West Virginia Employment Growth Forecast by Sector
West Virginia Employment Growth Forecast by Sector
industrial super sectors outside of energy
did not grow over this period either. This
lack of growth in output outside of energy
is really a red flag that West Virginians
must make diversifying the state’s eco-
nomic base a top priority. While we do
very much need a strong energy sector,
we also need much stronger growth in
industries such as manufacturing and
tourism. On a positive note, GDP per-
formed much stronger in 2017.
Natural Resources & Mining
Construction
Professional & Business Services
Manufacturing
Total
Leisure & Hospitality
Education & Health Services
2006-2016
2017-2022
Other Services
Trade, Transportation & Utilities
Health, Education and Drug
Abuse are Critical
Financial Activities
Government
Information
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
Average annual growth, %
SOURCE: U.S. Bureau of Labor Statistics and WVU BBER Econometric Model
The State is Adding Jobs
The state economy suffered tremen-
dously between early 2012 and mid-
2016, losing roughly 26,000 jobs over
that period. Fortunately, West Virginia
has finally turned the corner and added
back around 4,500 jobs over the past
year or so. Barring any unexpected
shocks to the economy, we can expect
to continue to see growth for the fore-
seeable future.
However, the job growth the state can
expect to see is probably going to hap
pen more slowly than we would hope.
We will likely not reach our 2012 peak
level of employment until around 2021.
Because of this, we should use this weak-
ness as inspiration to make the positive
investments and changes we need to really
ensure economic prosperity in West Vir-
ginia over the long run.
Output in the Energy
Sector is Growing
Not surprisingly, losses in coal were
the biggest driver of West Virginia’s
recession from 2012-2016. Coal output
in the Mountain State fell from nearly
160 million tons in 2008 to the low 80-
million-ton range for 2016. However, coal
output began to rebound during the fall
of 2016, and we can expect production
of around 90 million tons for 2017. We
can also expect production to stabilize
around the 90 million mark at least for
the next few years.
Natural gas output has also begun
to improve, increasing employment and
incomes. The lack of growth that was
observed during that period was driven by
limitations on natural gas infrastruc-
ture combined with a tremendous in-
crease in productive capacity, which led to
extremely low prices. However, infra-
structure improvements that are un-
derway are working to open the gas to
wider markets, domestically and abroad,
effectively increasing demand for the
gas, driving prices back up and incen-
tivizing new drilling.
Industrial Diversification
is Sorely Needed
While the most obvious cause of our
state’s recent struggles is the losses in coal,
the real culprit is the fact that other in-
dustries in West Virginia were not grow-
ing very rapidly to offset these losses. In
fact, GDP in West Virginia—our broad-
est measure of economic output—did
not grow at all over the period of 2012-
2016. To make matters worse, GDP for all
Perhaps the biggest dark cloud that
hangs over the Mountain State in terms
of long-term economic prosperity is the
fact that we have the lowest rate of labor
force participation among the 50 states.
In West Virginia, only 53 percent of the
adult population is either working or ac-
tively looking for work compared to 63
percent nationally.
This labor force participation deficit
is driven by three factors, all related to
human capital. First, we have people who
would like to work in an ideal world,
but they don’t bother to look for work
because they know their education and
training is not up to par from the per-
spective of potential employers. Second,
the same applies to health—people would
work in an ideal world, but they do not
bother to look for work because of poor
health. The third piece of the puzzle is
drug abuse, particularly opioid abuse,
which has skyrocketed in the state in
recent years.
West Virginia will never be able to
reach a level of income that is on par
with the national average if the state has
GDP Forecast by Sector
85
75
Billions of 2016$
GDP Forecast by Sector
Oil & Gas
Coal
Construction & Manufacturing
Government
Private Service-Providing
65
55
45
35
25
SOURCE: U.S. Bureau of Economic Analysis and WVU BBER Econometric Model
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