The director of West Virginia University’s Bureau of Business and Economic Research says the New River Gorge economy has suffered a series of body blows over the past 12 years, but reason for hope remains once COVID-19 abates.
That’s the forecast of John Deskins, the longtime director of the WVU bureau and an associate professor of economics at the school.
Deskins spoke recently to the New River Gorge Development Authority, giving members an idea of what to expect in wake of the gorge’s designation as a national park about a year ago. Much of the following is taken verbatim from the report. Not all sections are represented, due to its 11-page length.
Visitors flocked to the park last summer, no doubt providing business for restaurants, hotels and the like. Deskins’ report is broader in scope and looks at conditions beyond tourists’ economic activity. He examines a four-county area — Summers, Raleigh, Fayette and Nicholas.
Key findings on the negative side:
The New River Gorge area lost nearly 7,000 jobs between 2012 and 2016, but did enjoy a period of moderate growth between 2017 and 2019.
Regional employment fell by nearly 13% during the COVID-19 recession, or roughly 6,500 jobs; however, area employment levels have nearly returned to pre-pandemic levels.
Long-term job losses for the region have been heavily concentrated in goods-producing industries, particularly the coal industry. Coal output and tonnage have fallen off by more than half since 2008, with much of the industry’s demand shifting to export markets.
Trade, transportation and utilities have also endured large employment declines.
Unemployment surged to 17.6% during April 2020, but has fallen sharply since then and now sits in the mid-4.0% range as of September 2021.
The region has suffered major labor force attrition since 2012 and has workforce participation rates that are well below average across key age groups.
The New River Gorge Bridge is shown in October 2019.
Regional population losses deepened in recent years as the number of deaths outnumbered births by a widening margin and economic turmoil fueled an increase in outmigration.
On the positive side, but with a caveat — Deskins doesn’t expect the region to recover sufficiently from the recession by late 2022, due to the lingering effects of COVID. Again, much is taken verbatim:
Employment is expected to increase at an average annual rate of 0.6% in the region over the next five years. Job growth in the region is expected to be at its strongest between 2021 and 2023.
Sectors hurt most by the pandemic, namely leisure and hospitality and other services, will see the fastest rate of growth over the next few years as regional and national leisure travel return to normal patterns.
Manufacturing, professional and business services, the public sector and health care are other sectors that will contribute the most to regional job growth over the next five years.
The coal industry should experience improving conditions over the next two years, while state and federal infrastructure investment provides significant upside potential for construction activity going forward.
Per-capita personal income is expected to rise at an annual rate of 1.6% over the next five years.
Population losses are expected to continue in the area during the outlook period, but declines will be smaller compared to the past several years.
Unemployment is expected to decline slightly over the near term, but should see some upward pressure as workforce participation rates begin to rise in the post-pandemic period.
As for the rebound in employment from the dismal 2012-16 period, most was connected to the energy sector, namely an export-driven rebound in coal production and construction activity on natural gas pipelines. Unfortunately, the four-county area’s recovery lost momentum in mid-2019 as export demand for coal slumped and pipeline construction activity was halted amid legal and regulatory battles.
The region’s economy did experience a strong rebound during the initial phase of summer 2020 reopening, then came crashing down over the next few quarters as COVID cases spiked due to the delta variant.
Raleigh County, the report points out, serves as the center of the region’s economy. Fayette and Nicholas counties account for most of the area’s remaining economic activity, while Summers is the region’s smallest and most rural.
Travel and tourism
The report points out the plethora of outdoor-related activity has played a huge role in the area’s economy, prompting the National Scout Reserve to host the National Scout Jamboree there in 2013 and 2017. The delta variant squashed this past summer’s event, as well as Bridge Day for a second straight year.
Thousands of boy scouts walked the paths at the Summit Bechtel Family National Scout Reserve on the last full day of activities at the 2017 National Jamboree.
Even though the pandemic has significantly encumbered the area’s tourism and hospitality sector over the past 18 months or so, growth in tourism activity from a long-term perspective has enabled the four-county area to find some manner of stability in the face of a protracted decline in a traditional industry such as coal mining. It has also enabled some businesses to diversify their portfolios as the area contends with the long-term difficulties seen in the transition from coal extraction, thereby providing these companies the ability to smooth out activity across future business cycles.
Coal mining
As of 2020, natural resources and mining accounted for more than 4% of the region’s jobs; however, given the coal industry’s high levels of capital intensity and wages paid to coal miners, the overall sector’s share of output is more than three-times larger than its share of employment.
On the downside, production costs in the Central Appalachian Coal Basin rank as one of the highest among all major coal basins globally, due to decades of heavy mining activity that have left reserves buried at greater depths or available in seams that are thinner of more sparsely located.
Construction
The New River Gorge has struggled with a long-term slump in construction sector activity. Outside of a brief period of robust activity linked to natural gas pipeline construction between 2017 and early-2019, the four-county area has seen significant declines in construction across residential, nonresidential and nonbuilding categories, driven in large part by unfavorable demographic trends and the shrinking footprint of coal production.
The report goes on to note that the state’s Roads to Prosperity program and $1.2 trillion in the new federal infrastructure bill may help alleviate that situation.
Unemployment
Rates vary within the region, ranging from a low of 4.2% in Raleigh and Summers counties to a high of 5.2% in Fayette County, as of the third quarter of 2021.
Labor force
Overall, the region’s workforce has declined by more than 12% between 2012 and 2016, a total of 8,200 people. Roughly 2,000 were added in a brief 2017-2019 renaissance.
Even with the apparent improvement in labor force participation over the past few years, the New River Gorge area still suffers from a below-average rate of workforce engagement, even in comparison to the West Virginia average — which ranks last among all states.
Per-capita personal income for the New River Gorge area was estimated at approximately $42,500 for calendar year 2020. This marked a 7.1% increase versus 2019 and leaves overall per capita income for the region 41% above 2010 levels. However, income growth has been volatile of the past decade, even when compared to the state as a whole, with outright declines in nominal income levels during 2013 and 2016.
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