Incomes in resource-rich West Virginia lag behind the nation, in part because of a "trickle-down" approach to state economic policy that puts more power and money in the hands of a wealthy few, the West Virginia Center on Budget and Policy reported.
According to the center, West Virginia has historically been one of the poorest states, a trend continuing in 2015 with per capita personal income of $37,047 — nearly $11,000 below the national average. The statewide poverty rate was almost 18 percent last year, or more than 321,000 of its 1.84 million people. It also had some of the unhealthiest residents, leading the U.S. in rates of diabetes, drug deaths, smoking and heart disease.
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In a new report, the research group said recent economic weakness came from the collapse in natural gas prices and declines in coal production, manufacturing, construction and the utilities sector. It attributed some of the malaise to both historical and ongoing outside ownership of much of West Virginia's land and mineral resources.
"Our results would support the theory of a resource curse where a reliance on extraction of natural resources ultimately lowers overall economic well-being of a state," the report said. For West Virginia, that began with timber, followed by coal and natural gas with profits going to outside owners. It faulted that "colonialism," as well as assertions that a "culture of poverty" is a cause and not an effect of economic conditions.
The report acknowledged temporary booms when coal was in high demand and there was "broadly shared prosperity," but said the energy markets are subject to boom-and-bust cycles and that automation reduced jobs as productivity rose. "The projected continuing decline of coal, especially in southern West Virginia, makes any future booms unlikely."
The nonprofit center calls research and analysis science-based and nonpartisan, intended improve the quality of life in West Virginia. Its stated focus is public policy's effects on all residents, including low- and moderate-income families.
"The trickle-down approach to state economic policy that emphasizes putting more money and power in the hands of the wealthy often fails to deliver stronger economic growth or a better quality of life," the report said.
Since 2007, the state has cut taxes by more than $425 million annually. It eliminated the business franchise tax and cut the corporate net income tax rate, without an improvement in private-sector employment, the report said.
The organization concluded the state should work on improving West Virginians' health, education and job skills in policies to boost productivity and expand the middle class.