Many states are experiencing rapid labor-force gains as the economic expansion hums along. In Wyoming and West Virginia, the situation couldn’t be more different.
Since the recession ended in June 2009, Wyoming’s labor force has contracted by 5.1%, the biggest drop of any state in the nation during this period. West Virginia is next, with a decline of 4.5%, according to Labor Department data. Other states have shed workers, too, including Vermont, Kansas and Ohio.
By contrast, the nation as a whole has clocked labor-force growth of 5.1% since mid-2009.
While natural beauty and other factors such as a low cost of living and business-friendly government are drawing workers into states like Utah and Idaho—which also have resource sectors—Wyoming and West Virginia are suffering setbacks. The underlying reasons for these two states’ labor-market declines ties back to the their hefty reliance on coal, as well as more structural factors like below-average attainment of higher education.
The coal industry has been steadily losing jobs over the past several years as power plants turned to cleaner alternatives like natural gas, a boon to Texas’ labor force, which is the second fastest-growing in this expansion.
In Wyoming and West Virginia, dependence on coal means that during an energy bust, many discouraged workers leave. But unlike states with more diverse economies, these two don’t have enough other sources of employment to hold steady or grow, compensating for the decline in mining and related industries.
“When you have that dependence on just a few commodity industries and you don’t have a high-skilled workforce, that makes it difficult for the state to attract high-wage businesses, high-wage jobs,” said Maria Cosma, an economist at Moody’s Analytics who specializes in Wyoming economics. “If people can’t find good job opportunities at home, they will move elsewhere.”
Both Wyoming and West Virginia have seen population losses driven by outward migration. Wyoming’s population dropped by nearly 6,000 from 2016 to 2017, while West Virginia’s population declined by almost 13,000, a drag on labor-force growth.
Coal is closely linked to many jobs in Wyoming and West Virginia, which means employment across the states’ economies are feeling the hit.
In West Virginia, manufacturing jobs have suffered: the state’s payrolls in this sector are around 47,000, down from 57,000 a decade earlier. In Wyoming, the state and local government sector, reliant on the coal industry for tax revenues, has seen jobs decline sharply in recent years.
While the labor-force decline in both Wyoming and West Virginia has moderated over the past year, possibly tied to a pickup in energy prices, a full recovery remains a challenge.
For one, in the wake of the 2015 energy downturn, many coal companies in Wyoming replaced people with machinery, according to Ms. Cosma.
Furthermore, below-average higher-education attainment in Wyoming and West Virginia means the states struggle to retain highly skilled workers and draw in new ones. West Virginia’s labor force also suffers due to a lack of high-wage jobs and high opioid use.
Adding to the challenge of growing these regional labor forces is an aging population.
“If you have someone within 10 years of retirement age who say loses their job as a coal miner, they don’t really have the incentive to get back into the labor force if they’ve saved up enough for retirement,” Ms. Cosma said.
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from Real Time Economics https://ift.tt/2zjaFhP
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