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:
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.
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:
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.
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