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West Virginia struggles to match national economic growth trends

CHARLESTON, W.Va. — While the national economy has improved, the trend of growth has not affected communities equally.

According to a report released by the Economic Innovation Group, one in six Americans live in economically distressed communities. These areas tend to have higher poverty rates, lower median incomes and a higher percentage of adults without a high school diploma compared to the national average.

The numbers in West Virginia are among the worst in the country; 34 percent of West Virginians live in economically distressed ZIP codes. In comparison, 3.4 percent of residents live in prosperous communities.

Mississippi has the highest percentage of residents in economically distressed communities in the country at 43 percent, followed by Alabama at 35.8 percent and West Virginia.

“What see is a brutal recession for West Virginia’s economically distressed ZIP codes and a true lack of recovery in those same areas. Recovery hasn’t reached them at all,” said John Lettieri, the group’s co-founder and president.

“These trends are relatively new. The level of divergence in today’s economy is not what we have historically seen. Take us back to the 1990s. During that growth period where you had great, national headline growth, you also had very broad, regional growth.”

The ZIP codes in the most economically distressed conditions were in southern West Virginia, a region of the state heavily impacted by cycles in the coal industry.

McDowell County scored in the 100th percentile, the highest score possible. Wyoming and Mingo counties scored in the 98th percentile.

Lettieri said the divide between communities is in part due to the lack of new businesses.

“Millenials are the least entrepreneurial generation on record. We have a real creation problem in the economy, and that’s affecting places like West Virginia that are struggling right now to generate new business formation,” he said.

“Without that new business formation, you lose that positive chain reaction that happens in the economy. When a new business starts, it’s hiring employees, it’s creating competition in the marketplace, it’s delivering new services new goods, it’s forcing the incumbent companies to do a bit better.”

He added economic growth hinges on an engaged and active labor force, as well as governments that encourage new development.

“Is your local economy one where new businesses can start in scale, or are you relying on folks from the outside to just come in?” he said. “A lot of economic development is a little bit lazy. It’s trying to poach a company to come across state lines and set up shop. State and local leaders should be much more focused on the ground-up economic development.”

In terms of congressional districts, West Virginia’s 3rd District ranked at the bottom of the list at 431st out of 435 districts with a distress score of 98.1 points. The 1st Congressional District ranks 379th with 86.9 points, and the 2nd Congressional District is at 358th with 82.1 points.

The Economic Innovation Group is also a a support of economic opportunity zones, a program passed in the Tax Cuts and Jobs Act to encourage long-term private investment in low-income areas of the country. More than 8,700 exist across the United States.

U.S. Sens. Shelley Moore Capito, W-Va., and Tim Scott, R-S.C., toured Huntington in August to learn more about the city’s three economic opportunity zones.





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