Gender Analysis and Economic Development in West Virginia
Ann M. Oberhauser, Lillian J. Waugh, and Chris Weiss
Women are a vital and increasingly important part of West Virginia's economy. Between 1980 and 1994, the percentage of jobs held by women in the state's economy jumped from 37 percent to 46 percent. Moreover, the number of employed women in West Virginia increased by 37,000 between 1980 and 1990, while male employment decreased by 47,000 (U.S. Bureau of the Census 1980,1990; WV Bureau of Employment Programs 1995). These figures reveal the rising importance of women's waged work in West Virginia's economy. However, despite their vital contribution to the state's economy, female employment and gender-related issues remain largely neglected in state economic development initiatives.
This article utilizes gender analysis to examine women's roles in economic development and the barriers that prevent them from participating fully in West Virginia's economy. It also provides a number of policy recommendations. Specifically, the analysis presented here suggests that the state should increase its investment in social infrastructure, particularly for caregiving and community development activities, reassess its rural health delivery and microenterprise development policies, and examine alternative models of producer and marketing networks. These changes will not only improve women's socioeconomic conditions, but will also enhance the state's economic well-being for generations to come.
Linking Gender and Employment
Employment opportunities and access to well-paying, quality jobs are critical factors in achieving economic independence, yet they are not equally available to men and women. Disparities between men's and women's wages and labor force participation are evident at both the state and national levels. Nationally, women earn 60 cents for every dollar earned by men. The disparity is even greater in West Virginia, where women earn only 45 cents for every dollar earned by men. Additionally, at the national level in 1993, women's labor force participation rate (the percentage of women 16 years of age and older in the labor force) was 57 percent compared to 76 percent for men. In comparison, only 43 percent of working-age women and 65 percent of working-age men were employed in West Virginia (U.S. Bureau of the Census 1993; WV Bureau of Employment Programs 1993). The relatively low wages and labor force participation among women is linked to their higher rates of poverty. Again, comparing national and state data, West Virginia women have one of the highest poverty rates with 21 percent living in poverty compared to 15 percent of women nationally (U.S. Bureau of the Census 1993).
Gender relations and divisions of labor help to explain, at least in part, the disparities between men's and women's socioeconomic status. The concept of gender is based on socially defined attitudes and roles of males and females in society. This concept is useful in analyzing divisions of labor and work in general. In almost every society, men and women typically work in different areas, both inside and outside the home. Some tasks are considered women's work while others are considered men's work, leading to a recognizable gender division of labor (Moore Milroy 1991). This division of labor typically associates the productive sphere or workplace with males and the domestic sphere or household with females.
Associated with these gender relations and divisions of labor are men's and women's unequal access to resources such as time, power, and income. For example, greater value is placed on so-called productive work outside the home while domestic or reproductive labor is generally undervalued and unpaid. Additionally, gender divisions of labor extend to waged labor where women are largely concentrated in certain occupations such as nursing, clerical work, and teaching which are seen as extensions of their domestic roles. Women remain largely marginalized from male-dominated occupations such as production workers and operators, not because of their physical abilities, but because of dominant attitudes distinguishing "women's work" from "men's work."
In conclusion, the concept of gender is useful in that it emphasizes the social construction of certain roles and attitudes assigned to men and women in society. In turn, these roles and attitudes are relevant to various aspects of people's lives in the household and in the workplace.
The Socioeconomic Status of Women in West Virginia
The premise that gender roles are socially defined provides an important starting point for analyzing women's socioeconomic status in West Virginia. As mentioned previously, West Virginia women lag behind West Virginia men and their national counterparts in several economic categories, especially participation in the labor force. Several explanations involving economic, demographic, institutional, and cultural variables have been offered to explain why women's labor force participation is relatively low in West Virginia (Dorsey 1991; Isserman and Rephann 1993). Whatever the reason for this low participation rate, the result is that the state's economy is unable to fully utilize and benefit from its potential workforce. Therefore, an increase in women's labor force participation means adding productive labor to the economy and raising the living standards of the entire population.
The contrasting patterns in male and female labor force participation are related to the state's economic shift from a mining and manufacturing-based economy to a service-based economy (Dilger and Witt 1993). As Table 1 indicates, the proportion of nonagricultural employment in goods-producing industries has decreased steadily since 1940, falling from 57.2 percent in 1940 to 23.8 percent in 1990 (US Bureau of Labor Statistics 1990). In particular, mining has experienced significant job loss since 1940 when it accounted for 29.6 percent of nonagricultural employment in the state, compared to 5.7 percent in 1990. In contrast, employment in service-producing industries increased sharply, from 42.9 percent in 1940 to 76.3 percent in 1990. Service industries, which include nursing aids, cooks, waitresses, and other similar occupations, have gone from 6.9 percent of nonagricultural employment in 1940 to 23.2 percent in 1990. The service-producing sector as a whole accounted for over 75 percent of all nonagricultural jobs in 1990 (U.S. Bureau of Labor Statistics 1990).
Gender divisions of labor play an important role in the economic restructuring outlined above. In West Virginia, most of the increase in employment is in female-dominated sectors such as retail and trade, while most of the decline is in male-dominated sectors such as mining, construction, and manufacturing. Indeed, between 1988 and 1994, 97 percent of the 65,000 additional jobs in West Virginia were filled by women (WV Bureau of Employment Programs 1995). Women comprise between 48.4 percent and 65.8 percent of employment in the growing sectors of the economy: trade; finance, insurance and real estate (FIRE); services; and government (Figure 1). In West Virginia, all of these sectors have a slightly higher proportion of women than at the national level. In contrast, women represent less than one-fourth of all employees in each of the transportation, manufacturing, construction, and mining sectors at the state level and less than one-third at the national level (WV Bureau of Employment Programs 1993). Thus, the gender dimensions of contemporary economic restructuring cannot be ignored as women's participation in the labor force increases.
Although women's employment has risen dramatically, they are concentrated in a few occupations which are generally lower paid, lower status, and represent more part-time work than male-dominated occupations. In 1990, nearly 24,000 women were working as secretaries, making it the largest single occupational category for females in the state (Figure 2). Elementary school teachers were the second largest occupation among women in 1990 with approximately 18,500 (Hannah 1995). In general, femaledominated occupations in West Virginia tend to have a higher percent of females than these same occupations at the national level. For example, the female-dominated service occupations were 65.8 percent female in West Virginia, but only 61.7 percent in the U.S. as a whole (Figure 1). Likewise, men are concentrated in certain blue-collar occupations such as precision production/craft and repair; and operators, fabricators and laborers. These two occupations accounted for over half of the occupations of men in West Virginia (Hannah 1995).
Wage differentials between men and women are related to their occupational segregation. As mentioned earlier, in 1990, West Virginia women earned an average of 45 cents for every dollar earned by men. Translated to median annual incomes, the 1990 Census reported that the median annual income of West Virginia women was $7,287 compared to $16,030 for men (U.S. Bureau of the Census 1990). Their concentration in lower paying, lower status occupations helps to explain why women are more likely than men to live in poverty. In West Virginia, as elsewhere, the presence of children in families tends to increase the likelihood of poverty. Figure 3 indicates the breakdown of West Virginia families living in poverty by family structure. Female-headed households with children make up more than half of all families living in poverty in this state. It is not surprising that given the lower wages and fewer opportunities to generate substantial incomes among women in general, single mothers find it especially difficult to financially support their households.
These statistics on employment and poverty illustrate the lost potential for West Virginia women and the state's economy as a whole. Higher labor force participation rates, more access to well-paying jobs, and emancipation from poverty would be a tremendous boost for economic development throughout the state. These objectives could be achieved through appropriate job training programs, access to financial resources, and investment in social infrastructure.
Alternative Economic Strategies
Against this backdrop of socioeconomic statistics are incredible stories of West Virginia households struggling to survive under adverse economic conditions. In general, people choose from a variety of strategies to generate increasingly scarce resources for their households. These strategies might include one or a combination of the following options: increasing the flow of transfer payments; seeking additional work outside of the home; participating in the informal economic sector; or operating home-based businesses. For some women, formal employment outside the home is not a feasible income-generating strategy for reasons which include lack of access to transportation, domestic responsibilities, inadequate job training, lack of previous work experience, and other barriers to entering the workforce. Gender relations and divisions of labor play an important role in women's involvement in these and other income-generating activities
Given these barriers to formal employment, some women have turned to home-based work as a way to accommodate their domestic responsibilities and earn money for the household. An in-depth study of eightytwo West Virginia women who engage in home-based work addresses the types of activities, their economic contribution to the household, and the social implications of their work (Oberhauser 1993). The diversity of activities undertaken by women in this study occur throughout the state and produce a variety of goods and services used for both monetary and barter exchange. Specific activities include production of artisanal goods such as pottery, quilts, dried flower arrangements, and knitwear; provision of services such as child care, computer services, bed and breakfast inns, and housecleaning; and production of agricultural activities including vegetables, herbs, honey or flowers and raising livestock or other animals. Many of their activities involve domestic skills or skills learned through informal networks or formal training programs.
The biggest challenge for many of the women interviewed was accessing appropriate markets for their goods and services. They often sell their goods at farm markets, fairs, or through individual sales where they do not receive sufficient prices or they have difficulty advertising their services to appropriate markets. Several networks and cooperatives are currently established in West Virginia to organize women and men in the production and marketing of their goods and services. Examples of these producer and marketing networks include Appalachian By Design, Appalachian Flower Network, Cabin Creek Quilts, and Cratters in the Glen. West Virginia's rural geography often prevents people from reaching important markets-, therefore, these networks provide important means for people to not only increase their productivity, but gain access to state, national, and even international markets.
The economic and social aspects of these home-based activities relate to the previous analysis of gender relations and divisions of labor. Although the women interviewed rarely provide the sole source of household income, their earnings are important during periods of transition such as when the primary breadwinner is laid off or between jobs (Oberhauser 1993). In addition, the increased importance of these women's earnings affect household economies since female earnings are more likely to be spent on basic household needs. This type of home-based work also influences household dynamics and divisions of labor. For example, women who choose to stay home and raise their children might engage in a home-based income-generating activity because it allows them the flexibility of being at home, yet also brings in necessary income. Women homeworkers, however, frequently take on additional labor, oftentimes for relatively low pay, as they add to their already busy schedules performing household tasks and/or working outside the home.
This study reveals the need for more resources and economic development efforts to support alternative employment opportunities for women who are self-employed, operate small businesses, and engage in home-based work. Specific policy recommendations for these types of economic activities are outlined in the last section. In general, policyrnalkers should focus on access to financial capital and adequate markets so that these people can fully utilize their skills to generate household income.
Barriers to Women's Employment
Notwithstanding the general scarcity of jobs in West Virginia, there are five major barriers to women's employment in West Virginia: the historical legacy of job segregation, inequality in education, geographic isolation, domestic violence, and dependent caregiving. These constraints are interrelated, yet play distinct roles in impeding women's full participation in the workforce. State policymakers, community and economic development groups, and social service agencies have a vital role to play in lowering these barriers which have proven tremendously difficult for women to overcome. In particular, attention should be given to alternative models of social services, education, and caregiving.
The History of Women's Employment in West Virginia: Legacies of Job Segregation
West Virginia's economic history has significantly influenced women's current socioeconomic status. Physical geography has produced a state rich in natural resources which attracted outside capital on a large scale starting at the end of the 19th century (Lewis 1993; Pudup 1990). During this early period, firms based outside the state invested in the timber industry, coal mining, and natural gas fields, often realizing large profits in previously unexploited territory. Communities throughout the state expanded their populations and economic activities as migrants from Europe and the South came to West Virginia to work in the coal fields and timber industry (Lewis 1993). This tremendous growth was especially evident in the early part of the 20th century when, for example, the state's population nearly doubled between 1900 and 1920, growing by over 500,000 people (Simon 1979).
Gender relations and divisions of labor were important factors in this early period of industrialization. Productive and reproductive labor was clearly divided along gender lines (with some important exceptions) as men worked in the mines, mills, and factories, and women were largely involved in household reproductive activities such as cooking, cleaning, child care, and the numerous other activities that were required to keep households running (Greene 1990). Some women made significant contributions to their household incomes, however, by taking in boarders, selling garden produce, or providing other services in the community such as doing laundry or child care (Pudup 1990). Other women were employed outside the home in textile and knitting mills, glassware shops, and tobacco factories (Hensley 1990).
Contemporary female underemployment in West Virginia is linked to the state's historically rural population which contributed to the marginalization of women in the labor force (Howe forthcoming). West Virginia's lumber and coal industries, for example, were located in rural areas and overwhelmingly employed men who immigrated to service these industries in transient boom towns or labor camps where female employment was in short supply. Emergence of the glass industry in towns and small cities did little to change this labor profile. Access to formal, waged employment, however, did vary among women in the state according to certain demographic characteristics. Both black and immigrant women migrated to the state's larger population areas in search of wage labor and found work in factories, inns, private houses, and laundry services. In contrast, white, nativeborn females who comprised the majority of West Virginia women tended to remain in their rural communities and did not seek employment outside the home (Howe forthcoming).
During this period of early industrialization, women's employment as teachers was similarly linked to population centers, as were jobs in textile manufacturing, cigar and cigarette production, and the needlework occupations of dressmaking and millinery. Office work emerged later as a major employer of both high school and college-educated women in the state's larger commercial centers, especially in Parkersburg, Huntington, Charleston/Institute and Wheeling. U.S. Census records from 1870 and 1900 indicate that 6.0 percent and 9.3 percent of women worked during these years (WV Bureau of Employment Programs 1993). These rates reflect the percentage of people living in urban areas during this period. Thus, in contrast to what is generally believed ' women's primary role in the reproductive realm of the household has never precluded women from engaging in economic activities to help support their households (Howe forthcoming). The location of certain jobs in urban areas, however, presented a barrier to many rural women.
Education and Employment: The Critical Link
Moving from the historical to the contemporary period, unequal educational opportunities for men and women represent a second barrier to women's full participation in the workforce. West Virginia has been affected by the overall trend toward equity in education, but has not completed the transition to offering equal educational opportunities for women (Hawley 1994). For example, although schools and universities throughout the state are officially open to all students, the cultural climate in the educational system discourages female advancement in trade and industries. As shown in Figure 4, nearly three-quarters of the women in vocational education programs in 1992-1993 were enrolled in business courses, which include secretarial training, compared to 35 percent of the men in these programs. In contrast, over one-third of the men in vocational education were enrolled in trade and industrial programs, compared to just 4 percent of the women. This situation indicates a need to overcome gender biases in education in general and technical training in particular to encourage men and women to consider a wide variety of career options.
Additionally, while greater numbers of women than men were awarded higher education degrees in 1992-93, their educational achievement is not being translated into equal access to well-paying jobs (National Association for Women in Education 1993). In fact, women in the West Virginia labor force tend to be more educated than men, yet their average earnings are markedly lower than the average male wage (Hannah 1995). The solution to this dilemma is to continue to advocate for the completion of high school and the matriculation to higher education for both sexes. Additionally, parents, teachers, and guidance counselors must be educated about the needs of all students, especially girls and young women who have been traditionally discouraged from specializing in math, science, and technology at all levels of their education.
Economic Implications of Geographic Isolation and Domestic Violence for Women
The physical separation of the potential workforce from waged work constitutes the third major factor affecting women's full-scale entrance into the formal workforce. In fact, geographic isolation affects both men and women, especially as jobs have moved from the natural resource sector which is located primarily in rural areas, to service-based jobs located primarily in urban areas. Given West Virginia's rural nature (in 1990, 64 percent of West Virginians lived in rural areas), combined with the increasing urbanization of formal, waged employment, reliable and efficient transportation is an important factor for both men and women in the workforce. The mountainous terrain and relatively low population density contribute to the fact that many West Virginians go to great lengths to commute to jobs in or from rural areas. For example, people working at Snowshoe Resort in Pocahontas County regularly commute from Marlinton, Lewisburg, or Elkins, a round-trip of 50 to 120 miles. Much of this travel takes place from November through March, a peak employment season which coincides with the worst weather the mountains offer. Working parents at the resort cannot take advantage of the on-site day care facility which is designed primarily for children of guests at the resort.
Low income populations in particular have difficulty accessing adequate transportation in their search for employment. For example, in a recent survey 26 percent, or 514 parents, who received Aid to Families With Dependent Children (AFDC) or food stamps in West Virginia cited lack of transportation as a barrier to employmeni (Children's Policy Institute of WV 1995). This figure suggests that not only distance to employment, but ownership or access to a car or alternative means of transportation functioned as an isolating factor. The fact these parents were overwhelmingly female (78 percent) is consistent with the realities of poverty found among people in domestic violence shelters or other social service agencies. In many cases, these families have a difficult time finding the resources to buy food and cannot afford to own and maintain a car.
The isolation which impedes West Virginia's economic progress is not, however, simply geographical or demographic: it is also a function of gendered power relations. Women trapped by domestic violence have even less access to the emotional and material resources needed to seek gainful employment. In 1992, 91 percent of domestic violence in West Virginia was directed against women. Additionally, from 1990 to 1992, West Virginia experienced a 98 percent increase in domestic violence reports (from 3,040 to 6,029) (Hannah 1995). The dimensions of the problem are nowhere more evident than in the chilling revelation that severe abuse is the most likely reason for women to seek medical attention. Finally, spouses sometimes sabotage or physically retaliate
against women who seek to upgrade their skills and become employed outside the home. Lisa Diehl, who specializes in training women for nontraditional jobs, notes that daily verbal abuse calculated to demean women's skills and aspirations frequently escalates into violence from abusers as women complete job training or enter the workforce (Diehl 1995). These stories are all too common in the state's thirteen domestic violence shelters.
Violence towards women, however, can be effectively reduced through specific policy measures. West Virginia's domestic violence network is now two decades old and, while woefully underfunded, is increasingly linked to both state and private social services. This network should be expanded and receive increased funding to include services such as transportation to and from training/education sites and childcare. The full range of advocacy services for women and their families should be established and funded as a regular part of state expenditures.
In addition, compulsory reporting by police, and sentencing and/or counseling for offenders must be taken seriously and funded. Increasing linkage of social services to schools, which are underserved by on-site counselors, and continuing inservice training for judicial officers and social service, heath care, and education professionals is a vital part of intervention for families at risk. In particular, women at risk of domestic violence need to be linked to safe living situations after their shelter residency. Also, on-site or nearby childcare should be underwritten as an incentive for women to complete their high school or college degrees. Finally, it is particularly important that parents who avail themselves of training and education grants not be penalized by having their welfare and AFDC benefits compromised. Policymakers need to understand that parents' economic security is directly related to their ability to maintain a safe and stable household.
Dependent Caregiving and Missed Work Opportunities
Caregiving, or the provision of services which assure basic personal needs to those unable to care for themselves, constitutes a fifth major barrier to women's participation in the paid labor force. Families with adult wage earners working outside the home have the greatest need for caregiving services for elderly relatives, children, and the chronically ill or disabled, Where these services are not available, women are most likely to provide caregiving services to those in need. As West Virginia's aging population continues to outpace national norms, women will experience increased caregiving roles as aging children, especially widowed women at or over retirement age, assume the care of their parents. Indeed, demographic trends indicate there will be a greater need for respite care and social support networks as the number of women who provide significant time to eldercare grows in size (AARP 1988).
These caregiving responsibilities translate to tremendous sacrifices in the area of formal, waged employment. It is estimated that over a lifetime, women lose eleven years of wage-labor productivity to caregiving, especially caring for their children. These responsibilities frequently amount to a full-time (and often second) job for which they typically receive no compensation. Child care is perhaps the major constraint for women seeking to enter the workforce. Available data on the need for caregiving among West Virginia children support the Children's Defense Fund's contention that while child care is a key to family self-sufficiency, families must weigh the costs of employment against the costs of child care. A full threequarters of parents who seek day care do so because of employment needs (Keith et al. 1993). In 1994, West Virginia's demand for federal ly-su bsidized child care slots outstripped available funds, putting over 2,000 children on the waitlist for child care and placing severe economic burdens on parents (Bury and Smith 1994).
In addition, lower income families are disproportionately affected by child care costs. Child care consumes up to one-quarter of poverty level family income, but only 6 percent of upper-income family resources (Poersch et al. 1994). Moreover, 29 percent of the respondents to a recent survey of West Virginia's AFDC and food stamp recipients indicated that lack of child care was a barrier to their employment, a concern outweighed only by the lack of jobs in the respondents' communities (Children's Policy Institute of WV 1995). Finally, women were 18 times more likely to cite lack of child care as an impediment to employment than men, clearly indicating that they shouldered the burden of that responsibility.
The "trilemma" of childcare involves concerns over the availability, quality, and affordability of child care programs (Morgan 1986). These concerns shape the national debate on service provision, as does the growing movement to upgrade child care by linking training and compensation to a well-articulated certification procedure. Several innovative projects in West Virginia are aimed at addressing the paucity of quality, affordable programs in the state. For example, the Apprenticeship for Child Development Specialists which is supported by the Early Education Quality Improvement Project initiative, seeks to integrate training efforts, identify career models, and increase training models and opportunities to child care providers. In addition, the Home Base program in Morgantown links home child care providers to West Virginia Universityaffiliated families seeking that service and provides state guidelines for provider compliance. Finally, innovative programs such as those in Ritchie County which have successfully joined elder and child day care should be supported and established elsewhere.
Figures on the availability of formal child care in the state reveal a tremendous shortage and uneven distribution of centers. In 1995, there were 236 licensed day care centers in West Virginia; however, nine counties had no day care centers at all, over half of the counties lacked infant/toddler care, and fourteen had only one day care program (WV Department of Health and Human Resources 1995). Distance to day care is of major concern to parents, nearly 80 percent of whom make arrangements for child care provision within a five-mile radius of their home or in their homes. Again, the gendering of child care is a significant factor in determining who bears primary responsibility for providing the transportation and overseeing the placement of children in child care. Studies indicate that women are 32 percent more likely to work within 10 miles of their children's day care than are their spouses (Bury and Smith 1994).
Based on this discussion and the research available, policy needs to be developed which sets standards for wages and benefits consonant with the value of the product involved - healthy, eager, and ready-to-(earn children from self-sufficient families. Child and elder care should be seen as part of a community's educational and service infrastructure. In addition, these services should be an adjunct to business development in which private and public sectors are encouraged to pool resources to provide day care. Numerous studies have shown that child care services more than pay for themselves by boosting worker productivity (Personnel Journal 1994). North Carolina has pioneered rural development of quality child care through a non-profit organization called Smart Start. This state-funded program is administered by the North Carolina Partnership for Children which joins public and private sectors and invites communities to fashion their own child care facilities. Churches are frequently utilized for this purpose. Additionally, career development for child care specialists is integral to Smart Start with tremendous payoffs - staff turnover is down and the quality of work is rising. Working families enjoy greater access to care not only because of Smart Start, but because the state now allows them a child care tax credit and increases the percentage of work-related child care expense that can be deducted from the state income tax, along with an increase in the dependency exemption (Glasser 1995). Many would argue that similar tax credits should be granted families for caregiving to all dependents.
Full development of women's economic development in West Virginia requires integrating care giving into public policy measures. Improvements in state-wide care giving provisions will dramatically lessen the physical and social isolation which impedes change for West Virginian women, families, and communities, The following child care policy options have been tested in states such as North Carolina and are recommended for adoption in West Virginia:
West Virginia should fund a statewide child care resource and referral network which includes group day care in private homes.
State licensing staff should be increased to allow monitoring of programs, licensing regulations, and continuing education to link upgraded creclentials to wage increases for center and home day care professionals.
West Virginia should promote community-based private-public partnerships which develop more quality day (and elder) care programs. Before and after school care programs in the public schools should also be expanded. Additionally, corporate tax-incentives should be supported for employersupported child care facilities or services.
Family day care providers should be exempt from local zoning laws and the consumer sales tax.
Child and dependent care tax credits should be added to West Virginia state income tax provisions in lieu of child care deductions. Additionally, fund ing for state-subsidized child care payments should be increased to reduce/eliminate the waiting list which impedes parents from seeking and holding jobs.
In conclusion, the full utilization of a female work force in West Virginia has been hampered by the historical legacy of job segregation, educational inequities, geographic isolation, violence towards women, and lack of assistance for dependent care. Analysis of these problems, however, does not necessarily lead to effective solutions. Economic development policies need to be implemented which will assist in overcoming these gender disparities and allow West Virginia's women to achieve their full economic potential.
Gender Analysis and Economic Development
As stated earlier, gender analysis starts with the assumption that the differences between men and women are socially defined; therefore, it is possible to change these differences. Economic development initiatives should recognize the existing gender division of labor but should not, in the longterm, accept it. Moreover, economic policy does not just impact people or households, it impacts men and women differently based on their gender roles in society. Economic development programs should therefore work to support women's efforts to gain social and economic equality in the domestic sphere and in the workplace.
Gender analysis is increasingly used in international economic development programs, especially for those targeted at the Third World. In an effort to impact poverty and underdevelopment in Africa, Asia, and Latin America, the World Bank, U.S. Agency for International Development and other international donors are training their economic development planners in gender analysis and requiring them to apply it to all requests for funding. This type of analysis is important in the context of economic
and community development for at least two reasons. First, gender analysis ensures that more of the benefits of development accrue to the disadvantaged than to those already privileged. Second, it ensures that the benefits are materially and socially sustainable beyond the term of a project or program (CIDA 1989). Either of these reasons is sufficient for making the argument that every economic development project in the United States, from those conceived by state governments to the plans made in the wake of the riots in Los Angeles, should include gender analysis.
There is considerable evidence from the international development literature that ignoring the unequal distribution of resources between men and women can lead to potentially disastrous results. In the late 1980s, there were several studies that looked at how household/families spent available income. According to one researcher, "there is now a wealth of evidence which shows that household income is not fully pooled and shared" (Dwyer and Bruce 1988). Women typically bear the responsibility for managing household income and expenditure to meet the day-to-day needs of household members. A general finding from studies from all major regions of the Third World, as well as from many developed countries, is that whereas women's income is almost exclusively used to meet collective household needs, men tend to retain a considerable portion of their income for personal spending (Elson 1993). These studies indicate that if economic development professionals want their job creation schemes to affect the most people they will concentrate their efforts on increasing women's income, since women tend to spend their money on food, shelter, and education for the entire household.
Applying Gender Analysis in West Virginia
The concept and methodology of gender analysis are so new in the United States that there are few examples available to demonstrate its use or to train economic development professionals in its practice. This may change in the future as the economic development field becomes more sophisticated and more women become more involved in economic development planning.
A case study from West Virginia illustrates the usefulness of applying a gender analysis to economic development initiatives. In 1994, the state's voters agreed to allow the sale of up to $300 million in general obligation bonds to underwrite water and sewer infrastructure and related economic development projects (Dilger and Witt 1994). Voters were convinced to vote for the bonds based on two arguments. The first was that despite years of federal water and sewer money spent in the state, many parts of the state, especially in southern counties, lacked access to clean water and sewer systems. So an emotional appeal was made to the electorate to vote for clean water. Governor Caperton articulated the second argument in favor of the bonds' passage: "Development of our infrastructure is absolutely critical to creating more jobs in West Virginia. The [West Virginia Infrastructure and Jobs Development Council] will coordinate our efforts to address a desperate need in West Virginia for water and sewage systems and other infrastructure. We also will be promoting and protecting the public health and safety, and all of West Virginia will benefit" (Caperton 1994).
In order to understand the differential impact of economic development policies on women and men, it is necessary to answer the following five questions:
1. Who does what?
2. Who has access to or control of resources?
3. Who has access to or control of benefits?
4. What factors influence activities, access, and control?
5. Who is included at each stage of a project (as informants, decision make rs/plan ne rs, deliverers of services, and as beneficiaries)?
Applying these questions to the Water and Sewer Infrastructure Bill can provide information concerning the potential disparate impacts it has on women and on men.
Who does what?
West Virginia women, if they work, earn only 45 percent of men's wages and are more likely than men to live in poverty, despite, on average, having more years of education (Hannah 1995). West Virginia women are also less likely to be self-employed than men even though almost one-quarter of all firms in West Virginia are owned by women. Finally, the different demographic profiles of West Virginia men and women are linked to their economic activities. Similar to rural areas worldwide, in West Virginia women outnumber men in all age categories above 25 years (Figure 5). In contrast, the number of men is greater than women in all age categories up to 25 years of age. This is related to the fact that men are more mobile than women and tend to migrate to other areas to search for work when it is not available locally. In contrast, women are more likely to stay behind to care for children and older relatives.
Who has access to or control of resources?
Access to clean water is very important for all men and women in West Virginia. But how are West Virginia women, who are the majority of the population in rural areas and make only 45 percent of men's wages, going to be able to afford to hook up to the water or sewer line when it comes down their road? Without some sort of economic assistance, such as a special low-interest loan pool, many female-headed households may have to forgo the benefits of the clean water they voted for.
Who has access to or control of benefits?
Among the benefits of the Water and Sewer Infrastructure Bill are jobs associated with laying the water and sewer lines and building water purification plants. But only 8.3 percent of the jobs in the construction industry are held by women. Moreover, only 16.7 percent of women work as operators, fabricators and laborers and a much smaller proportion work in the construction field (U.S. Bureau of Employment Programs 1993). Obviously, in the absence of more aggressive job training programs, relatively few women will benefit directly from the jobs created by the bond money.
What factors influence activities, access, and control?
Women are underrepresented in policymaking bodies throughout the state. The Infrastructure Council appointed by the Governor, for example, is composed entirely of men. Yet many women in the legislature and women business owners in the counties to be served by this money are knowledgeable about the state's water and sewer needs. Since none of them are included on the Council, however, it may lack sensitivity to the needs of women when determining the Council's actions.
Who is included at each stage of a project-as informants, decision makers/planners, deliverers of services, or as beneficiaries?
Women and their families will clearly be beneficiaries of this economic development effort if they can afford it. But it is unclear whether their voices will be heard when decisions are made about location, access, and greatest need. There is no evaluation system in place that measures whether, in fact, more jobs were created and for whom, and whether the "desperate need for water and sewer systems" was met.
The implementation of gender analysis in this context is not an argument against bond issues for clean water and sewer systems. Rather, it is a planning tool to guide policymakers and economic development experts in developing programs which will ensure that women have equal access to the plan's resources and benefits. In the case of the infrastructure bonds, it may mean that serious attempts are made to increase the number of women participating in job training programs in the construction industry so that they can benefit from the jobs that are created in the development and operation of the new systems.
Meaningful evaluation is sadly lacking in many economic development programs across the nation and in West Virginia. One of West Virginia's leading authorities on economic development programs in the state suggests that there is a critical need to evaluate economic development strategies because it is unclear which ones are succeeding (Isserman 1994). Those interested in gender analysis might require a definition of "success" which involves consideration of who benefits from job development. According to Weiss (11990:64):
"Studies in Kentucky and Colorado, for instance, show that women do not benefit equally from traditional economic development that simply aims to increase the number of jobs in an area. In fact, these studies indicated that women's net disposable income was actually reduced when jobs in manufacturing and mining were developed primarily for a white male constituency."
Policy evaluation, combined with gender analysis that sets goals and objectives, selects indicators of success, collects data, and analyzes the results could eliminate the social inequalities which are all too common in conventional planning methods.
Successful Strategies that Impact Women
A community-based, bottom-up approach to economic development is more likely to yield results which are beneficial to women and their families. Additionally, as stated earlier, improving women's socioeconomic conditions will enhance the economic wealth of all West Virginians for generations to come. There are at least three job creation strategies that impact women and offer options to men: rural health delivery, microenterprise development, and flexible manufacturing. Each of these strategies works to eliminate the barriers previously outlined because they rely less on large manufacturing plants and infrastructure and more on individual initiatives and businesses requiring small amounts of capital.
Rural Health Delivery
The health sector is the fastest growing sector in the state's economy. There are more nurses now than there are coal miners in West Virginia. Women currently make up about 82 percent of all health care workers in West Virginia. About 91 percent of nursing home employees are women, along with 82 percent of hospital employees and 78 percent of the workers in the rest of the state's health services (Merrifield 1994). Moreover, health services employment is expected to continue to increase, especially given West Virginia's aging population. There will be less hospitalization and a shift toward outpatient facilities and home health care, all of which makes opportunities for small business development (Merrifield 1994).
The problem is that economic development practitioners and people working in rural health delivery rarely talk to one another. A project created by the Center for Rural Health Development and the West Virginia Rural Development Council has tried to rectify this by creating forums for the two professions to talk to one another. At a recent meeting of economic developers and health care providers, most participants agreed that health care is not seen as a business activity and there is tunnel vision at the state and local level about what job creation activities include. As with any business, health care facilities need access to capital, both for improvement of their infrastructure and for operating expenses. The meeting revealed a need for more training in business operations and long-range planning skills. Policymakers are now grappling with overturning policies that prohibit the state Economic Development Authority from lending to nonprofit hospitals and clinics and ways to prevent rural health facilities from closing and eliminating jobs.
Microenterprise Development
A second job creation strategy that impacts women is that of microenterprise development, or those businesses that employ fewer than five employees and have start-up capital needs of less than $10,000. Nationally, the typical microentrepreneur is a woman. A study of seven programs designed to assist microenterprise development concluded that these programs, which provided access to capital and managerial advice to microenterprise entrepreneurs, were successful. Nearly all (82 percent) of the microenterprises receiving assistance were still operating after two years, 62 percent of them had increased their net worth, and 59 percent of the entrepreneurs experienced an increase in their household net worth (Clark and Kays 1995).
Flexible Manufacturing Networks
Much of the industrial growth in recent years has taken place in small businesses and more "flexible" and alternative types of manufacturing systems. One of the most exciting flexible manufacturing experiments operating in West Virginia is a small network of producers headquartered in Lewisburg called Appalachian by Design (ABD).
Supported mainly by private foundation funds, ABD is a non-profit brokering firm that coordinates a network of self-employed rural women and connects them to markets for high-quality handloom knitwear and knitted goods. The network also operates customized training programs and has recently opened a production center to link the sweaters produced in the women's homes. About 50 knitters are connected through a telecommunications network and have a steering committee that represents them to the ABID staff and Board of Directors. ABD's chief customers are national and international corporations such as Esprit, Hot Knots, and others who purchase designer sweaters and kni"wear for special niche markets.
The knitters come from very rural areas of the middle and eastern part of the state and are all home-based. As outlined above, the reasons they engage in this type of activity include barriers to working outside the home because of small children or disabled family members, or the lack of available jobs in their areas. Most are lowincome and also operate family farms or other income producing ventures. Some husbands work along with their wives to complete orders. This kind of homework by rural women has been targeted by the U.S. Department of Labor and others as potentially exploitative, but the women themselves don't see it that way. They see it as an opportunity to use their talents and their home to create income for their families. State economic development policy needs to encourage this kind of entrepreneurship through grants to the community-based organizations that start networks and micro-loans to the producers for equipment and other materials.
Conclusion
West Virginia's economy is in a critical phase of its development as global competition increases along with seemingly growing disparities within the state. The state's economic history illustrates its dependence on natural resource extraction, which traditionally employed males and contributed to the under-employment of women. In recent decades, however, West Virginia has experienced a difficult economic period in which thousands of jobs were lost in male-dominated sectors. Consequently, many households and communities have been financially devastated.
In order to turn this situation around and allow the state to reach its full economic potential, West Virginia economic developers and politicians should acknowledge the importance of gender divisions of labor and reward the labor of women both in and outside the home. Statistics on employment illustrate the negative effects of occupational segregation on women's wage rates and their overall marginalization in the workforce. This condition has paved the way for alternative income-generating strategies such as self-employment, home-based industries, and community-based producer and marketing networks.
In addition, inadequate transportation in geographically isolated areas, educational inequality, and dependent caregiving are major barriers to women's advancement in the workforce. Indeed, these are not just women's issues, but are part of the social infrastructure which needs considerable attention in economic development initiatives. ~,t is evident that everyone is impacted by inadequate facilities and support networks for care of the elderly, children, and disabled oeople in this state. These constraints affect entire families and have significant impact on household economies.
Finally, and perhaps most importantly, policymakers should routinely use gender analysis when examining the potential impacts of economic development programs on the state's economy. West Virginia women are a tremendous yet undervalued resource who could play a major role in the economic growth of this state. Their potential, however, will remain largely untapped unless there is a strong commitment to uncover and rectify inequities in the state's economic development policies.
References
American Association of Retired Persons (AARP). 1988. A National Survey of Caregivers: Final Report. Washington, D.C.: Opinion Research Corporation.
Bury, Elizabeth E. and Richard C. Smith. 1994. Demographic and Economic Change in West Virginia, 1980-1990: A Primer. West Virginia University Regional Research Institute Research Paper 9310. Morgantown, West Virginia.
Canadian International Development Agency (CIDA). 1989. Handbook for Social/Gender Analysis. Coady International Institute for Social and Human Resources Development.
Caperton, Governor Gaston. 1994. Press Release. Charleston, West Virginia. July 29.
Children's Policy Institute of West Virginia. 1995. Executive Summary of Welfare to Work: Breaking the Cycle of Poverty. Charleston, West Virginia.
Clark, Peggy and Amy Kays. 1995. "What are we learning about microentrepreneurs?" Equal Means 2:3 (Summer): 30, 31.
Diehl, Lisa. 1995. Phone conversation with Lillian J. Waugh, September 5.
Dilger, Robert J. and Tom S. Witt, eds. 1993. West Virginia in the 1990s: Opportunities for Economic Progress. Morgantown, WV: West Virginia University Press.
Dilger, Robert J. and Tom S. Witt. 1994. "The $300 Million Infrastructure Improvement Amendment." The West Virginia Public Affairs Reporter 11:4 (Fall): 210.
Dorsey, Stuart. 1991. "The Strange Case of the Missing West Virginia Labor Force." Growth and Change 22:3 (Summer): 49-65.
Dwyer, Daisy and Judith Bruce. 1989. "Homes Divided." World Development 17:7 (July): 979-991.
Elson, Diane. 1993. "Gender-Aware Analysis and Development Economics." Journal of International Development 5(2): 237-247.
Glasser, Florry. 1995. Rural Child Care. Speech, "Women and the Economy" conference. Charleston, West Virginia.
Greene, Janet W. 1990. "Strategies for Survival: Women's Work in the Southern West Virginia Coal Camps." West Virginia History 49: 37-54.
Hannah, Karen, ed. 1995. West Virginia Women in Perspective. Charleston, WV: West Virginia Women's Commission.
Hawley, Clifford. 1994. "Demographic Change and Economic Opportunity." in West Virginia in the 1990's: Opportunities for Economic Progress. Eds. Robert Jay Dilger and Tom Stuart Witt, pp. 47-72. Morgantown, WV: West Virginia University Press.
Hensley, Frances S. 1990. "Women in the Industrial Work Force in West Virginia, 1880-1945." West Virginia History 49: 115-124.
Howe, Barbara J. forthcoming. Employment Opportunities for Women in West Virginia's Nineteenth-Century Cities. Lexington, KY: University Press of
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Isserman, Andrew. 1994. "State Economic Development Policy and Practice in the United States: A Survey Article." International Regional Science Review 16(l
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Merrifield, Ed. 1994. The Dimensions of Health Care Employment in West Virginia. Charleston, WV: West Virginia Bureau of Employment Programs, Office of
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The Casino/Riverboat Gambling Issue in West Virginia:
An Introduction
Robert J. Dilger
According to the National Conference of State Legislatures, casino/riverboat gambling is one of the "hottest" issues facing the states today (NCSL 1995). Ten states (Colorado, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, and South Dakota) have legalized casino gambling, six states (Illinois, Indiana, Iowa, Louisiana, Mississippi, and Missouri) have legalized riverboat gambling, and 19 states currently have casino gambling under the sponsorship of Native American Indian tribes.
During the past year, casino gambling efforts failed to win approval in the Pennsylvania General Assembly and in the Alabama state legislature. Voters in Bridgeport, Connecticut, on the other hand, endorsed casino gambling in a nonbinding referendum, and the New York state legislature approved a constitutional amendment allowing casino gambling in upstate New York (that measure must pass the 1996 New York state legislature and be approved by the state's voters before casino gambling can take place legally) (NCSL 1995).
The casino/riverboat gambling issue has been on and off West Virginia's political agenda for a number of years. In 1994, there were serious discussions in the state legislature, especially in the House of Delegates, about putting the "gaming" issue, with a local option election provision, on the statewide ballot as a proposed state constitutional amendment (Seiler 1994). However, that idea died as support for it failed to materialize in the state Senate. The promise of hundreds of new jobs and millions in additional state and local government revenue, however, has kept the casino/riverboat gambling issue alive, and advocates of casino/riverboat gambling continue to push their cause in the state legislature. A bill providing Greenbrier County voters an opportunity to allow casino-style gambling at the Greenbrier resort, for example, was introduced during the 1996 legislative session (Seiler 1995; Olson 1996).
The debate over casino/riverboat gambling raises a number of contentious issues. The opponents and proponents even disagree over how the issue should be presented: is it a debate over gambling or gaming?
The proponents, represented here by Marcus E. Prater, Marketing Communications Manager forAmeristar Casinos, Inc., argue that casino/riverboat gaming will result in more jobs, increased economic development, and millions of dollars in increased tax revenues for West Virginia's state and local governments. They also argue that it will provide a big boost for state tourism. They also argue that opponents have perpetuated several myths about casino/riverboat gaming which are either not true or are exaggerated. They argue, for example, that casino/riverboat gaming companies are not controlled or are influenced by organized crime, that casino/riverboat gaming does not directly cause an increase in crime rates, does not drive other businesses from the area, does not provide only low-paying, part-time jobs, does not create problem gamblers, and does not primarily serve customers who can least afford to lose money.
The opponents, represented here by John Kindt, a professor at the University of Illinois, argue that casino/ riverboat gambling's proponents inflate gambling's positive economic impacts and trivialize or ignore its many negative impacts, both on other businesses in the community, on state and local governments, and on people. They argue that gambling is a regressive tax on the poor, causes many existing small businesses, especially restaurants, to go bankrupt, results in an increase in criminal activity and additional costs for state and local government criminal justice systems, can lead to political corruption, and encourages compulsive "pathological" gambling. The pathological gambling problem, in turn, they argue, creates numerous social problems and many "hidden" costs for both businesses (through increased absenteeism and declining productivity) and taxpayers (through increased social-welfare expenses). Other authors have also suggested that casino/riverboat gambling adversely affects other gambling outlets (and the state and local government revenue that they generate), especially horse racing (Gove 1995).
In the interest of promoting a healthy debate on this very contentious, emotional issue, I invited a leading proponent and a leading opponent of casino/riverboat gambling to submit an article expressing their respective views for publication in The West Virginia Public Affairs Reporter The articles presented here have been edited for style, not for content. They express the authors'views and should not be seen as being representative of the views of myself, the Institute for Public Affairs, or of West Virginia University.
References
Gove, Samuel K. 1995. "Current Gaming Issues in Illinois." Paper Presented at the Southwestern Political Science Association's Annual Meeting. Dallas, Texas. March. Cited in IGPA Newsletter (Institute of Government & PublicAffairs, University of Illinois) 9:1 (Fall 1996): 6.
National Conference of State Legislatures (NCSL). 1995. "What's Happening with Casino Gaming?" State Legislatures, Inside (December): 2.
Making a Case for Casino/Riverboat Gaming
Marcus E. Prater
As casino gaming has expanded across the country in the last decade, the Las Vegas Strip and Atlantic City, New Jersey have been replaced as true representations of the industry by towns such as Vicksburg, Mississippi, Joliet, Illinois, and Council Bluffs, Iowa. It is in towns such as these that communities considering the issue of legalized gambling can experience the most accurate model of what effect casino gaming can have on a state and its counties, cities and residents. What those who are interested in separating fact from fiction will find is that casino gaming is a popular form of entertainment that provides remarkable economic benefits without increasing the tax burden or imposing unacceptable social costs.
Of course, there are two sides to the issue of expanded casino gaming. It is the responsibility of both sides to convey accurate information and keep emotional distortion out of the debate.
What Could Gaming Mean to West Virginia?
The question is often asked - what could gaming mean to West Virginia? The short answer is more J . obs, increased economic development, millions of dollars in tax revenues and a boost in tourism. The long answer requires a full explanation of what is possibly ahead for West Virginia and how the area stands to capitalize on the opportunities created by legalized gaming.
As with other areas of the economy that experience strong growth, gaming's surge across the country has created a variety of benefits that can be broken down into seven categories: capital investment, secondary capital investment, direct jobs, indirect jobs, construction jobs, increased tourism and tax revenue.
Capital investment related to gaming includes all of the riverboat casinos under construction at various shipyards, the hotels and restaurants that are part of the land-side development, entertainment facilities, landbased casinos and the expansions related to a successful gaming operation. From the Las Vegas Strip and Tunica County, Mississippi, to Bettenclorf, Iowa, and Evansville, Indiana, and points in between, billions of dollars for labor and materials are being spent on the development of gaming facilities.
Secondary capital investment makes an impact when new businesses or expansions are needed to accommodate the increase in consumer traffic created by gaming developments. New hotels, restaurants, clothing stores, office supply stores and other retail outlets are just a few of the examples of secondary capital investment that are often needed in new gaming jurisdictions.
Direct jobs are created when the gaming facility begins to hire employees as the development nears its opening. Most riverboat developments in the past five years have employed at least 500 workers, with the average around 1,000 and the top end around 2,000. The annual salaries range from minimum wage to more than $200,000, with the average somewhere between $18,000 and $25,000. Dozens of positions are offered and include the major areas of Gaming, Hotel, Finance, Marketing, Sales, Security, Food & Beverage, Human Resources, Administration, Engineering, Purchasing, Receiving and Surveillance.
Much like secondary capital investment, indirect jobs are created when existing businesses in the area need to add staff to meet demand or when new businesses hire a full workforce. Construction jobs are needed to develop the physical facilities related to a new gaming development, and often the workforce for a major riverboat casino complex exceeds 500 high-paid construction workers. The availability of construction jobs is also positively affected by secondary capital investment.
Gaming is a proven tourist draw, and what has taken place in Las Vegas over the past 15 years has been repeated on a smaller scale in new gaming jurisdictions throughout the country. Gaming not only draws new visitors to an area, but it also prompts visitors drawn to other attractions to stay longer, thus increasing the number of times tourist dollars are turned over in the local economy.
Additionally, substantial tax revenues are created by new gaming developments. Each state taxes gaming revenue differently, but irrespective of the tax rate, gaming can result in a windfall for state and local governments. Factor in property taxes, hotel taxes, sales taxes and personal income taxes paid by a new workforce and balancing the budget can quickly become a welcome reality. Thanks to riverboat casinos, the State of Mississippi, for example, is operating with a budget surplus for the first time in its history.
Across the board in cities where riverboats are docked or permanently moored, tourism, jobs, retail sales and capital investment all have experienced dramatic increases. The success stories range from Sioux City, Iowa, securing revenue for basic infrastructure improvements to Tunica County going from one of the poorest counties in the country with an unemployment rate of 26.2 percent to its present position as a thriving and economically strong area employing thousands of new workers while drawing tourists from all over the country to enjoy the entertainment features created by hundreds of millions of dollars in new capital investment. Tunica County collected $16 million from casinos in 1994, more than four times the entire county budget in 1991, and its unemployment rate has dropped as low as 4.9 percent.
According to International Gaming & Wagering Business magazine's 1994 Gross Annual Wager report, gaming revenue - the amount of money consumers actually spent on gambling - rose 15.5 percent from $34.7 billion in 1993 to $39.9 billion in 1994. Of that, state and local governments received from 1 to 20 percent depending on the form of gaming. No matter how it's divided, that's a lot of new money governments did not have five years ago - and a lot of money going toward education, public works, economic development, programs for the elderly, tourism promotion, environmental issues and other areas that would have suffered without an unwanted tax increase.
In Mississippi, for example, dockside riverboat gaming produced $167 million in tax revenues in 1994. For a state that for years struggled to balance the budget, $167 million in new money makes a dramatic impact that is felt throughout the state. Moreover, Mississippi's casinos directly employ 25,000 people; they contributed to the generation of $900 million in direct and indirect income in 1994, $1 billion in total taxable income, and the creation of another 33,000 related jobs.
"You take any state, especially one with a population of 2.6 million, and add this many jobs in an area that did not exist three years ago, and you've got a very, very significant impact," William A. McGinnis, deputy executive director of the Mississippi Department of Economic and Community Development, told Casino Journal.
The National Impact of Gaming
In the 54 years since the first legal wager was made in sparsely populated Las Vegas in 1931, the gaming industry has evolved into one of the most dynamic and economically powerful forces in present-day American business. With some form of gaming now legal in 48 of the 50 states and the now-dominant view that gaming is an enjoyable and morally acceptable form of entertainment, the gaming business is currently a $500 billion venture responsible for hundreds of thousands of jobs and billions of dollars in tax revenues and capital investment. It provides a strong economic impact that has repeatedly proven to be a financial boost for governments and the citizens these governments serve.
Buoyed by the success of gaming in Nevada and the tax-free status Nevada residents enjoy, gaming first expanded to Atlantic City in 1978. Before casino gaming was introduced in Atlantic City, the area had all but been abandoned by tourists, leading to a decay in both its social and physical stature. While casinos in Atlantic City have been criticized for failing short of completely revitalizing the area, the simple fact remains that without casinos Atlantic City would not have 41,000 gaming industry jobs, would not have an annual direct tax impact of $600 million, would not have $5 billion in new capital investment related to gaming and would not have 10 times more annual tourist visits than in the years preceding gaming's introduction.
As day-to-day costs began to outstrip tax revenues during the early-to-mid-1 980s and as unemployment rates soared and retail sales dropped, state and local governments began seeking other forms of revenue and economic development. This created the birth of the riverboat gaming industry - and the 'face of the entertainment business in the United States would forever be changed. Beginning with Iowa in 1989 and continuing with Mississippi, Illinois, Louisiana, Missouri and Indiana, states heeded the voters' wishes and began legalizing riverboat gaming, which in turn brought a new form of entertainmentto millions of people far away from the major gaming centers of Nevada and Atlantic City. Land-based casinos in Colorado and South Dakota and Native American gaming ventures in many other states also contributed to the growing availability of what had been perceived as taboo decades earlier.
If you combined all of the commercial gaming activities in the country and created one entity, it would account for $39.9 billion in revenue in 1994, a figure that would rank 12th among all companies on the Forbes Sales 500 list based on gross revenue being equivalent to sales in non-gambling accounting. This figure, for example, ranks ahead of Kmart's $34.3 billion but below Chrysler's $52.2 billion. In terms of aggregate sales, the Forbes Sales 500 increased by a healthy 8 percent in 1994, but gaming did even better, increasing 15 percent over the previous year.
So what do all these numbers prove? In simple terms, they show what a force gaming has become in relation to the national economy as a whole. With more than 90 gaming companies traded publicly, the national impact of gaming is felt on Wall Street and in small towns throughout the country. The numbers also indicate this country's growing demand for entertainment, an appetite that is directly related to a 6 percent rise in personal income from 1993 to 1994. Proportionally, more and more discretionary income is spent on various forms of entertainment, which includes sporting events, concerts, theme parks, movies and, of course, gaming.
The Local Impact of Gaming
Gaming is certainly not a cure-all for every state facing a budget shortfall, but under the right circumstances, gaming can produce remarkable economic benefits that create long-term stability and improve the overall quality of life. For examples on how to implement casino gaming to produce an undisputed level of success, look no further than Vicksburg, Mississippi, Joliet, Illinois, and Council Bluffs, Iowa.
Prior to the legalization of gaming, Vicksburg, population 30,000, was "in a very tough situation," local clothing store owner John Wayne Jabour said. "We really shrunk in the last 10 years. From 1980 to 1990 we lost almost 15,000 people in our community and things were just headed downward. Stores were closing right and left, you couldn't sell a piece of property, you couldn't sell a home..."
And now?
"People have a spring in their walk, they're happy, they're optimistic," Jabour said.
Jabour is certainly not alone in his assessment of gaming's positive effects in the Vicksburg area.
"Well, Vicksburg had been essentially stagnant until gaming came to town," Pete Stone of the Vicksburg Warren Chamber of Commerce said. "You can only do so much with the Chamber. We've gone through the same recruiting process and so forth and so on, but the advent of gaming coming here has helped us a great deal economically, obviously, and it's virtually wiped out unemployment."
"Gaming has been a real boost to Vicksburg's tourism industry," Executive Director of the Vicksburg Convention and Visitors Bureau Lenore Barkley said. "We were a tourism destination before gaming, but this has been a real asset in that it gives our visitors one more reason to come to Vicksburg and has our visitors maybe staying longer."
According to figures from the Mississippi Department of Economic and Community Development, tourism-related spending in Vicksburg - money not spent at the city's four casinos - jumped $10 million to $78.5 million the first year casinos were open. The Vicksburg Convention and Visitors Bureau derives operating income from a 1 -cent sales tax collected only on nightly room rentals and tabs at larger-volume restaurants. This tax generated $415,000 in 1992, the first year casinos opened, $459,000 in 1993 and $636,000 in 1994. The influx of tourists has also contributed to a rise in nonresident retail sales, which climbed from $25.4 million in 1993 to $26.6 million in 1994.
"Tourism's always been very important to the stability of this community and now with gaming there's nobo y in this city that isn't touched by the extra revenue that's being brought into the city," Barkley said.
"We are living in good times now. It is absolutely amazing what gaming has done forthis area," Vicksburg Warren Chamber of Commerce Executive Vice President Jimmy Ware told the Vicksburg Evening Post.
In Joliet, population 88,000, the turnaround has been just as remarkable. Perhaps an October 1995 special report in The Baltimore Sun summed up the impact of gaming the best:
"Five years ago, this was a typical rust belt city of shuttered stores, crumbling sidewalks and empty streets. Today, thousands of tourists step along red brick walkways lined with honey locust trees. The city's change in fortune is largely the result of four riverboat casinos docked along the banks of the Des Plaines River. Since opening in 1992, the hulking ships have brought nearly 4,000 jobs and $67 million in tax revenue to Joliet. More significantly, perhaps, they have enhanced the economy without increasing crime or hurting local businesses, according to police data and interviews with public officials and residents."
It's brought a new vitality and life to our downtown,' said city planner Donald J. Fisher. "it also changed the overall image of the city - which is very hard to do."'
Along the Missouri River in Council Bluffs, population 75,000, two riverboat casino resorts recently opened, with each project valued at more than $95 million. Opening the door to this extraordinary capital investment and more than 2,300 new jobs was the Iowa Racing and Gaming Commission's response to a changing market. Reacting to a regulatory climate that many casino companies found too stifling, the Commission made the adjustments necessary to renew the industry's interest in Iowa.
Unlike Mississippi, where gaming licenses are not limited and the free-market approach creates a tremendously competitive environment, Iowa limits the number of gaming licenses awarded. This approach allows the Commission to control each market and maximize tax revenues. By allowing two riverboat casinos in Council Bluffs and slot machines at the local dog racing track, the Commission has thoughtfully positioned the market to capitalize on the strong population base in the Council Bluffs/Omaha, Nebraska, metropolitan area without creating saturation in the market. Illinois employs the same limited-license approach with similar positive results.
The economic and market dynamics of each state are different, but Mississippi, Illinois and Iowa have all produced overwhelmingly positive results with their respective methods. Generally, emerging jurisdictions have implemented the limited-license approach, but gaming has clearly proven its effectiveness in a variety of different environments. If there is any doubt, simply visit Vicksburg, Joliet or Council Bluffs.
Myths vs. Realities
It's no secret that the rich, colorful past of gaming wouldn't be accurate without a reference to mobster Bugsy Siegel and his appearance on the Las Vegas scene in the mid-1940s. Since that time, though, the gaming industry has had to battle the stereotypical references to the mafia and other unsavory associations. Just as the belief that someone like Bugsy Siegel is still controlling the action is a myth, so are a variety of other views, opinions and so-called "facts" espoused by anti-gambling crusaders. It is important to examine the myths - and realities - of present-day casino gaming.
Myth - Casino companies are controlled or influenced by organized crime.
Reality - Public casino companies are among the most heavily regulated companies in the nation and have no connection to organized crime.
Not only do casino companies have to answer to a variety of regulatory agencies in each state, but public companies are also scrutinized by the Securities and Exchange Commission. Large, privately held casino companies have all but disappeared from the gaming landscape. Public companies have to undergo annual independent audits and their financial records are a matter of public record as part of the stringent reporting requirements. Established jurisdictions such as Nevada and New Jersey investigate the hiring of all individuals in senior management positions, and emerging jurisdictions such as Mississippi, Missouri and Indiana have adopted regulations that apply in Nevada and New Jersey and have augmented them with tough language and restrictions. It ensures the interests of the state and local governments, the residents and gaming customers and the casino companies themselves are fully protected.
Myth - The presence of riverboat casinos creates a dramatic increase in street or property crime.
Reality - There is no direct relationship between the introduction of gaming in a community and an increase in crime rates.
Casinos in emerging jurisdictions have actually contributed to a decrease in crime in some areas. Whenever an area increases foot traffic and draws tourists, simple logic suggests crime would rise. While minor increases in crime do in fact occur in some instances, two statesponsored studies - the Indiana Gambling Task Force Report and a report from the Illinois Riverboat Gaming Council - reveal crime in several areas with recently opened riverboat casinos has actually dropped. For example, Major Gary Fleming of the Alton (Illinois) Police Department reports: "We didn't know what to expect, but we haven't had any crime problem at all. We initially assigned four officers to the area, but they have been reassigned because problems were minimal. We were also able to re-hire four police officers laid off before the boat came due to increased tax revenue."
Davenport, Iowa, Natchez, Mississippi, and East St. Louis, Illinois, have all reported no increase or a slight decrease in crime since the boats opened. Larger gaming cities such as Las Vegas and Atlantic City actually have lower visitor-adjusted crime rates than so-called family tourist-draw cities such as Orlando.
The Federal Bureau of Investigation has conducted studies that show there is no clear relationship between the introduction of gaming in a community and subsequent crime rates in that community. The FBI also concluded that the legalization of casino gaming is often followed by a drop in the rate and number of crimes committed within the community. In addition, increased tax revenue is often used to improve the police force. The bottom line is the stereotype of rampant crime and other activity such as prostitution associated with casino developments is just that - a stereotype that is not based on fact.
Myth - Casino gaming drives other businesses out ofthe area.
Reality - Casino gaming stimulates the growth of new jobs and businesses.
This reality has been proven repeatedly in emerging jurisdictions, from Will County, Illinois, to Deadwood, South Dakota, and from the Mississippi Gulf Coast to the Native American casino areas of Minnesota. In nearly every instance, retail sales have experienced a sharp jump after riverboats have opened.
Many anti-gaming groups have cited figures that misstate the impact of casino developments on the local restaurant business. One such fact is that between 1977 and 1987 the number of restaurants in Atlantic City decreased from 243 to 146. What they have failed to reveal is that because of the influx of casino employees and the money they spend, the number of restaurants in the Atlantic City Metropolitan Statistical Area increased from 383 to 848 from 1977 to 1987, an increase of more than 120 percent.
In Mississippi, figures provided by the Mississippi Department of Economic and Community Development's Division of Tourism Development show restaurant sales were up 14.3 percent in 1994 compared with the previous year. And in a 1993 vs. 1992 comparison, the Mississippi Gulf Coast experienced a 60 percent increase in hotel sales tax, a 19 percent increase in total sales, a 29 percent increase in plane arrivals and departures and a 110 percent increase in new residential building permit valuations - all attributable to gaming.
Myth - Consumers will substitute gaming for purchases of necessities or other goods.
Reality - This theory is based on inaccurate assumptions.
This myth was first dispelled by a report prepared by the WEFA Group titled The Effects of Casino Gaming on Consumer Spending. The WEFA Group - formed from the merger of Wharton Econometric Forecasting Associates and Chase Econometrics - is one of the most respected forecasting and analysis organizations in the world. Their report exposed that the argument of the socalled "substitution effect" is based on at least two erroneous assumptions. First, that consumer budgets are limited or even fixed over time, and second, that a dollar spent in a casino is "sterile" or no longer an active part of the economy.
Additionally, in a report prepared by Christiansen/ Cummings Associates for the 1994 Gross Annual Wager, it was pointed out that "These consumer expenditures on commercial games pay the wages and salaries of the hundreds of thousands of employees, provide a return on the equity component of the tens of billions of dollars invested in casinos and racetracks and companies that vend computerized wagering systems, service the debt component of these investments, support the stock prices of the hundred or so publicly owned companies involved with gambling, and, in sum, are the motivating force of an economic engine that is most visible in Nevada but that less visibly drives an annually growing portion of the American leisure economy."
Myth - Casino jobs are primarily low-paying, parttime positions.
Reality - The typical casino job is a full-time position with an annual wage of between $18,000 and $25,000.
Casino operations are just like every other business, and while guest service is the most visible in the casino, the back-ot-house workforce is extensive, When the property is a destination resort with a hotel, various food and beverage outlets, retail space and other amenities, it becomes a major operation that demands a substantial, well-paid workforce.
In Minnesota, for example, total employment at tribal casinos surpassed 10,000 individuals at the close of 1992. According to the Minnesota Planning Agency: "If there had been no casinos, and the welfare rate in the 10 counties had climbed as fast as the rest of the state, the costs of AFDC (welfare) would now be $7 million per year higher, not including additional medical benefits or food stamps."
In Connecticut, the enormously successful tribal gaming enterprise in Ledyard has helped offset job losses from defense industry cutbacks by providing good-paying jobs.
Myth - Casino gaming creates problem gambling.
Reality - Problem gambling does not result from casino gaming.
Compulsive gambling exists throughout society. Experts estimate that between 2 and 5 percent of the population has the potential to become compulsive gamblers. However, compulsive gambling has never been shown to be caused by casinos. Most states already offer legalized gaming in the form of activities such as pari-mutuel betting, bingo, charity casinos and lotteries. The existence or absence of casino gaming will not determine whether gaming is available to the compulsive gambler.
Studies have proven that a compulsive gambler gambles regardless of whether it is legal or not in a particular area. As a Massachusetts Senate committee clarified, "There are no data to support the contention that expanded gambling will cause an exponential increase in problem gambling. Nor are there data showing that gaming venues 'cause' problem gambling. Three of the five most popular venues of choice for problem gamblers in Massachusetts are currently illegal. Problem gamblers gamble regardless of the legal status of a venue."
Myth - Casino companies fail to acknowledge the issue of problem gambling.
Reality - Casino companies have taken the lead in the prevention of problem gambling.
Problem gambling is certainly one of the most important issues the gaming industry faces. The actions taken by the industry over the last five years have been significant, including setting up national toll-free hotline numbers, paying for the staffing of those hotlines through a percentage of revenues, working with local officials in emerging jurisdictions to combat the problem, training employees to recognize the signs of problem gambling and taking steps to educate the public of the dangers of addictive behavior and the appropriate treatment. In addition, the recently formed American Gaming Association has made the issue of problem gambling a top priority.
Myth - Casino customers are primarily those who can least afford to lose money.
Reality - Numerous consumer profile studies have shown the typical casino customer is between the ages of 40 and 55 with a college education, a white collar job and a higher discretionary income than the national average.
Myth - The American Insurance Institute estimates that as much as 40 percent of all white collar crime is committed by individuals who have serious gambling problems.
Reality - This widely circulated statistic is patently false because the American Insurance Institute simply doesn't exist. Detailed research traces the statistic back to a March 1987 advertisement by the Tennessee Baptist Convention.
One Company's Impact
Ameristar Casinos, Inc. is a publicly traded company with a strong background in the gaming and hospitality industry dating back to 1954, As gaming has expanded in recent years, small companies such as Ameristar based in cities away from Las Vegas and Atlantic City have joined the mega-resort companies as partners in shaping the industry. The emergence of companies such as Ameristar has helped diversify the industry while giving it a voice that is more typical of the United States in general.
Based in Jackpot, Nevada, population 1,000, Ameristar is probably the only publicly traded company in the country with its headquarters in a town the size of Jackpot. Ameristar has two casino properties in Jackpot, 45 miles south of Twin Falls, Idaho, and its presence there provides a major contribution to the local economy.
With 1,000 employees at Cactus Pete's Resort Casino, The Horseshu Hotel & Casino and Ameristar's corporate and development offices, the company is the second-largest employer in a 100-mile region. Payroll reached nearly $14 million in 1994, employee benefits totaled more than $4 million, cost of goods was more than $8 million and an additional $27 million went for other expenditures.
Because of the quality of Ameristar's casinos and hotels, Jackpot has gone from a small roadside stop to a destination resort community that has shared in the company's success through the economic infusion that Ameristar has provided. The town has a new community recreation center with an indoor swimming pool, a challenging 18-hole golf course, low-cost housing and other features, that when combined with an almost nonexistent crime rate, creates a very positive quality of life.
Ameristar has built a well-respected reputation of focusing on quality first, and features a variety of amenities that ensure long-term viability. In Vicksburg, Ameristar didn't simply open a barge loaded with slot machines. Ameristar's capital investment totaled more than $80 million and the riverboat features a variety of dining and entertainment options and is generally recognized as one of the outstanding facilities on the Mississippi River, with four restaurant outlets and a 370-seat showroom that features nationally known entertainment.
Ameristar Vicksburg employs more than 1,100 workers with an annual payroll exceeding $18 million. In 1994, Ameristar spent an additional $3 million on employee benefits, $4 million on goods and $40 million on other expenditures, including utilities, advertising, transportation, outside services and various taxes. Most of that $40 million was spent in the local economy.
Though there is a total of four riverboats in the Vicksburg market, Ameristar, with the largest facility, has clearly led the way in helping to revitalize the local economy. Tourism and tax revenues are up, infrastructure improvements are ongoing and unemployment is down. Now, two years after gaming first came to Vicksburg, there are solid numbers from the State of Mississippi to back up the positive impact casinos have had on the area in the first two years they have been in business.
At Ameristar's new development in Council Bluffs, the company is making a $96 million capital investment, which includes a riverboat casino and a pavilion with a 160room hotel, three dining outlets and a variety of other entertainment options. Ameristar projects hiring a total of 1,400 workers with an annual payroll of $33 million, a figure that translates to an average annual salary of more than $23,500. Because of the fear that Omaha across the Missouri River will reap more than its fair share of benefits from the development, Ameristar has targeted the hiring of 70 percent of its employees from Western Iowa and has an Iowa-first policy when it comes to purchasing goods and supplies.
Ameristar is dedicated to making it a better place to live in Council Bluffs, in Jackpot and in Vicksburg, and the company will continue this commitment while targeting an aggressive expansion strategy. The benefits gaming creates are not simply the rising tax revenues and the falling unemployment rates. No, the benefits are also a basic improvement in quality of life and the chance for a brighter future - a future filled with opportunities and a future supported by the strong foundation only a progressive industry such as gaming can provide.
The Business-Economic Impacts of Licensed Casino Gambling in West Virginia:
Short-Term Gain but Long-Term Pain
John Warren Kindt
There is an imperative need for a new national commission to review gambling activities throughout the United States because few states have prepared comprehensive cost/benefit analyses of the social and economic impacts of encouraging more licensed gambling activities-particularlycasino-style gambling. West Virginia, in particular, has not prepared such a report.
In the national elections held on November 7, 1995, over 75 percent of the communities considering casinostyle gambling voted against it. For example, even though casino riverboats would have provided some short-term economic gains to Floyd and Clark counties in Indiana (at the expense of the Louisville economy), both of them were good "economic neighbors" and rejected riverboat gambling by even greater vote margins than they had rejected the riverboats in a previous election. Significantly, the voters residing in the state capitol of Missouri, Jefferson City, reconsidered the riverboat gambling which had been approved previously in 1992, and in the 1995 election rejected it by a considerable margin (News Leader 1995). The Wall Street Jourrial reported that in Louisiana "the industry has been embroiled in virtual nonstop scandal ... and its much-touted economic payoff, especially in terms of job creation, has fallen far short of promises" (Wartzman 1995).
All of the states surrounding West Virginia have recently considered riverboat casinos and rejected them because of the socioeconomic negatives associated with casino-style gambling. These types of gambling activities appear to be disfavored by the public where state policymakers and the electorate are given the time and the opportunity to examine the costs and benefits of casino-style gambling. Even so, a national commission is needed to analyze the new multifaceted issues involving the proliferation of licensed gambling activities. Otherwise, the public is often relegated to relying on industry-generated reports and promotional pieces.
The last national cornmission that analyzed gambling activities was in 1975-1976 (U.S. Commission 1976). The need for new analyses is highlighted by new video technologies which the industry is promoting to provide gambling video terminals in each U.S. household, as well as gambling via the Internet. Various forms of gambling have already been initiated or are proposed for U.S. airlines, railroad cars (casinos), blimps, and over 20 casino ships (conducting gambling "trips to nowhere" and including a leased Soviet aircraft carrier for Florida's casino gamblers). Once riverboat casinos, in particular, are legalized by a state legislature, even greater political pressures develop to authorize numerous, unanticipated varieties of gambling. Increasingly, states and communities are being forced to choose if they wish to be based on a gambling economy (like Nevada and Atlantic City) or on a nongambling economy (like Hawaii and Tennessee).
The Economic Development Argument Exposed
From a business-economic perspective, the main issue involved in legalizing various forms of gambling is whether gambling activities constitute a valid strategy for economic development. While the dollars invested in various legalized gambling projects and the jobs initially created are evident, the industry has been criticized for inflating the positive economic impacts and trivializing or ignoring the negative impacts (Goodman 1994). The industry's tendency to focus on specialized factors provides a distorted view of the localized economic positives, while ignoring the strategic business- economic costs to the state as a whole (such as West Virginia) and to different regions of the United States (California Governor's Office 1992; Kindt 1995). In 1994, all of the various experts who testified before the U.S. House of Representatives Committee on Small Business criticized the impacts that casino-style gambling activities inflict upon the criminal justice system, the social welfare system, small businesses, and the economy (Congressional Hearing 1994). Utilizing legalized gambling activities as a strategy for economic development was thoroughly discredited during the hearing.
Florida is the only state which has conducted a comprehensive statewide analysis of the impacts of legalized gambling activities. Its report concurred with the congressional hearing's conclusions (Florida Budgeting Office 1994).
Since some issue areas have not received widespread public attention in West Virginia, this analysis highlights some of the neglected issue areas as they relate to tax revenues, social-welfare costs, education, and job creation.
Economic Cycles and Gambling's Impact on Tax Revenues
From the perspective of U.S. economic history, the United States has had previous economic cycles with widespread legalized gambling activities. The most relevant cycle occurred after the American Civil War and paralleled the post-bellum migration to the "Wild West." Although gambling proliferated during this time-frame, within a few years the trend toward prohibiting gambling activities had begun, and by 1910 there was virtually no legal gambling in the United States. Gambling activities were not just prohibited via state statutes and local ordinances, but more importantly, these prohibitions were incorporated into most state constitutions. The fact that state constitutional provisions were utilized to make it as difficult as possible for future generations to legalize gambling activities (and thereby experiment once again with a classic "boom and bust" economic cycle) lends substantial credence to arguments that both historically and currently, the legalization of gambling activities eventually causes: (1) increased taxes, (2) a loss of jobs from the overall region, (3) economic disruption of other businesses, (4) increased crime and (5) large social-welfare costs for society in general and government agencies in particular. For example, two studies of the riverboat casinos in Illinois concluded that for every one job created by the riverboats, most of the surrounding communities probably lost one or more jobs from pre-existing businesses (Grinols 1994; Grinols and Omorov 1995).
In recent economic history, legalized gambling activities have been directly and indirectly subsidized by the taxpayers. The field research throughout the nation indicates that for every dollar the legalized gambling interests indicate is being contributed in taxes, it usually costs the taxpayers at least 3 dollars-and higher numbers have been calculated (Politzer, Morrow and Leavey 1981 -1 Better Government Association 1992; Florida Budget Office 1994). These costs to taxpayers are reflected in: (1) infrastructure costs, (2) relatively high regulatory costs, (3) expenses to the criminal justice system, and (4) large social-welfare costs (Illinois Governor's Office 1992). Accordingly, several state legislators (e.g., in South Dakota) have called for at least partially internalizing these external costs by taxing all legalized gambling activities at a straight 50 percent tax rate.
Furthermore, as a matter of good public policy, state officials and legislators in Illinois have proposed legislation to prohibit contributions by legalized gambling interests to politicians and political campaigns. In the case of casinos, New Jersey already has such prohibitions, but other states have neglected to enact similar prohibitions. Political scientists have raised concerns that the newly developing constituencies in the licensed gambling industry are becoming so widespread that the industry can dictate economic, social, and tax policies. For example, the industry drafted a state constitutional referendum in Florida which would have mandated the introduction of casinos into communities-even if a particular community voted unanimously against a casino (Dyckman 1994). The industry spent approximately $3 million to get the Florida referendum on the ballot and $16.5 million to campaign for the casinos-more than the combined gubernatorial campaigns of Governor Lawton
Chiles and his challenger Jeb Bush (Lavelle 1994). In these contexts, an article in the Columbia Journalism Review cautions the news media to "flat out ask [experts, academics, and even other reporters] if they make money off the industry" (Simurda 1994).
Social Welfare Costs
Legalized gambling activities act as a regressive tax on the poor (Clotfelter and Cook 1989). Specifically, the legalization of various forms of gambling activities makes "poor people poorer" and can dramatically intensify many pre-existing social-welfare problems. Demographic analyses reveal that certain disadvantaged socioeconomic groups tend to gamble proportionately greater amounts of their overall income and marketing efforts, particularly by state lotteries, have allegedly been directed at these target groups.
In a specific example involving casinos, a 1995 Wisconsin report concluded that "[wlithout considering the social costs of compulsive gambling, the 'rest-of-the-state' areas lose-or, transfer in-$223.94 million to the local gaming areas. Considering the lowest estimated social costs of problem gambling, the rest of ... [Wisconsin] loses $318.61 million to gambling" (Thompson, Gazel, and Rickman 1995). This report also concluded that without casino gambling, many local citizens would have increased participation in other "outside" activities. "More than 10% of the locals would spend more on groceries if it were not for the casino, while nearly one-fourth would spend more on clothes. Thirty-seven percent said that their savings had been reduced since the casino had opened ..." (Thompson, Gazel, and Rickman 1995).
From the business perspective, businesses are not naive. For example, "in a rare public stand on a controversial political issue, the Greater Washington Board of Trade's 85-member board voted unanimously against" Mayor Sharon Pratt Kelly's initiative to bring casino-style gambling to Washington, D.C. (emphasis added, Spayd and Woodlee 1993). With the exception of the cluster services associated with gambling, new businesses tend not to locate in areas allowing legalized gambling because of one or more of the aforementioned costs. In areas saturated with legalized gambling activities, pre-existing businesses face added pressures that push them toward illiquidity and even bankruptcy. Although South Dakota does not constitute a saturated gambling state, this trend has already been reported there. South Dakota basically had no gambling in 1988 and then instituted casino gambling and video lottery terminals by the end of 1989. Within two years legalized gambling activities constituted one of the leading causes of business and personal bankruptcies among South Dakota residents (whereas this cause was virtually nonexistent in 1989) (Nelson 1993). More subtly, traditional businesses in communities which initiate legalized gambling activities can anticipate increased personnel costs due to increased job absenteeism and declining productivity (Kindt 1994a). The best blue-collar and white-collar workers, the TypeA personalities, are the most likely to become pathological gamblers (Kindt 1994b). A business with 1,000 workers can anticipate increased personnel costs of $500,000 or more per year-simply by having various forms of legalized gambling activities accessible to its workers.
To some extent businesses must already internalize the societal costs associated with assisting personnel with drug or alcohol-related problems. Legalizing various gambling activities increases the number of problems related to pathological gambling in the context of the workforce, and these costs are reflected in increased personnel costs-such as "rehabilitation costs," which can easily range from $3,000 to $20,000 (or more) per pathological gambler (Kindt 1994b). In the context of the healthcare debate, the spectre of these unanticipated costs can raise further concerns to businesses already being asked to bear certain health care costs.
Education Costs
Gambling activities and the gambling philosophy are directly opposed to sound business principles and economic development. Legalized gambling activities also negatively affect education-both philosophically and fiscally (Better Government Association 1992; Clotfelter and Cook 1989). Adherence to a philosophy of making a living via gambling activities not only abrogates the perceived need for an education, but also reinforces economically unproductive activities (and is statistically impossible since the "house" always wins eventually). In states with legalized gambling activities which were initiated allegedly to bolster tax revenues to "education," the funding in "real dollars" has almost uniformly decreased.
The Pathological Gambler Problem
States which embrace legalized gambling activities can expect enormous socioeconomic costs and a decline in the quality of life. Unlike traditional business activities, legalized gambling activities cater to a market consisting of addicted and potentially addicted consumers, and most pre-existing traditional businesses will find it quite difficult to compete for "consumer dollars" which are being transformed into "gambling dollars." For example, the field research strongly suggests that the introduction of widespread legalized gambling in South Dakota, including casinos and video lottery terminals (VLTs), over a two-year time span caused a one percent increase in the number of problem and probable pathological gamblersa recognized addictive behavior pursuant to the American Psychiatric Association (Clotfelter and Cook 1989; Better Government Association 1992). Each newly-created pathological gambler has been calculated to cost society from $13,200 to $52,000 per year (Maryland Department of Health 1994; Better Government Association 1994).
These costs are not just reflected in society as a whole, but impact on all businesses. In particular, small businesses could easily experience disproportionate negative impacts, and unlike large corporations, small businesses would be less likely to have the asset base necessary to cushion against those negative impacts.
Sociologists almost uniformly report that increased gambling activities which are promoted as sociologically "acceptable" (the acceptability factor) and which are made "accessible" (the accessibility factor) to larger numbers of people will increase the number of pathological gamblers (Goodman 1994; Politzer, Morrow and Leavey 1981; Better Government Association 1992; Maryland Department of Health 1994). The baseline of pathological gamblers as part of the population begins at .77 percent as reported by the 1976 U.S. Commission on Gambling (U.S. Commission 1976). Since gambling has been legalized and made accessible in several states, the range has increased to 1.5 to 5 percent in those states (Alberta Lotteries and Gambling 1994). This phenomenon was specifically confirmed by a 1995 study which concluded that the lifetime probable pathological and problem gamblers in Iowa increased from 1.7 percent of the public in 1989 to 5.4 percent in 1995 (Iowa Department of Human Services 1995; Petroski 1995). Similarly, a limited study of Native Americans revealed a rate for lifetime probable pathological and problem gamblers of 14.5 percent in casino areas (Alberta Lotteries and Gambling 1994). These developments translate into increases in socioeconomic costs which must be addressed and absorbed primarily by taxpayers, but also by businesses, charities, social-welfare organizations and governmental units.
Negative Impact on Job Creation
On a regional level, the combined ranges of these various socioeconomic costs are so large that they tend to dwarf the localized economic positives (California Governor's Office 1992). These drains on society could easily translate into a net loss of jobs on a statewide or regional level. Furthermore, it can be argued that the combined economic positives and negatives result in a net negative economic multiplier (Goodman 1994; Teske and Sur 1991). From the perspective of business-economics and strategic development, major businesses are and should be concerned with the trend toward expanding various forms of legalized gambling activities. Among other reasons, nongambling related businesses will not be competing for consumer dollars or recreational dollars on a "level playing field," because legalized gambling activities can cater to an addicted and potentially addicted market segment.
Since the U.S. economy and most state economies are extensive in scope, the socioeconomic negatives associated with legalized gambling activities can remain hidden for long periods of time. However, just because a particular activity is "legalized" by a state government does not mean that the negative business or societal impacts have been eliminated-or even reduced.
Conclusion
Increasingly, taxpayers and businesses are beginning to realize that, as Professor Jack Van Der Slik has summarized for much of the academic community, state-sponsored gambling "produces no product, no new wealth, and so it makes no genuine contribution to economic development" (Van Der Slik 1990). Businesseconomic history supports this proposition. The recriminalization of gambling activities occurred 100 years ago after a brief gambling boom following the Civil War. Most state legislatures utilized constitutional provisions to recriminalize gambling, because lawmakers wanted to make it as diff icult as possible for future generations to experiment with the classic "boom and bust" cycles and the concomitant socioeconomic negatives occasioned by legalized gambling activities. To paraphrase Georg Hegel's common quote, "those who forget the lessons of economic history are condemned to relive them" (Bartlett 1968).
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