Income Rises for State’s Top Wage Earners

Contact:    Stuart Frazer, 304-720-8682 or sfrazier@wvpolicy.org

Low-Income Families Fall Further Behind

–The income gap that separates West Virginia’s top wage earners from the rest of the state’s households has widened dramatically over the past few decades, according to a study released today by the Economic Policy Institute and the Center on Budget and Policy Priorities.

The state’s poorest residents have seen their incomes decline since the late 1990s while families earning the most have seen their incomes increase. West Virginia had the 7th largest increase in income inequality in the nation between the late 1970s and the mid-2000s.

“This is an extremely troubling trend for West Virginia,” stated Stuart Frazier, Policy Analyst with the West Virginia Center on Budget and Policy. “Growing up in poverty is harmful to our state’s children and affects everything from their performance in school to their earnings as adults.”

The key findings in the report include the following:

• In the mid-2000s, the richest 20 percent of families had an average income ($134,464 per year) 8.4 times greater than the average income of the poorest 20 percent ($15,917 per year). In the late 1970s this ratio was 4.9.
• From the late 1990s to the mid-2000s, the average income of the poorest 20 percent decreased by almost 12 percent, while the richest fifth of families saw their incomes increase by over nine percent.

Many of the reasons for growing income inequality are outside of the control of states. However, West Virginia policymakers can take a number of steps to help address the disparity between the rich and poor.

Recommendations include:

• Raise the minimum wage and/or index it to keep pace with rising costs.
• Make state tax systems less regressive.
• Improve the unemployment insurance system.
• Strengthen supports for low-income workers. 

“The drop in incomes among West Virginia’s poorest households is particularly troubling,” continued Frazier. “Creating a state Earned Income Tax Credit, similar to the federal policy, could help struggling families move up the income ladder.”

“With the election over, it is time for the governor and the legislature to do what they can to help narrow the income gap between the state’s poor families and those who are better off. Our state has a high number of low-paying jobs and this has contributed to the inability of our poorest families to raise themselves out of poverty,” said Ted Boettner, Executive Director of the West Virginia Center on Budget and Policy. “Raising the minimum wage would go a long way toward helping the state’s low-income workers and would help reverse the trend we are seeing in today’s report.”

The full report and information on West Virginia can be found here.