Income Disparities in Virginia: A Growing Divide?

Last November, Peter Galuszka penned a column for the Bacon’s Rebellion e-zine, “The Invisible Working Class,” in which he decried the condition of working class Virginians. Drawing upon the book, “Deer Hunting with Jesus: Dispatches from America’s Class War,” by Winchester writer Joe Bageant, Peter offered considerable anecdotal evidence for the shrinkage of manufacturing jobs, stagnant incomes and lack of medical insurance. If he had had access as well to a new report by the Commonwealth Institute, he would have had a field day.

The Commonwealth Institute, a liberal think tank focusing on Virginia, covers the same ground as Peter and Joe — but with charts, graphs and statistics. The Institute’s newly issued report, “The Growing Divide: The State of Working Virginia,” reaches much the same conclusions. Among its main findings:

• While Virginia’s growth in average wages has outpaced the national average, the trends are primarily benefiting Virginians in the top income brackets. Median wages (marking the point where 50 percent of wage earners fall above and 50 percent below) have stagnated or declined.
• The gap in wages between whites and African-Americans in Virginia has been consistently higher than the U.S. and has not decreased substantially since 1979.
• Despite favorable economic conditions, the number of Virginians without health insurance has been on the rise since 2001, and private pension coverage has declined almost 10 percent since 2001.

First, let me applaud the Commonwealth Institute for approaching the issue of income distribution in Virginia on a dispassionate and factual basis. All too often, people make a lot of wild claims with no grounding in the facts. The Commonwealth Institute has transformed the terms of debate in what appears, at least upon cursory examination, to be a fairly even-handed treatment. Although their purpose is to highlight disparities and injustices, the authors readily acknowledge the strengths of Virginia’s economy.

“The Growing Divide” is a fine example of the form that public policy debate should take. The report has opened up fresh avenues of inquiry, and it raises the level of debate in Virginia. I can pay no higher compliment.

That said, “The Growing Divide” is not without its flaws and limitations. My primary concern is that it is deceptive to discuss average or median incomes in terms of statewide averages. There are two Virginias: Northern Virginia and the Rest of Virginia. Wages and salaries are significantly higher in NoVa than RoVa. From the numbers in the report, it is difficult to tell if the wage disparities reflect a growing income gap within regions or between regions. If the gap reflects mainly the higher wages and faster growing population of NoVa, that’s quite different than a growing gap within regions. If the wage differential in NoVa is offset by a higher cost of living (especially housing), the implied disparity in living standards may be more apparent than real. We just won’t know until someone crunches the numbers region by region.

The same criticism applies to the comparisons of race. African-Americans comprise a higher percentage of the population in RoVa than NoVa. If wages are significantly higher in NoVa, and NoVa’s population is growing as a percentage of the state’s, the wage gap could signify little more than the fact that fewer African-Americans live in NoVa. Meaningful comparisons would look at the wage gap within regions.

Despite this significant reservation, the study highlights indisputable problems such as the fraying private safety net (medical insurance and pension funds), and looks at income statistics in refreshing ways. I am particularly impressed by the discussion of productivity. I will mine this data in future posts.