Commentary:  Steve Roberts

Change Anti-job Laws: Better Business Climate Would Improve W.Va.

The Charleston Gazette, September 3, 2004

With Labor Day approaching, now is a good time to reflect on the health and well-being of West Virginia’s employment base. Jobs are the key to overcoming the challenges faced by the people of our beautiful state. Employment provides West Virginians of all walks of life with an ability to earn a paycheck, to provide for their families, to own a home, to purchase goods and services, to buy a car and to prepare for retirement.

However, just this past year, many areas have been hit hard by job cuts or outright business closures. And while our state recently has been adding jobs, our good-paying manufacturing and goods-producing jobs are disappearing.

In the Northern Panhandle, families and businesses are struggling with the impact of the sale of Weirton Steel. Thousands are losing their jobs, and thousands of others are losing their retirement and health-care coverage.

In the Kanawha Valley, the impact also is being felt hard. Since the first of the year, the region has experienced a series of announcements about jobs closures: Flexsys is shutting down — 250 jobs gone. Mayflower’s South Charleston Stamping lost a major contract — 350 jobs to be lost. Chemical companies face stiff competition and must work to reduce costs to remain competitive.

The loss of these high-paying jobs has a “shockwave” effect. For each 100 jobs eliminated, the negative impact will be on the order of $4 million in lost household income. Other businesses, particularly small businesses, retailers and service providers, will see business decline as a result. Prospects appear distant for these workers finding similar employment opportunities and income. Some likely will have to move elsewhere.

Why is this happening here and at this time? The answer is that West Virginia’s business community is being buffeted by a multitude of forces, and our state’s laws are not helping. Forces include the need for increased profitability, cost-controls and productivity gains. These needs are more important than ever, particularly given the new heightened competition from emerging countries around the world.

How can West Virginia survive and get on a road to greater employment and prosperity? The answer rests with how quickly our elected leaders change West Virginia’s anti-job laws that are making our state’s businesses uncompetitive and out of step with nearly every other state.

West Virginia needs an economic revitalization package that solves these problems:

• West Virginia is known as one of the “tort hell” states because of its litigious environment. Companies don’t want to locate jobs or have operations in a state where they may face the expense, hassle and potential liability from frivolous claims and pro-lawsuit judges. As a result, West Virginia is in dire need of civil-justice reform. Reform requires three key areas that must be changed to bring our state into step with the rest of the nation. These include removing collateral source restrictions, limiting punitive damages, placing limitations on joint and several liability and prohibiting third-party claims against insurance companies.
• West Virginia’s workers’ compensation costs per worker are the highest in the United States. Only California comes close, and its costs are about half of what the average West Virginia employer faces. West Virginia needs to continue developing a long-term solution to ensure stability and predictability of this program and to prevent future abuse and manipulation.
• West Virginia’s unemployment compensation program is paying out more than it takes in, and possibly faces bankruptcy by 2008. Many “out of step” factors are contributing to this, and these need to be ended.
• West Virginia is one of a handful of states that has not brought its insurance laws into step with the nation. A small step was taken in this direction during the 2004 session, but much, much more needs to be done, particularly in the area of reforms to address a crisis in commercial insurance accessibility and affordability. Small businesses are struggling with this coverage, and the situation surely will only worsen unless reforms are enacted now.
• West Virginia has one of the highest business tax rates for its corporate net income tax, and may be the only state that also imposes a Business Franchise Tax. Worse still, West Virginia’s overall tax burden is the eighth heaviest in the nation. Businesses have to think twice about investing in a state that has this high a tax burden.
• Compared to other states, West Virginia’s environmental regulatory program is considered cumbersome. Employers report that getting environmental permits in West Virginia takes longer than in other states, and the state has several policies that are more restrictive than surrounding areas. If we want to encourage investment in West Virginia, particularly in the manufacturing sector, we must make this process more streamlined and effective for all parties.

This situation is so pressing that we must act quickly to make West Virginia more competitive. There is no time to spare. Additional job losses likely will be arriving in the coming months, particularly in communities that have already been hit, such as the Kanawha Valley.

We must act now to resolve the problems and ease the burdens facing our state’s business community. West Virginia can and will be an even better place to live, raise a family and enjoy life, once our state joins the mainstream by improving its business climate.

Roberts is president of the West Virginia Chamber of Commerce.