country’s leading economic development experts, recently reviewed the WVU study and concluded that it “does not provide any convincing evidence that a state that adopts RTW laws will, as a result, experience faster job growth.” The flaws with the WVU study highlight why state policymakers should not rely on its conclusions to adopt RTW.

 4. RTW is not about “workplace freedom.” While RTW proponents define ‘workplace freedom” as letting workers opt out of paying a representation fee to pay for the benefits they are receiving under any negotiated union contract, most would define workplace freedom as being treated with dignity and respect on the job. That means getting paid an honest wage for an honest day’s work, and having access to benefits such as paid sick days, paid family leave, health care, and a retirement plan. The only freedom workers would receive if RTW were enacted is the ability to get something for nothing.

 5. Low workforce skills are the central reason for West Virginia’s economic woes, not lack of RTW. A recent in-depth study by the Center for Business and Economic Research at the University of Kentucky that explored why the state is so poor found that the shortage of skilled workers – not RTW – was the central reason for the state’s relative poor economic performance. Since West Virginia faces many of the same social and economic problems as Kentucky, policymakers would be well advised to promote polices that improve the skills of the state’s workforce instead of RTW that could reduce workforce training.

While we are all worried about our economic future and want to build a strong economy in our state with good-paying jobs, enacting right to work is not going to get us there. Instead it may hurt working families by redistributing income from workers to employers and from middle-class taxpayers to the wealthy.  I hope the legislature in West Virginia will see that we can’t build West Virginia by tearing down working families and unions. Instead we need  to focus on the policies that we know work, such investing in early childhood education, research and development, higher education, workforce training, and effective ways to help more people get out of poverty. 

Other States Facing Severance Tax Shortfalls

Beckley Register-Herald – As officials in Charleston grapple with how to tackle West Virginia’s $354 million budget shortfall, due largely to less than expected severance tax collections, states facing similar financial gaps are using other ways to shore up their finances. Read

Nearly one out of every seven dollars going into West Virginia’s coffers comes from the state’s energy sector. With the coal industry and the oil and natural gas sector struggling, West Virginia had a historic low in its total tax collections last year.

Coal production dropped by a seventh and natural gas prices were at historic lows, the Energy Information Agency reported.

In October, Gov. Earl Ray Tomblin slashed 4 percent from the budget of state agencies, cut staff Christmas parties and cut 1 percent of state funding to local schools.

Busy First Two Weeks of 2016 Legislative Session

“Right to Work” Debated in Public Hearing

So-called “Right to Work” legislation remains on the fast track having already passed the full Senate and the House Judiciary committee. It will likely be taken up by the full House on Monday.

This week the House held a public hearing on the controversial bill. Here’s more in the Charleston Gazette-Mail and the Beckley Register-Herald.

Here are a few facts about “Right to Work” laws.

•Rigorous studies show RTW laws do not boost job growth.
•Low workforce skills are a cause of slow economic growth in neighboring Kentucky, not lack of RTW.
•RTW laws weaken labor unions.
•RTW could lower wages even more in West Virginia.

More here in our full report.

EITC Awareness Day

Did you know that over 150,000 West Virginia tax filers claim the federal Earned Income Tax Credit (EITC)? For Tax Year 2015 working West Virginians making up to $53,267 may receive some amount of this refundable credit (West Virginia Alliance for Sustainable Families).

On Friday, this pro-work, anti-poverty program was celebrated at the state Capitol with the 2016 EITC Champion of the Year, Landau Eugene Murphy, Jr.

Volunteer Income Tax Assistance (VITA) sites help make the program successful. If you would like to become a VITA volunteer, please go here for more information.

It’s time for West Virginia to join 26 other states which also offer a state Earned Income Tax Credit. Ask the House Finance Committee to consider legislation to enact a WV EITC with one quick action.


2016 EITC Champion of the Year, Landau Eugene Murphy, Jr. at WV Capitol to commemorate EITC Awareness Day

  
West Virginia State Senate recognizes EITC Awareness Day on January 29, 2016

Cut in Coal Severance Tax Unaffordable

If you are a regular Budget Beat reader, or even if this is your first issue, you are likely aware of West Virginia’s growing budget deficit, topping $350 million this fiscal year.

Industry leaders are calling for a cut in coal’s severance tax as a measure to boost jobs and production during these hard times. Dropping the severance tax from 5% to 2% will not only further harm the state’s budget but also not do much to lift up the coal industry.

With its thinning coal seams and lower productivity, West Virginia has lost market share to western states, in particular Wyoming. West Virginia has seen its share of total U.S. coal production decline from 14.4% in 2001 to 11.5% in 2013, while Wyoming’s has increased from 32.7% to 39.4%.

So while the industry points to the lack of severance tax in Pennsylvania, and a lower severance tax in Kentucky, as reason to lower West Virginia’s tax, those states have seen their market shares decline as well in the face of higher productivity out West.

Read more in Sean’s blog post.

coal share

Severance Tax Cut No Cure for Coal and Could Seriously Impact Budget

The West Virginia Coal Association announced it intends to push for a cut in the state’s coal severance tax rate, from its current rate of 5% to 2%, as an attempt to jumpstart the state’s ailing coal industry. This is the latest in a series of attempts to give coal a tax break under the justification of increasing coal production and employment in the state. While past attempts have taken the form of credits and other schemes, this effort is a straightforward cut in the severance tax rate. But with the state budget already in a precarious position, is a tax cut the solution to coal’s problems, or will it lead to even more trouble for West Virginia?

It’s clear that the coal industry is struggling, particularly in southern West Virginia. The state’s coal production is expected to be down 39% from 2008 to 2015, while nearly 50 coal companies have declared bankruptcy nationwide. But while giving coal a tax break sounds like a quick fix to help turn the industry around, it’s unlikely to do much to help increase production or employment, while doing some serious damage to the state budget.

There are a number of factors at play affecting West Virginia’s coal industry that offering a severance tax break just won’t overcome. Chief among those is the fact that there is little evidence that the severance tax plays a big role in determining production and employment. Instead, reserve location, market demand, and logistics all play a much greater part in driving production and employment. That’s why when the Wyoming Legislature modeled the effect of a substantial severance tax cut for coal, it found only a minor increase in production but a large decrease in revenues. And last year, in West Virginia, the West Virginia Bureau of Business and Economic Research (BBER) found that the various proposed tax incentives for coal would offer only small increases in production. As BBER director economist John Deskins put it, “It would be hard for a 5% price change to overcome those logistical systems that these companies have put in place over years and years.”

The coal industry often argues that the state’s severance tax makes West Virginia uncompetitive, however, coal seams are getting thinner and it’s more expensive to mine coal here than in other states, particularly those out West, severance tax or no severance tax. In fact, of the top 10 coal producing states in 2013, West Virginia had the lowest coal mine productivity, meaning that it is much more labor intensive, therefore expensive, to mine coal from seams in West Virginia, than in any other state.

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While Central Appalachian states like West Virginia have been hamstrung by thinning seams and lower productivity, they has been losing market share to western states, in particular Wyoming. West Virginia has seen its share of total U.S. coal production decline from 14.4% in 2001 to 11.5% in 2013, while Wyoming’s has increased from 32.7% to 39.4%. So while the industry points to the lack of severance tax in Pennsylvania, and a lower severance tax in Kentucky as evidence of West Virginia’s uncompetitiveness, those states have seen their market shares decline as well in the face of higher productivity out West.

coal shareIn fact, while West Virginia has lost coal market share to Wyoming, it has happened even as Wyoming coal faces both higher severance and overall taxes. West Virginia’s effective severance tax on coal is 4.25%, compared to Wyoming’s rate of 5%, while overall taxes in West Virginia on coal total 6.5%, well below Wyoming’s rate of 10.6%. Even with taxes nearly 40% lower in West Virginia, it isn’t enough to overcome Wyoming’s productivity advantage.

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But beyond competition from coal in other states, West Virginia coal faces even stiffer competition in its own backyard from natural gas. Booming natural gas production, which is subject to the same 5% severance tax in West Virginia as coal, has hurt the coal industry as well. The Marcellus and other shale plays have led to a glut of natural gas, driving energy prices down, making gas-fired electricity often a better deal than coal. In fact, natural gas topped coal as the nation’s largest source of electricity for several months in 2015. And again, a cut in the state’s severance tax will do little to help make coal more competitive with natural gas.

So while a cut to the severance tax will do little to aid the coal industry, it would spell disaster for the state budget. The severance tax on coal produced a little over $311 million in FY 2015, including both the state and local share. Cutting the severance tax rate from 5% to 2% would have cost nearly $220 million, digging an even deeper financial hole than the state already finds itself in.

The severance tax is important to West Virginia’s budget, and it’s important that we keep it. While the coal industry has long provided important benefits to the state and local economies, it also has created its share of costs, to the point where it can cost the state and taxpayers more than it provides. The severance tax is one of the only ways we have to account for the costs created by the coal industry. And while the coal industry is struggling, it doesn’t mean it should be let off the hook with a dubious tax cut.

Come to the Capitol Thursday and Friday!

Join Us at the Capitol This Week

This Thursday, January 28, join us for Kids and Families Day at the state Capitol hosted by the Our Children, Our Future campaign. This is one special day each year when hundreds of everyday kids, families and community leaders make their voices heard. Join us under the Rotunda starting at 9AM. Go here to register.
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And join us on Friday for State EITC Awareness Day! Here’s the agenda for the day:


Thank You for Your Support

On Tuesday, the WVCBP marked the start of the 2016 Legislative Session with our 3rd annual Budget Breakfast.

Ted gave his yearly outlook on the state’s upcoming budget and this year we were honored to have Alexandra Sirota as our keynote speaker from the North Carolina Budget and Tax Center. Both presentations are available here.

 

The governor’s proposed budget calls for another year of cuts to higher education funding. Here’s what Ted had to say to West Virginia Public Broadcasting about how this would impact our college and universities, and the students who go there.

The WVCBP also honored Linda Frame for eight years of service. She is one of the original members of our team, coming on board January 1, 2008. Linda is our Communications and Administrative Manager and was humbled (and completely surprised) to receive this recognition.

 

At the Capitol….

Update: On Thursday, the West Virginia Senate passed SB 1 which would make West Virginia a “Right to Work” state. The 17-16 vote fell along party lines. Here’s what you need to know about the so-called Workplace Freedom law and how it would harm unions and our economy.

The House of Delegates is expected to take quick action to repeal the state’s prevailing wage. Here’s more in the Beckley Register-Herald on how this bill would harm working families. And here’s why repealing the prevailing wage is unnecessary in West Virginia.

2016 Legislative Session Off to a Quick Start

So-Called “Right to Work” Bill is First of the 2016 Legislative Session

The very first Senate Bill introduced this year would make West Virginia the next so-called “Right to Work” state. As they deliberate the legislation, West Virginia legislators are relying on a flawed analysis from WVU’s College of Business and Economics according to a report out this week from the Economic Policy Institute. Here’s more in today’s Charleston Gazette-Mail.

The bill was passed out of Senate Judiciary today on a 9-8 vote.

Here’s more in Ted’s blog post on why “Right to Work” legislation cannot be linked to creating West Virginia jobs and improving its economy.

 RTWMEOK

Ted’s Statement on Governor Tomblin’s State of the State Address

What the governor proposed will make West Virginia’s hard times even harder.

Instead of a balanced approach that includes revenue to meet the state’s growing needs he relies on cuts to the public investments that help build strong economy.

His higher education cuts would pile more debt on our college students and their families. The ideas he offered won’t help West Virginia’s working families, keep young people in our state or help people move from poverty to the middle class.


Last Chance to Register!

Yesterday, the governor released his proposed budget for the upcoming year and by Tuesday we’ll be ready to tell you everything you need to know about it. Spoiler alert: the state is facing a $353 million deficit and we can expect more cuts to important programs like higher education.

The 2016 Budget Breakfast is on Tuesday – have you registered?

Register today!


In Case You Missed It

On Monday a diverse group of experts came together in Charleston to discuss how a West Virginia Earned Income Credit could benefit the state’s working families and its economy. Speakers presentations are available here. Here’s more in the Charleston Gazette-Mail.

Senate Finance Chairman Mike Hall talks about West Virginia’s current budget situation.

Limiting SNAP Benefits Won’t Boost Employment

On January 1, the West Virginia Department of Human Resources (DHHR) added a so-called work requirement to the Supplemental Nutrition Assistance Program (SNAP).

In nine West Virginia counties, adults aged 18 to 50 with no dependent children must participate in a work or educational activity for a monthly average of 20 hours per week in order to maintain SNAP eligibility, with some exceptions. In West Virginia, there are about 37,000 adults who could lose SNAP benefits from this policy change.

Denying recipients about $150 a month for food in counties that have not recovered from the recession sounds is bad policy. In fact, 8 out of the 9 counties affected have more people unemployed now than before the Recession. Here’s more in Sean’s blog post.

It’s That Time of the Year! Here’s Where You Can Find Help At Tax Time!

 

Upcoming Events at the State Capitol This Month

January 28: Kids and Families Day
January 29: West Virginia Earned Income Tax Credit Awareness Day

Will “Right-to-Work” Grow West Virginia’s Economy? Not Likely

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.

RTWMEOK

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.