When a ‘Jobs Act’ creates no jobs

Back in 2001, the West Virginia Legislature passed the West Virginia Jobs Act.  The aim was to require companies working on public projects financed all or in part with state taxpayer dollars to hire more local workers.

According to the law, “The Legislature finds that the employment of persons from outside the local labor market on public improvement construction projects contracted for and subsidized by the taxpayers of the state contributes significantly to the rate of unemployment and the low per capita income among qualified state residents who would otherwise be hired for these jobs.”

So, I suppose you can give lawmakers the benefit of the doubt.  Their hearts may have been in the right place, but their economics were flawed, and the execution has been pitiful. That is evident in the findings in a report by the Legislative Auditor’s Performance Evaluation and Research Division (PERD).

Let’s start with the most incriminating conclusion.  From 2011 until this year, Workforce West Virginia, which oversees the program, could not document any hires for a public works project because of the law.  Not one.  (David Beard has  more here.)

The legislative audit found a series of problems with the program.

First, the law defined the local labor market as all of West Virginia and any county in surrounding states within 50 miles of West Virginia’s border.  The law was likely written that way so it would not violate the Privileges and Immunities Clause of the U.S. Constitution which has been interpreted to prevent the discrimination of non-residents and preference for state residents.

The widely defined labor market stretches into portions of eight states, meaning less than ten percent of the local labor market is in West Virginia.  That disproportionate distribution puts West Virginians at a statistical disadvantage compared with the rest of the labor market.

But perhaps more importantly, the audit found the program just doesn’t work.  If an employer on a public works project is unable to find the minimum number of qualified employees from the local labor market on their own, the employer must inform Workforce West Virginia.

That agency attempts to find a qualified worker, but if the position is not filled within three business days, Workforce West Virginia is required to issue a waiver allowing the employer to hire from outside the labor market.  The audit found that over the last two years, waivers have been issued 91 percent of the time.

These and other statistics come from businesses trying to abide by the law. It does not include companies, including those from out of state, that just ignore it.

Enforcement of the statute falls to the State’s Division of Labor.  That agency has 18 inspectors in the licensing, wage and hour section. These are “boots on the ground” inspectors doing real work; they don’t have the time or the resources to ensure companies follow a law that, according to the audit, is having zero impact on employment.

What the law does do is create yet another level of pointless paperwork and bureaucratic hurdles for companies trying to do business in West Virginia.  The Legislative Auditor recommends the Legislature “consider repealing” the Act. That’s a recommendation that should be followed.



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