Section II: Recent Trends in the West Virginia Economy

Employment and the Labor Market

TOTAL EMPLOYMENT West Virginia’s economy has fully recovered from the COVID-19 recession in terms of employment. Payroll employment, which contracted by over 80,000 between January of 2020 and late-Spring 2020, bounced back at a healthy pace through mid-2022. The state attained a full employment recovery by the end of the third quarter of 2023. Since then, the state has continued to grow. Altogether West Virginia has now added about 7,000 new jobs over the pre-pandemic level, representing growth of just shy of one percent.

Figure 1.7

PRIVATE SECTOR EMPLOYMENT In Figure 1.8 we present total private-sector employment in West Virginia, in contrast to total employment presented previously. Here the figure follows a similar trajectory compared to that in Figure 1.7. Overall, private sector employment currently stands at about 100.9 percent of its January 2020 level, almost exactly on par with performance overall. This indicates that the private sector and the public sector (state and local, as well as federal government), have performed similarly in terms of employment recovery and growth.

Figure 1.8

WEST VIRGINIA COMPARED TO THE NATION In Figure 1.9 we present total employment again, for the state and for the nation, except that we have converted the data to an index beginning at 100 in January of 2020. This approach allows for an easy comparison between state- and national-level performance. As illustrated, the state and the nation performed similarly through the first year and one-half of the pandemic. However, since mid-2021, the state has fallen behind in terms of employment growth. As of the most recent data, the state is at 100.9 percent of its pre-pandemic level of employment, while the nation stands at 104.5 percent.

Figure 1.9

EMPLOYMENT GROWTH BY COUNTY While we present a broader analysis of economic performance by county in a separate report, here we briefly consider how employment growth varies across county. Here we present a simple long-run view by calculating total employment in mid-2024 minus total employment in mid-2014 on a county-by-county basis. In Figure 1.10 we illustrate the top 15 growth counties over the past decade compared to the remaining 40 counties in the state. As noted in the figure, the top 15 growth counties added nearly 19 thousand jobs over the period, whereas the remaining 40 counties lost over 26 jobs over the period. The point here is that economic performance varies widely across the state’s counties and relatively strong performance in a few counties or regions may be masked in aggregate data by the numerous counties that have been stagnant or have declined.

Figure 1.10

UNEMPLOYMENT Unemployment has been very low since the recent pandemic. The state’s jobless rate fell below four percent for the first time on record in early-2022 and set an all-time low of 3.5 percent in 2023. Unemployment has risen slightly over the past year or so, but remains very low, in the low-four-percent range.

Figure 1.11

In many instances historically, declines in West Virginia’s unemployment rate can be explained at least in part by some combination of labor force attrition and underlying demographic trends. Over the past three years or so, the very low unemployment rate has been the product of increased hiring activity mostly, but ongoing friction between factors influencing the demand and supply for labor have also caused the labor market to appear even tighter than the measured unemployment rate might indicate.

LABOR FORCE PARTICIPATION Based upon the unemployment rate, West Virginia is at “full employment.” But, while the state’s labor market is very tight in the short-run context of the unemployment rate, it only provides a partial representation of labor market health. Specifically, West Virginia’s underlying demographic characteristics, industrial structure, and other unique factors warrant additional information to assess labor market conditions.

As a result, one should examine the labor force participation rate, in conjunction with the jobless rate, for a more complete depiction of West Virginia’s labor market. As of 2023, West Virginia’s labor force participation rate was second lowest among all states at just shy of 55 percent. The fact that West Virginia surpasses Mississippi in terms of labor force participation reflects a slight improvement in some sense, since West Virginia has consistently been 50 ^th among the states since the US Bureau of Labor Statistics began reporting this data series in 1976. The fact that a large proportion of West Virginians are age 65 or older explains some of the state’s workforce participation deficit against other states. However, the underlying causes extend to issues beyond age since the state also lags well behind the nation among the prime working age population (25-54 years of age) and among other age categorizations. On a positive note, the state’s rate has increased over the past couple of years and the workforce participation gap with the nation has narrowed slightly.

Figure 1.12

JOB OPENINGS A significant trend that emerged both nationally and within West Virginia that speaks to the massive swing in labor market conditions during the COVID-19 pandemic was a sharp increase in the rate of job openings. According to the Bureau of Labor Statistics, over the course of 2021 through 2023, an average of seven to eight percent of all jobs available are not filled in West Virginia. Some of this persistently high rate of job openings stemmed from early retirements during the pandemic. The rate has improved to the low-six-percent range over the past year. However, the rate in West Virginia is still above pre-pandemic levels and the state continues to experience significantly higher job openings compared to the nation overall.

Figure 1.13

Income and Output

INCOME Per capita personal income in West Virginia stood at $52,585 in 2023, placing the state 49 ^th highest among the 50 states. West Virginia is substantially ahead of Mississippi by this metric, and lags 48 ^th placed Alabama by less than $1,000 per person. Overall, the average West Virginian receives around $77 dollars in income for every $100 received by the average American.

Turning to Figure 1.15, we report the growth of per capita personal income for the state and for the nation over the past decade or so. While the state has been near the bottom of states in terms of per capita personal income, the relative position of the state compared to the nation has not moved significantly. As reported in the figure, per capita personal income growth (not accounting for inflation) in West Virginia has lagged the nation over the past decade or so. Since 2011, the figure has grown by about 53 percent for the state, versus nearly 61 percent for the nation. However, most of this deficit occurred over the first few years of this window of time. Since around 2016 the state and the nation have performed very similarly in terms of per capita personal income growth. While West Virginia has not improved relative to the nation in terms of per capita personal income, it has not fallen further behind over the past decade or so.

Figure 1.14

Figure 1.15

WAGES In Figure 1.16 we report average wages for the state overall and across the major industrial super sectors. Altogether, the average wage in the state was around $55,000 for 2023. Unsurprisingly, wages vary widely across supersector, with typical wages in the utilities sector and in the mining and oil and gas sector exceeding $100,000 for the year. This stands in sharp contrast to a sector such as leisure and hospitality, where the typical wage stood at only around $26,000 for the year.

Figure 1.16

GDP West Virginia has lagged the nation in terms of real GDP growth over much of the past decade or so, as depicted in Figure 1.17. And the state has generally posted more volatile performance in terms of real GDP growth, as compared to the nation. After experiencing a large annual percentage decline during 2020 (approximately 3.7 percent), West Virginia failed to bounce back in a mirrored fashion in following two years: the state posted real GDP gains of only 2.1 percent and 1.3 percent in 2021 and 2022, respectively, lagging performance at the national level. However, 2023 was a very strong year for West Virginia; economic output grew by around 4.7 percent in West Virginia in 2023, compared to 2.6 percent for the nation. The projection calls for the state to be almost on par with the nation for 2024.

Figure 1.17

GDP – SELECT SUPER SECTORS It is important to consider the mining super sector (which includes coal mining, oil and gas production, as well as quarrying) to fully understand the state’s economic output picture. In Figure 1.18 we use an indexed approach to illustrate the change in West Virginia’s total GDP outside of the mining super sector, versus GDP from the mining super sector exclusively. As illustrated, output outside of mining has grown by less than three percent since 2017, after accounting for inflation. In contrast, output in the mining super sector has grown considerably over the period – posting nearly 43 percent cumulative growth between 2017 and 2023, after accounting for inflation.

In figure 1.19 we expand the set of growing sectors to include the health, information, and professional & business services super sectors, all three of which have also posted healthy growth in West Virginia in recent years. If we consider all four of these super sectors combined, they have posted cumulative output growth of over 24 percent since 2017, after accounting for inflation. In contrast, all other industrial super sectors have collectively declined in terms of output by just over one percent over the period.

Figure 1.18

Figure 1.19

Recent Demographic Trends

POPULATION West Virginia has seen its population decline annually for more than a decade and has registered an overall loss of over 88,000 residents since 2012. Overall, the absolute and percentage declines in population over the past decade have surpassed the losses observed during the mid- to late-1990s but are demonstrably smaller than the massive population declines that occurred during the early- to mid-1980s economic collapse. West Virginia’s sustained population declines set it apart from nearly every state in the US. Indeed, because of this population loss the state saw its representation in the US House of Representatives drop from three to two, beginning with the 118 ^th Congress in 2023 (down from a high of six decades ago). Losses are expected to continue throughout the forecast period.

Figure 1.20

West Virginia’s population declines have been driven both by net outflows of residents to other states and natural population losses in many years. Natural population losses are defined as the situation in which deaths exceed births. West Virginia saw an important swing in net migration beginning in 2020, however, and the state has recorded more in-migrants than out-migrants for four consecutive years. Indeed, it is estimated that the state received more than 5,000 more in-migrants compared to out-migrants for 2023. The rate of natural population decline in West Virginia worsened in 2020, 2021, and 2022, but is expected to be stable at losses of around 6,000 to 7,000 annually for the forecast period. Altogether, these facts support the idea that economic development policies that effectively encourage in-migration are crucial to the state’s long-term economic prosperity.

Figure 1.21

A separate section of this report details population trends on a county-by-county basis. The data show that only a handful of counties have consistently gained population in recent years, while the large majority of the state’s 55 counties have seen population loss, ranging from minor losses in a few counties, to quite large losses in others.

AGE DISTRIBUTION Age distribution represents one of the defining demographic characteristics of the Mountain State’s population when compared to most of the US. And this age structure has palpable impacts on broader economic trends in the state. The state’s median age stands more than three years above the national figure. Another sign of the state’s skewed age distribution is the fact that more than 21 percent of the state’s residents are aged 65 or older, exceeding the national figure by nearly four percentage points.

Figure 1.22

HEALTH AND DRUG ABUSE Even after accounting for the state population’s age distribution, West Virginia experiences higher incidences from various morbidities as well as higher mortality rates. According to the Centers for Disease Control and Prevention, West Virginia’s age-adjusted all-cause mortality rate is the highest among all states. The state also ranks within the bottom tier of states in terms of high incidences of heart disease, cancer, and diabetes. Furthermore, behavioral or lifestyle factors that contribute to poor health outcomes such as physical activity during leisure time are among the lowest in the nation and rates of cigarette smoking and smokeless tobacco use among the adult population are among the highest nationally. Another source of the state’s poor health outcome trends over the past decade or so has been the extremely high rate of death from opioid and other drug overdoses. Indeed, the drug overdose rate in West Virginia was far more than double the national average in 2022 (most recent data available). However, the rate of drug overdose mortality in West Virginia in 2022 – 81 deaths per 100,000 residents – represents a noticeable improvement from the rate of around 90 in the previous year.

Figure 1.23 

Figure 1.24

[1] All forecast estimates for this document are provided by S&P Global, Inc.