Why isn’t the wealth trickling down?

Has trickle-down economics been good for Waynesboro? At first glance, definitely.
According to figures from the Virginia Department of Taxation, taxable sales in Waynesboro – the best way I can approximate for the local economy what we call gross domestic product or gross national product for the national economy – have nearly doubled since Waynesboro City Council decided in 2003 to drop the tax rate on real estate from 97 cents per $100 assessed value to 85 cents and later made moves to cut the rate to its current 70 cents per.

In 2003, there was $220.6 million in economic activity in Waynesboro. In 2007, the last full year for which taxable-sales numbers are available, economic activity was at $399.2 million, and based on activity in the first three quarters of 2008 it appears that the growth trend will continue and push Waynesboro’s effective GDP over the $400 million mark for the first time even in the face of news reports today that are saying that the national economy has been in a recession since December of last year.

Just for comparison, economic growth in our next-door neighbor, Staunton, has been much slower coming. In 2003, economic activity as measured in taxable sales was at $361.9 million, and in 2007 it was at $371.5 million, a growth rate over the period of around 3 percent, compared to the near-90 percent growth in Waynesboro. And based on numbers for the first three quarters of 2008 it doesn’t appear that there’s going to be much in the way of growth this year, and possibly there could be some retrenchment in the offing.

So, that’s good news for Waynesboro, right? The economy has almost doubled in size, and it’s due to the trickle-down economic philosophies of the city council that cut the tax rate 30 percent.

Somebody then needs to explain why the trickle-down hasn’t trickled down. According to figures from the Virginia Employment Commission, in 2003, at the start of this economic upturn, the average Waynesboro resident made $37,804 a year, but as of the most recent figures available, in October 2008, that same average Waynesboroan is now making $33,488 a year, $80 less a week and $4,000 less annually.

The reason for this is probably obvious when you think about it. The growth, impressive on the books, has been retail, retail, retail. Manufacturing, technically, is still the largest single employment sector in the River City, but retail and the related food and accommodations industries together account for one in three jobs in the Waynesboro labor market, and as we know, pay in those areas is much lower than pay in the industrial sector.

For generations, manufacturing interests such as General Electric and DuPont and Crompton Shenandoah and others made the Waynesboro economy the envy of Western Virginia. The slow departure of industrial jobs, hastened by the failed Reaganomics of the early and mid 1980s, has been a millstone around the necks of city councils since.

I want to be careful not to fault recent city councils for stepping up and doing what their predecessors didn’t seem to have the will to do, which is basically anything to try to reverse what turned into 25 years of Hooverism as the city economy withered for lack of attention. Credit to city leaders for trying, but let’s be clear about this. We’re far from being done as far as rebuilding the foundation of our local economy is concerned; indeed, we’re still in the infancy stage, and until somebody in City Hall gets it that we’re going to need to be a player in the manufacturing sector again, we’re going to continue taking baby steps toward our economic revitalization.

 
– Column by Chris Graham

 

 


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