Report Uncovers a “Growing Divide” In the Prosperity of Virginia’s Workers

RICHMOND – Virginia’s economy has experienced substantial growth in recent years, yet a new report (download here) by The Commonwealth Institute for Fiscal Analysis reveals that the state’s growing wealth is not reaching all workers, industries, and communities. A growing divide is emerging in the state where average workers are left behind in the current economy. 

The report, entitled, “A Growing Divide: The State of Working Virginia,” looks at how Virginia workers are faring. “Most news surrounding Virginia’s economy is positive: our workers are among the most educated and productive in the nation, our job growth is high and unemployment is low.” said Michael Cassidy, Executive Director of The Commonwealth Institute.  “But beneath those broad numbers, a very different picture emerges of growing disparity in income, stagnant wages for middle and low wage workers, and reduced benefits coverage.”

The report’s key findings include:

• The gap in wages between Virginia’s highest (top 10 percent) and lowest (bottom 10 percent) earners grew more in Virginia in real dollar terms between 1996 and 2006 than in any other state.
• Despite large and steady increases in worker productivity, median household income has declined since 2003. 
• For the first time in almost a decade, employment expansion in Virginia fell below the national average in 2006.
• The number of uninsured Virginians has been on the rise since 2001 and the percentage of the state’s working population obtaining health insurance through their employer has declined 13 percentage points between 1979 and 2005.
• A substantial gap in both unemployment rates and wages still exists between African American and white workers.  Also, among those with jobs, African Americans are twice as likely to be underemployed as white Virginians.

“Normally, wages rise along with productivity, but the Virginia economy is experiencing just the opposite.  This means that instead of the benefits of economic growth being more or less widely shared across the whole range of working Virginians, they are being concentrated at the very top level of earners.  This rising tide is not lifting all boats,” Cassidy said.

The report documents some trends that are familiar to many:  the continuing decline of the manufacturing sector across the state means that 1 in 5 jobs there have been lost.  Other trends run counter to what is often seen as areas of strength in the Virginia economy: the information sector has yet to recover from the dot-com bubble bursting in 2001, losing 1 in 9 jobs despite strong overall economic growth.  

“Narrowing this divide will take thoughtful public policy that can invest in the tremendously productive workers in our state who are struggling to move ahead in an economy that benefits the wealthiest more and more,” said Cassidy.  “When 20 percent of workers in Virginia make wages that leave them below the poverty line, we have significant challenges before us.”