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Five WV counties ‘have seen a great depression’

Charleston Gazette-Mail photo by Christian Tyler Randolph John Deskins, director of the Bureau of Business and Economic Research at West Virginia University, discusses the current and projected future performance of the state economy during the West Virginia Economic Outlook Conference at the Charleston Embassy Suites Tuesday.
Charleston Gazette-Mail photo by Christian Tyler Randolph
John Deskins, director of the Bureau of Business and Economic Research at West Virginia University, discusses the current and projected future performance of the state economy during the West Virginia Economic Outlook Conference at the Charleston Embassy Suites Tuesday.

CHARLESTON, W.Va. — Speakers at the West Virginia Economic Outlook Conference sang a familiar tune Tuesday: West Virginia must diversify its economy if it wants to make the strides that the rest of the United States has in the past five years.

The West Virginia economy has slowed down with 16,000 jobs lost from the state’s energy sector since 2012, according to a report from the Bureau of Business and Economic Research. Speakers urged for a more efficient government and better avenues for people to learn skills to prepare them for the newer, less energy-centric economy.

John Deskins, the director of the bureau, said West Virginia is back to where it was in 2010 for non-energy economic output after years of decline in that area.

“This state is driven by energy overwhelmingly,” he said. “I want energy to be strong, I have nothing wrong with coal and gas, I love this state and its history, but we have got to have health in other sectors as well.”

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said in an interview that the state has been hit the hardest by changes in the economics of the energy sector, especially with the sharp drop in oil prices.

“It’s been a real roller coaster over the last two decades with the run-up in oil prices and coal substituting for it in the 2000s,” he said. “And then coal did pretty well in the export market. But the last two years have been a fairly sour experience for it.”

Charles Patton, the president of Appalachian Power, said coal will continue to be a significant part of the company’s fuel mix until 2040, but less so than it was before.

“Our new generation of energy will be natural gas and renewables, and that’s driven primarily by economics and uncertainty in environmental regulation,” he said. “Clean Power Plan or no Clean Power Plan, the generation mix and the supply mix is just changing because of economics and advancements in technology.”

Not all of West Virginia is hurting because of the decline in coal. Counties in the top ten of 2015 natural gas production have experienced higher employment growth than other counties, according to the bureau report. Deskins described the Eastern Panhandle as having a strong and healthy economy, and the Charleston metropolitan area has potential in the manufacturing industry.

The place hit the hardest by the decline has been the southern region, concentrated in the counties of Logan, Wyoming, McDowell, Mingo and Wayne. Deskins said most of the jobs lost from coal are from the southern part of the state. Each county has lost between 25 and 36 percent of its jobs since 2012.

“These are five counties that have seen a great depression,” Deskins said. “I’m not saying that to be dramatic. That is a true and accurate descriptor.”

 However, Deskins said there is room for growth in all of the state, including the southern region where he says tourism could be a big industry.

Mark Muchow, the deputy secretary of the state Department of Revenue, said the outlook for the state’s economic growth isn’t particularly bright, but West Virginia at least is coming out of the economic recession it has been in for the past few years.

“The depression is pretty much over,” Muchow said. “The earthquake has happened, but now you have some leftover tremors.”

Muchow said the state was expected to see growth in both employment and wages in 2016, but it is now projected to have a slight decline for the year. An uptick in both areas is expected in 2017, however.

The state hasn’t had much to work with in terms of revenue, Muchow said, because of a 40 percent drop in corporate income tax profits. State revenues as a whole dropped by 7.5 percent in 2015.

Ted Abernathy, the managing partner with the consulting group Economic Leadership, said West Virginia, like every other state, is now competing at a global level, so it must find ways to bring business and entrepreneurial talent in to get the state back on track.

“If you’re a small city like Charleston, you’re going to have less ammunition to fight with to attract labor,” he said. “And you’re competing with all city states now. You’re going to have to attract new labor to come in the state.”

Deskins said businesses haven’t been too keen on settling into West Virginia because of its labor force participation rate. The state has been dead last in the category every year since 1976, and it also has the highest percentage of disabled people.

“We have to think of outside-the-box solutions,” he said. “Maybe a person is disabled and they can’t work in the coal mines, but with the right education and training they could work in an office environment.”

Lacker cited education and training as crucial to West Virginia’s economic growth going forward. Patton agreed, saying coal isn’t going to be the top employer it once was.

“It’s imperative that we diversify workforce training for things outside of that,” he said. “It really is these technical degrees and two-year training programs that are the way of the future.”

Reach Max Garland at [email protected], 304-348-4886 or follow @MaxGarlandTypes on Twitter.

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