With Election Day fast approaching, West Virginians continue to hear about inflation from candidates — mainly Republicans running for local and state offices, who have blamed national Democrats for higher prices and overspending.
“Under Bidenomics, hard-working Americans are facing higher inflation, rising gas prices, and an uncertain economic future,” Gov. Jim Justice posted on X earlier this year. He is running for a U.S. Senate seat in Washington.
Across the country, the inflation rate has slowed from a peak of 9% in 2022 to a low of 2.4% in September. But West Virginians — especially low-income earners — aren’t recovering equally because prices continue to increase and wages haven’t caught up.
And as we’ve traveled the state talking with voters, many have been concerned about rising prices and the cost of living.
Here’s what to know about inflation, its impact on West Virginians and what lawmakers plan to do about it.
What is inflation?
Inflation is the rate of increase in the prices of goods and services over time. It’s why your $20 bill gets you less today than ten years ago.
Inflation rates can impact purchasing power and if they are too high, money can begin losing value as prices rise too rapidly.
Economists are now examining the drivers behind the sharp increase in inflation after the pandemic.
During the pandemic, federal spending ramped up as stimulus checks were supplied to families, unemployment benefits were expanded and loans for small businesses were given out.
Increased spending, coupled with spikes in energy prices, supply-chain disruptions and a tight job market, where there are more job openings than workers willing to work them, were the main factors behind the high inflation rate the nation is recovering from.
The Federal Reserve, the country’s central bank, uses the inflation rate to gauge the economy’s health. The Reserve’s board members also meet once a month and determine federal interest rates.
When inflation rates are high, the bank will raise interest rates to slow the economy. When federal interest rates are high, people and businesses are discouraged from borrowing money and spend less.
How has inflation affected the cost of living in West Virginia?
John Deskins, director of the West Virginia University Bureau of Business and Economic Research, said in the summer of 2022, a once-steady inflation rate rose rapidly.
“The cost of maintaining the standard of living for a typical household has risen quite a bit over the last three years and it’s not good,” he said. “You have to go back 40 years to the early 1980s to see inflation that high.”
The average West Virginia household is spending $105 dollars more per month on groceries than in January 2021, according to a report from the Republican members of the Joint Economic Committee. The cost of housing, transportation and energy have also risen.
Residents across the state have said that home prices and rent have skyrocketed and there is a lack of affordable housing. In that same period between 2021 and 2023, median home prices rose 26%.
Why aren’t West Virginians feeling the recovery?
West Virginians are still being squeezed by higher prices driven by inflation, and low-income households have felt the most pressure.
The pandemic hit the wallets of low-income earners the hardest, according to a congressional report. Between 2019 and 2021, high-income households also increased their incomes more, further increasing income inequality.
Inflation also impacts different categories of goods at different rates. It’s often measured in these categories: food and beverages, clothing, transportation, housing, education and communication, medical care and other goods and services.
For example, the prices of groceries can increase faster than the cost of apparel over the same period. Low-income households are often impacted the hardest by higher prices and inflation rates, especially when income is not increasing at a similar rate, Deskins said.
“Wages have kept up for some people, but for others, they haven’t,” he said. “It has really thrown chaos into the economy.”
Low-income households often lack flexible incomes to keep up with inflation and rising prices. Despite personal income growing statewide by 7% since 2021, it still falls short of the national average, meaning families earn less than in other states.
How are West Virginians handling rising costs?
Inflation is felt across the economy — from the kitchen table to the service counter at your local hardware store.
Small businesses are paying more for products they sell and have had to raise prices. Business owners have had to adapt to supply chain disruptions and worker shortages.
Business owners in some parts of the state have said it’s been difficult to find workers since the pandemic and they’ve had to cut their hours while others said they’re looking for new ways to stay profitable.
“Most of our young people have left,” said Stephen Miller, owner of the Star Hotel and Restaurant in Franklin. “I can’t find wait staff. I can’t find dishwashers, and I can’t find chefs.”
Meanwhile, many residents across the state in places like the southern Coalfields or the Potomac Highlands have said inflation and rising costs for things like housing, gas and groceries have made it harder for them to live comfortably.
“Groceries, fuel, all kinds of fuel, electric for your house, everything’s going up out of the price,” said Mike Usenick, a resident of Wheeling. “I don’t know how some people even pay for it.”
What are state officials doing to support people being squeezed by inflation?
State lawmakers have pushed for eliminating personal income taxes, which would benefit wealthy households significantly more than lower-income ones, according to a report released by the West Virginia Center on Budget and Policy.
The top 1% of earners (those earning $467,000 or more per year) would receive as much as $10,000 in tax cuts while the bottom 20% would receive only $21 a year in cuts.
Historically, low-income West Virginians have paid more of their income in federal and state taxes compared to high-income earners.
West Virginia’s tax system is regressive. A regressive tax structure means that as income increases, the tax burden decreases. Put simply, the more money you make, the less taxes you pay.
As part of our continued election coverage, we’ve worked to interview legislative candidates across the state asking them questions based on challenges faced by residents in their districts, including how they planned on addressing inflation and cost of living.
Candidates spoke about their plans to increase economic development by investing in more high-paying jobs, opportunities and businesses while other candidates addressed rising costs and housing shortages.
Del. David Kelly, R-Tyler, is running unopposed and said he was proud to have worked with legislators to cut taxes and lower income tax rates.
“Look, I go to the same gas stations, and we’re all struggling with the issues – high prices at the gas pumps, food prices are skyrocketing,” Kelly said. “That’s something that the state doesn’t have control over, but we’re all aware of it and we’re trying to meet the needs.”
But cuts to state income taxes are likely to give lawmakers less money to help poorer West Virginians struggling with rising prices and inflation.
Correction, Oct. 24, 2024: This story has been updated to correct the percentage of earners who would benefit the most from income tax cuts.