Coronavirus Will Have a Profound Impact on West Virginia’s Economy

The daily lives of West Virginians have already been impacted by the coronavirus outbreak, with schools closing this week and the announcement this week from the governor that bars, restaurants, and casinos will also be closed. The federal government is recommending to avoid groups of more than 10 people, and to practice “social distancing.”

All of this means there is much less economic activity going on than normal, to the point where we may already be in a recession. According to an analysis from the Economic Policy Institute, the country is likely to lose 3 million jobs this summer, even with a moderate fiscal stimulus. That would be the equivalent of 14,000 jobs lost in West Virginia, in just a few months.

***UPDATE*** A new state by state analysis from the Economic Policy Institute shows that West Virginia could lose 24,255 jobs by the summer, or 4.3% of total private sector employment.

To put that job loss in perspective, West Virginia lost about 22,000 jobs during the 2009 recession, but those losses happened over a period of 15 months. The impact from the coronavirus would be nearly as large in a fraction of the time.

West Virginia’s economy was already showing signs of weakness before this crisis. The state lost 10,300 private sector jobs in 2019, with most of those losses coming in construction, manufacturing, and mining. While the state’s service sector wasn’t as weak as the overall economy, a coronavirus recession is much more likely to affect jobs in service industries.

The risk of a severe, prolonged recession is very real as workers and families take a financial hit from the economic impacts of the virus. They will in turn have less income themselves to spend on a wide range of goods and services. The double blow of declining consumption could generate more widespread layoffs and likely lead to a number of business failures.

The number of people who experience hardship and cut back their consumption could build very quickly as the virus spreads and the public health response ramps up. Such effects are already starting. 

For example, the governor’s decision to close casinos, bars and restaurants will affect the wages and hours of 63,000 workers in West Virginia, nearly 10% of the state’s workforce.

Which is why it is increasingly important for the federal government to act quickly to pass policies that help workers and families that are experiencing or soon will experience virus-induced job losses, and to shore up demand for goods and services to avoid escalating business cutbacks or closures that deepen a recession.

These policies should include:

• Rapid direct payments to individuals, made as quickly as possible, and that go to both employed and unemployed individuals, as well as people without earnings such as those receiving Social Security, Supplemental Security Income, veterans’, or other such benefits.
• Immediate access to paid sick leave to protect against jobs loss when workers can’t work due to their sickness (or the sickness of family members), as well as preventing further spread of the virus.
• Medicare coverage of all coronavirus related costs to ensure people get tested and treated without fear of costs leading to the virus spreading further.
• Increasing the federal Medicaid match for all states, freeing up resources for state governments to make all the public health investments they need during the outbreak. The Families First Coronavirus Response Act would increase the federal Medicaid match by 6.2 percent from January 1, 2020 throughout the end of the public health crisis. Increasing the federal match was one of the most effective parts of the 2009 Recovery Act.

To prepare for the coming wave of workers forced out of work due to the crisis, the state should take quick action to full amount of unemployment insurance aid available from the Families First Coronavirus Response Act. $1 billion is available in grant aid to state unemployment insurance agencies. West Virginia should take these specific steps to receive the full amount of aid available.

• Waiving the waiting week for unemployment benefits.
• Waiving the work search requirements for those directly impacted by an coronavirus related illness in the workplace or direction from a public health official.
• Ensure employers notify laid off workers about benefits that they are eligible for.
• Ensure multiple points of application (phone, internet, and in person).

Beyond the provisions of the Families First Coronavirus Response Act, there are additional steps West Virginia could take to strengthen its unemployment system during this time. These include:

• Providing unemployment benefits to workers who are forced to quit their jobs in order to avoid exposure to the virus, which 24 states already do.
• Enact a work sharing program to allow companies to cut worker hours and compensate for lost wages through a partial unemployment check.
• Implement an early warning system to identify firms at risk and let them know about work-sharing and other business assistance services available to them.

The costs of doing too little, too late to contain a recession are high. The human and economic costs of a long, severe recession would be serious. Prolonged unemployment harms not only the health and well-being of workers and their families, but also workers’ future job prospects and lifetime earnings.