Place of the Week: Boone County, WV
Econ Weekly (Nov. 8, 2021)
Issue 43: November 6, 2021
Inside this Issue:
Joy on Jobs: October’s Labor Report was a Good One
Trim to the Stim: A Beginning of the End for Fed Bond Buying
A Bill to Build: Washington Gets to Yes on Infrastructure
Hydrocarbon Conundrum: Coal Momentarily Reviving but Ultimately Dying
Health Care Despair: Why 18% of the U.S. Economy is So Dysfunctional
Can You Steer Me Now? Cars With Software Becoming More Like Phones
Power Play: Renewables Rising as the Energy Transition Unfolds
Remembering Tough Times: A Look Back at the Recession of 1990
And this week’s Featured Place: Boone County, West Virginia, Clinging to Coal
Quote of the Week
“There has to be CO2 removed from the atmosphere. There’s nobody in the world that disputes that.”
-Occidental Petroleum CEO Vicki Hollub
Market QuickLook
The Latest
More news from the labor market. Good news. The economy created 531,000 new jobs in October, or likely even more than that based on a recent pattern of upward revisions for earlier months. Indeed, remember that disappointing jobs report for September, which showed just 194,000 new jobs? Well, the statisticians at the Labor Department now say the gain was really 312,000, still not great but not terrible either. August job gain estimates, too, were revised upward, from 366,000 to 483,000. Job market trends now appear rather strong, despite the setbacks from Covid’s Delta variant earlier this fall.
There are still plenty of reasons not to celebrate. For one, the labor force participation rate won’t seem to budge, standing still at a lowly 62%. (It’s only 56% for females). In the meantime, 7.4m Americans remain officially unemployed, meaning people jobless but actively looking for work. Another 6m say they want a job but aren’t actively looking for one (perhaps because they’re ill with Covid or caring for someone who is). Another 4.4m are working part-time but would rather be working full-time. By all accounts, surging asset prices (homes, stocks, cryptocurrencies, etc.) led some Americans to disengage from work, retiring early or simply taking time off. And this depresses participation rates.
Clearly, the Delta scourge took a major toll on the economy, as did broken supply chains, causing—most importantly—a shortage of semiconductors crippling auto production. But as the October jobs figures show, hiring momentum is climbing as the Covid crisis wanes, and as auto production begins to normalize. Roughly 11% of October’s job gains were from the manufacturing sector, and about half of that from just the critical auto sector (which provides lots of well-paid jobs, many in economically struggling areas). Helpfully, 31% of last month’s job gains were from the leisure and hospitality sector, and 22% from just restaurants and bars (a subset of leisure and hospitality). Professional services (think lawyers and consultants) accounted for another 19% of October’s new jobs. Overall, the unemployment rate dropped to 4.6%, not too far from its pre-pandemic rate of 3.5% and way down from its 2020 high of nearly 15%.
As for purchasing power, average weekly earnings for non-supervisory workers in the private sector rose 5.4%, comfortably above the 4.4% rise in the PCE index measuring price inflation. For leisure and hospitality workers, weekly earnings rose 14%. The increase was about 6% for those toiling in education and health, a very large swath of the American workforce.
The new jobs report was published several days after the Fed’s policy committee (the FOMC) met for the seventh time this year. As expected, chairman Powell announced the start of an end to monthly bond-buying, a practice that ostensibly helped keep credit flowing freely throughout the economy since the start of the Covid crisis. Purchases will decrease by… (TO CONTINUE READING, VISIT www.econweekly.biz)
Places:
Boone County, West Virginia: Last week, Econ Weekly profiled Provo, Utah, whose economy is prospering thanks to an educated workforce, a fast-growing population, an ecosystem of finance and tech talent, an influx of retirees and remote workers, proximity to a booming city (Salt Lake), a vibrant tourist sector, good broadband infrastructure and a large anchor employer, in its case Brigham Young University. Boone County, West Virginia, sadly, has none of these. There, an economy that once thrived thanks to a single commodity—coal—now struggles to survive as coal’s usefulness wanes. Located in the state’s southwest amid the Appalachian plateau, Boone has 13% fewer residents now than it did in 2010. That’s on par with the decline in Puerto Rico, an economy with its own set of enormous challenges (see Econ Weekly’s March 29th issue). In Boone, more than a fifth of all residents are over 65. Less than 1% are foreign born (A full 98% of the population is white). And fewer than one in ten people have a college degree (compared to one in three nationally). The disturbing data doesn’t end there. A fifth of all Boone County residents are classified as having a disability. As the national economy frets about a worryingly low 63% worker participation rate, the rate in Boone County is just 40%. In the nearby Huntington metro area, federal HUD statistics show that roughly one in three residents say they’ve been diagnosed with depression—that’s the highest rate nationwide. Even closer than Huntington is the state capital Charleston, where at least some well-paid government and health care jobs are available. But even here, sharp population declines, opioid addiction, disappearing chemical production and widespread poverty cast a dark shadow. Speaking of the opioid tragedy, the area’s Regional Intergovernmental Council, citing a study by the American Enterprise Institute, says the opioid epidemic is costing Boone County’s economy an estimated $206.5 million a year, the highest per-capita burden of any county in the U.S. A coal mining job, if you can get one, pays well, even today. But in Boone County, just two mining companies—Blackhawk and Alpha—are left following the closure of multiple mines since coal’s heyday in the 1950s. Blackhawk and Alpha are still, sure enough, the county’s top two private sector employers. Statewide, coal production dropped 31% from 2011 to 2019, according to Southerly. And just last year, as the pandemic ravaged demand for power and steel, coal sector employment in West Virginia declined 18%, to roughly 11,000 (once upon a time the figure topped 100,000). Boone County, with just 13 active coal mines left, finds itself in a cycle of spiraling decline: Fewer jobs and coal revenue mean less income and fewer people. Fewer people means a shrinking tax base. A shrinking tax base means less money for public services, like schools, police protection and hospitals. Setting aside the starkly different racial demographics, the impact of lost coal jobs on Boone County looks much like… (TO CONTINUE READING, VISIT www.econweekly.biz)
Looking ahead
The Energy Transition: PJM Interconnection, which oversees the largest wholesale electricity market in the U.S., is “on the verge of going solar in a big way.” To talk about it, Mike Borgatti of Gabel Associates joined the “Energy Policy Now” podcast, produced by the Kleinman Center for Energy Policy at the University of Pennsylvania. He starts by explaining what PJM is: A regional transmission organization (RMO), which is run as an independent administrative third party, regulated by the Federal Energy Regulatory Commission (FERC). It manages the transmission of electricity across a large portion of the northeastern quadrant of the U.S., covering 13 states and roughly 60m people. As mentioned, it also runs a wholesale power market where buyers (businesses and households) come together with sellers (mostly electric utilities). RMOs are by law obligated to accommodate any independent power producer that wants to sell on the grid. And right now, many players are lined up with plans to offer solar and wind power. In fact, the backlog includes… (TO CONTINUE READING, VISIT www.econweekly.biz)
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