Lawrence Mishel, Sean O'Leary: If Right-to-Work Impacts Growth So Much, Why Leave it Out of Forecast?
Charleston Gazette-Mail - In economics, if a factor has a big impact on growth, then you take that factor into account in your projections. Apparently, the Bureau of Business and Economic Research at West Virginia University does not do so. In March 2016 the Bureau reported that turning West Virginia into a Right-to-Work state by 2017 would have an “employment growth effect of 0.56 percent” each year, an almost doubling of growth. Yet, when the bureau released its annual Economic Outlook Report for the state in October, the projection was for employment to grow just 0.7 percent over the next five years, trailing the projected national average of 0.9 percent per year.
Only two scenarios make sense. One is, if right-to-work had the impact that the bureau said it would, then employment projections should show growth of around 1.0 to 1.2 percent a year (adding the 0.56 to the 0.5 or 0.6 expected growth in earlier projections). This would show a sharp reversal for West Virginia’s growth compared to the nation. After years of lagging behind national growth, including the bureau’s right-to-work impact would show West Virginia exceeding national growth rates by 40 percent over the next five years, completely changing the state’s economic outlook. The other possibility is that West Virginia economic trends greatly weakened since early 2016, so perhaps the positive impact of right-to-work is offsetting this weakness. Neither explanation seems to work very well. It is noteworthy that the Bureau of Business and Economic Research report makes no mention of the state’s new right-to-work law, nor does the bureau report have any discussion of the newfound weaknesses of West Virginia’s economy.