The economies of the United States and West Virginia are both showing improvement. The U.S. economy grew at an annualized rate of 4.2 percent in the second quarter, while in West Virginia revenue collections are running substantially ahead of estimates.
There’s no question the economic news is positive. However, the full story is more complicated. Generalizing about the economic well-being of individuals and families based on the national picture is a little like seeing sunshine out of your window and assuming there is good weather everywhere.
The Economic Innovation Group (EIG), a bi-partisan public policy organization, has released a comprehensive report that measures the economic vitality of individual communities. The Distressed Communities Index used seven metrics (education level, housing vacancy rate, percentage of adults not working, poverty rate, median income, job and business changes and growth) to make its calculations and narrow those findings to individual zip codes.
EIG found that one in six Americans lives in a distressed zip code. “Some are predominantly minority, while others are nearly exclusively white,” the report found. “These 5,225 zip codes are the places that have fallen through the cracks of the U.S. economy. Their residents struggle to access economic opportunities that offer the chance for a better life.”
Mississippi had the largest share of its population living in distressed areas—43 percent—followed by Alabama, West Virginia, Arkansas and Louisiana. In the Mountain State, one third of our people (34 percent) live in distressed communities. West Virginia does have regions that are thriving—the eastern panhandle and the I-79 corridor between Morgantown and Bridgeport—but many areas have never recovered from the economic downturn, said EIG Co-Founder and President John Lettieri.
“The real challenge is in that bottom 20 percent that are doing so badly that they are dragging down the state’s overall numbers,” Lettieri said on Talkline Thursday. “What we see is a brutal recession for West Virginia’s economically distressed zip codes and a true lack of recovery in those same areas. The recovery hasn’t reached them at all.”
Lettieri said this severe disparity is a relatively new trend. The economic boom of the 1990’s was spread more broadly, but the post Great Recession recovery has left behind tens of thousands of communities. The vital elements of economic vitality including new business creation and the willingness of people to move for better opportunity never returned.
“All those measures have collapsed,” Lettieri said, “and unlike the stock market or GDP or unemployment, there’s really been no improvement, particularly on the start-up side.”
Lettieri is a political agnostic on the reasons for uneven recovery. “This is not a Trump economy problem. It wasn’t an Obama economy problem. It’s really the trend of 21st Century growth.”
This is a deeply troubling dynamic. One of the strengths of the American economy has been that growth has widely shared benefits which, in turn, created and sustained a strong middle class. As President John F. Kennedy famously said, “A rising tide lifts all boats.”
Millions of Americans are benefiting from the long recovery and West Virginia is finally climbing out of the economic doldrums. However, it appears this rising tide is leaving behind too many boats with millions of people aboard.