The Times West Virginian

West Virginia

October 22, 2012

Employment picture could influence race

W.Va. unemployment rate becomes issue in gubernatorial contest

CHARLESTON — West Virginia’s unemployment rate continues to creep higher, increasing its profile as an issue in the combative race for governor.

When adjusted for seasonal hiring trends, the unemployment rate rose from 7.5 percent to 7.6 percent in September. That’s the fifth monthly increase since April, when the rate had dropped to its lowest level in more than three years at 6.7 percent.

Republican Bill Maloney has seized on last month’s uptick as further evidence that voters should replace Gov. Earl Ray Tomblin in November.

“Earl Ray Tomblin proves he’s been an utter failure on jobs,” Maloney, a Morgantown drilling consultant and business owner, said in a statement.

Tomblin argues that West Virginia’s business climate is steadily improving and headed toward long-term gains. The Democratic incumbent cites ongoing business tax cuts and an estimated $6 billion worth of investments by employers over the past two years.

“Internationally respected companies such as Macy’s and Gestamp already are hiring, but Gov. Tomblin knows there is more work to be done,” said campaign spokesman Chris Stadelman, referring to two employers attracted to the state with incentives such as tax breaks.

Economist Eric Bowen sees both good and bad in West Virginia’s employment picture. Bowen and his colleagues at West Virginia University’s Bureau of Business and Economic Research have been scrutinizing the state’s jobs figures for the bureau’s much-anticipated annual economic forecast.

The researchers will detail their findings Nov. 15 at the Charleston Civic Center, on Nov. 27 at the Martinsburg Holiday Inn and in February at the Capitol when the Legislature begins its regular session.

Bowen said employment was improving at the beginning of the year. West Virginia’s labor force, chronically anemic when compared to other states, was growing as its economy added jobs.

By April, the state had 11,600 more jobs than it had the year before, and 8,300 fewer people were seeking unemployment benefits as they looked for work, according to figures from WorkForce West Virginia.

“Things were looking pretty good up until the first quarter of this year,” Bowen said. “Most of the sectors had been improving. ... Then things started to take a turn.”

Bowen said losses in the mining sector, which includes other natural resources but is dominated by coal, have played a major role in the downturn. He estimated that sector has shed 6,300 jobs since January.

While mining represents between 4 percent and 5 percent of total employment, those jobs tend to be high-paying, Bowen said. For that reason and others, the mining sector accounts for as much as 15 percent of the state’s economic performance, he said.

“In terms of overall economic output, it’s more substantial,” Bowen said. “When you have declines in that sector, it tends to have a ripple effect across the economy.”

Among other factors, coal production has slowed as power plants switch to cheaper natural gas as their fuel source. Bowen noted that in April, natural gas generated as much electricity as coal did.

“That’s just unheard of,” he said.

West Virginia also produces natural gas, including in the rich Marcellus shale reserve deep underground that’s attracted much interest from the drilling industry. But among other differences, those jobs don’t pay as well as coal jobs.

“The gas sector certainly has been growing, and will probably continue to grow, but it won’t be offsetting the losses in the coal sector,” Bowen said.

Other areas of the economy will, however, said Bowen, citing the upcoming forecast. He said construction, health care, professional and business services jobs are among those expected to rebound.

“Things are continuing to look pretty good for the next several years,” Bowen said. “The job losses that we’ve seen in the energy sector are concerning, but overall that will be outweighed by gains in other sectors. ... There are a lot of other areas of the economy that are doing pretty well right now.”

West Virginia weathered the Great Recession and the fragile recovery better than a number of other states. Its monthly unemployment rate has never equaled or exceeded the U.S. rate since the recession hit in November 2008 — though September’s rate is as close as it has come, just two-tenths of a percent lower.

The national unemployment rate dropped last month, from 8.1 percent to 7.8 percent. West Virginia’s 7.6 percent rate was higher than that of 23 other states. Among its neighbors, West Virginia’s rate was lower than Kentucky’s or Pennsylvania’s but higher than that of Maryland, Ohio or Virginia.

West Virginia’s September rate is also lower than it was a year ago or when Tomblin narrowly defeated Maloney in the October 2011 special election for an unexpired term as governor. Their rematch is for a full, four-year term. The state had 4,700 fewer people filing unemployment claims last month compared with September 2011 and more people employed — though only 400, according to the seasonally adjusted figures.

But West Virginia has yet to return to pre-recession levels. Unemployment stood at just 4.5 percent in October 2008, the month before economists believe the meltdown hit the state. Around 36,100 people received unemployment benefits then, compared with 60,800 last month. While the labor force had just 4,000 more people then than it did in September, it also had 28,700 more jobs.

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