West Virginia Job Losses due to Coal Industry Decline
West Virginia is experiencing a financial crisis due to the decline of its coal industry. Madison, Boone County, used to be a thriving town for mining jobs and was once the top coal producer in the country. But now, West Virginia’s mine closures have been leading to job losses in the state. Boone County lost about 60% of its coal mining jobs between 2009 and 2015.
At present, Madison is left with a high percentage of older people and addicts in its population, as well as a shortage of medical services to treat them. West Virginia’s economy is shrinking day by day as miners search for jobs at other locations while young people move elsewhere because of the high unemployment.
Demographers at West Virginia University’s (WVU) Bureau of Business and Economic Research report the following:
- the dwindling population of West Virginia will lose more than 46,000 people (2.5%) between 2010 and 2030.
- the prime working-age population (25–54 years old) will observe a 13%+ decline.
- the people who are 65 or older are expected to increase by 43.5%.
According to the WVU report, statewide coal output was 80 million tons in 2016. This value is just more than half of the 158 million tons of coal that were produced in 2008.
The report also analyzed the coal production industry in West Virginia for 2017–2040. It states that coal production will rise over the next three years before declining to below 80 million tons by 2030. The report predicts coal production to stabilize between 2019 and 2022, averaging about 87–88 million tons each year. Further, total coal production is expected to decline from the mid-80-million-ton range in 2025 to around 78 million tons in 2040.
The primary reasons for the West Virginia coal industry decline have been reported as 1) the replacement of coal by the lower-priced natural gas in electric power plants and 2) a decline in the export demand for coal.
West Virginia Ranked as the Worst State for Business and Jobs in 2017
In 2017, CNBC released a list of the top states for conducting business in America, using more than 60 measures of competitiveness. Among 50 states, West Virginia was at the bottom of the list for the the first time in CNBC’s 11-year ranking system.
The factors considered while ranking were:
- Cost of doing business
- Economic growth
- Life quality
- Technology and innovation
- Access to capital
- Cost of living
Reports suggest that the following two factors contributed toward the states’ poor ranking: 1) decrease in coal mines and 2) decline in population, and having the least educated workforce.
In 2016, the state had about one percent of its jobs in the mining sector. In the span of five years, mining employment has gone down by 40%, with some parts of the state losing about 70% of mining jobs, drastically increasing unemployment in West Virginia.
West Virginia Opioid Crisis Results in Billion-Dollar Void in Its Economy
West Virginia’s opioid crisis has been the most significant inhibitor of its economy in the past few years. It has created nearly a $1.0-billion void in the economy, relating to the loss of lives and jobs, as well as a shortage of resources required to fight the epidemic.
The estimated $1.0-billion loss is accounted for as follows:
- More than $322.0 million in productivity lost because of fatalities
- More than $316.0 million in productivity lost because of the number of addicted people not working to their full potential,
- More than $320.0 million in resources tied up in the opioid crisis
The contributing factors can be divided into two categories:
- The cost of healthcare, substance abuse treatment, and criminal justice (such as police protection and legal and correctional facilities). The crisis in West Virginia has required a steep increase in the investment of time, skills, knowledge, and other resources that could be used to solve other issues.
- Productivity loss, due to the increase in unemployed opioid-addicted people and people who have died because of opioid overdoses.
To overcome the opioid abuse effects on the state, West Virginia University has undertaken some initiatives. It has followed a multi-disciplinary approach to study this addiction, which includes research on the medical, economic, cultural, psychological, and sociological effects of such abuse.
Poor education and health, combined with the opioid epidemic, are the most prominent challenges for West Virginia’s financial crisis. If people addicted to opioids get the help they need to overcome their addictions, then the state might be able to prosper and come much closer to the national average for income and other economic outcome measures.
“WV coal production decline expected to continue,” Charleston Gazette-Mail, June 28, 2017.
“West Virginia Is Dying and Trump Can’t Save It,” US News, May 25, 2017.
“Report reveals deepening poverty in West,” World Socialist Web Site, January 25, 2017.
“America’s Top States for Business 2017,” CNBC, July 11, 2017.
“CNBC ranks West Virginia as worst state for business,” MetroNews, July 12, 2017.
“Opioid crisis biggest inhibitor to West Virginia economy,” WVNS TV, November 30, 2017.
“WVU chief economist: Opioid crisis has cost West Virginia nearly $1 billion,” WVU Today, November 28, 2017.