Expert: West Virginia Economic Rebound Will Take Time

MORGANTOWN — A West Virginia University economist predicts the state won’t return to its 2012 level of employment until 2022.

John Deskins, an associate professor of economics and director of WVU’s Bureau of Business and Economics, spoke Monday about economic enablers at the WVU Academic Media Day.

West Virginia’s economy has been growing again for the past 18 months, but its rate still lags behind national growth. For that reason, he said, “We shouldn’t lose our sense of urgency.”

Coal production in the state has remained flat over the past four to five years, but “we expect stability going forward,” Deskins said. On a brighter note, natural gas production returned to a healthy level of growth in 2017, a trend that he expects to continue.

Unlike other states, West Virginia’s gross domestic product had “no growth whatsoever” in 2011-16, he said, adding that 2017 was a better year but was coming off a low base.

The state’s economic suffering was driven by coal loses. Adding to the woes, the state “didn’t have other sectors growing to offset these gaps that coal created,” he said.

The lack of other growing sectors translates into “a desperate plea” for industrial diversification, he indicated.

Deskins identified economic enablers as business climate, human capital, entrepreneurship, infrastructure, regionally-specific economic development strategies and good government.

Regarding West Virginia’s business climate, he said the top priority has to be determining what can be done to make the state more attractive businesses. He thinks that has to be a guiding principle and central to every question of policy.

In terms of human capital, a well-educated, drug-free workforce is necessary to attract businesses to the state. Unfortunately, some residents don’t have the right education, training or job skills to secure employment. Health concerns and drug abuse also are barriers to employment.

A 2017 labor force participation report — which indicates the share of the adult population that wants to work — showed a national rate of 63 percent. However, West Virginia, at 53 percent, was “dead last,” a position it has held every year since 1976, Deskins said.

“It’s a long-term, long-running problem that’s tough to overcome,” he said. “There is no way we could ever hope to achieve economic prosperity until we get more people able, willing and ready to participate in the workforce.”

On another front, Deskins said opioid abuse “is very much an economic development issue.” He cited Centers for Disease Control and Prevention data that shows opioid overdose deaths nationally increasing from three per 100,000 population in 1999 to 11 in 2015. For the same period, though, opioid overdose deaths in West Virginia rose dramatically — from two to 50 per 100,000 population.

Turning to entrepreneurship, he said, “There is a desperate need for industrial diversification. The only way to successfully achieve industrial diversification is through entrepreneurship.”

Good infrastructure involves not only roads but also access to natural resources and modern technology such as cell phone service, he said.

Deskins advocates the creation of economic development strategies that are specific to each region of the state.

“Our state is very, very different from region to region,” he said. “Economic development potential and needs are so different across our state.”

He also called for thinking outside the box and examining the “big picture” in terms of governmental structure. For instance, he said West Virginia has had a centrally-structured government since the 1930s, while the formula for determining the geographic size of individual counties dates to the 1800s.