Fundamentally, when one thinks of the American Dream, they are thinking about mobility. At its core, social mobility is the ability to improve one’s life and achieve their own vision of happiness and overall well-being. This could be through “material well-being,” such as higher incomes and more luxury items, but it could also involve other aspects of life that makes one better off—like family well-being and a fulfilling career.
Given the complexity and individual preferences that go into one’s best life, any reasonable measure of social mobility must take into account a more holistic approach. This was precisely the goal of my index, co-authored with Gonzalo Schwarz, on social mobility in the United States. We based this index on four major pillars: Entrepreneurship and growth; institutions and the rule of law; education and skills development, and social capital. We have done our best to measure the artificial (mostly policy-based) and natural (more individualized) barriers that exist within states that hamper mobility.
West Virginia ranks only 42nd in the country, according to our measure. This is worse than every neighboring state except Kentucky, which is one spot below. On a score of zero to 10, West Virginia scores a measly 4.16—over two points less than the top state, Utah, and a little over a point higher than the lowest scored state, Louisiana.
Among the four pillars, West Virginia ranks worst (47th) in the “Entrepreneurship and Economic Growth” pillar. Most damning in this area was the state’s score on “Business Dynamism,” which was dead last in the entire country. West Virginia has the lowest core start up rate (4.5 percent), the lowest growth in total firms (-2.94 percent), the lowest labor force participation rate (54.9 percent), one of the lowest housing permits per 1,000 people (1.8), and an extremely low level of patent activity (just 0.07 patents per 1,000 people). To be frank, there was not a single variable in this indicator where West Virginia scored well.
Why is dynamism so low? In part, regulation and taxes. West Virginia scores very low on occupational licensing laws, meaning that many residents must jump through various hoops with respect to time and money to receive permission to perform certain tasks. Given the already below-average incomes and high poverty rates in the state, this is simply not feasible. To add insult to injury, West Virginia is quite punitive with its tax policies—the state has below average scores for corporate, income, and sales taxes, lowering the reward to achieving success in the first place.
This is a double whammy: It is hard to start your career and when you do, you are penalized for it.
Continue reading at The West Virginia Daily News.
Justin Callais, PhD, is the Chief Economist at the Archbridge Institute. He leads the institute’s “Social Mobility in the 50 States” project and conducts original research on economic mobility, economic freedom, economic development, and institutional analysis. Follow his work @JustinTCallais and subscribe to his newsletter, Debunking Degrowth.
Economics of Flourishing
Fundamentally, when one thinks of the American Dream, they are thinking about mobility. At its core, social mobility is the ability to improve one’s life and achieve their own vision of happiness and overall well-being. This could be through “material well-being,” such as higher incomes and more luxury items, but it could also involve other aspects of life that makes one better off—like family well-being and a fulfilling career.
Given the complexity and individual preferences that go into one’s best life, any reasonable measure of social mobility must take into account a more holistic approach. This was precisely the goal of my index, co-authored with Gonzalo Schwarz, on social mobility in the United States. We based this index on four major pillars: Entrepreneurship and growth; institutions and the rule of law; education and skills development, and social capital. We have done our best to measure the artificial (mostly policy-based) and natural (more individualized) barriers that exist within states that hamper mobility.
West Virginia ranks only 42nd in the country, according to our measure. This is worse than every neighboring state except Kentucky, which is one spot below. On a score of zero to 10, West Virginia scores a measly 4.16—over two points less than the top state, Utah, and a little over a point higher than the lowest scored state, Louisiana.
Among the four pillars, West Virginia ranks worst (47th) in the “Entrepreneurship and Economic Growth” pillar. Most damning in this area was the state’s score on “Business Dynamism,” which was dead last in the entire country. West Virginia has the lowest core start up rate (4.5 percent), the lowest growth in total firms (-2.94 percent), the lowest labor force participation rate (54.9 percent), one of the lowest housing permits per 1,000 people (1.8), and an extremely low level of patent activity (just 0.07 patents per 1,000 people). To be frank, there was not a single variable in this indicator where West Virginia scored well.
Why is dynamism so low? In part, regulation and taxes. West Virginia scores very low on occupational licensing laws, meaning that many residents must jump through various hoops with respect to time and money to receive permission to perform certain tasks. Given the already below-average incomes and high poverty rates in the state, this is simply not feasible. To add insult to injury, West Virginia is quite punitive with its tax policies—the state has below average scores for corporate, income, and sales taxes, lowering the reward to achieving success in the first place.
This is a double whammy: It is hard to start your career and when you do, you are penalized for it.
Continue reading at The West Virginia Daily News.
Justin T. Callais
Justin Callais, PhD, is the Chief Economist at the Archbridge Institute. He leads the institute’s “Social Mobility in the 50 States” project and conducts original research on economic mobility, economic freedom, economic development, and institutional analysis. Follow his work @JustinTCallais and subscribe to his newsletter, Debunking Degrowth.
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