*(Editor’s note: This commentary has been updated with new unemployment figures today.)
We will soon see the largest one-month jump in unemployment in West Virginia in the state’s history because of the pandemic.
The state’s jobless rate has been on a steady decline for months and has settled in at around five percent. Every month about five-thousand people file for unemployment in West Virginia.
But the COVID-19 virus has triggered a cascading economic downturn in just a matter of weeks.
Workforce West Virginia has taken over 90,000* applications for unemployment in March alone. That’s 18 times the average number of monthly filings.
According to the U.S. Bureau of Labor Statistics, West Virginia’s jobless rate in February was 4.9 percent with about 40,000 people unemployed out of a workforce of 850,000. If the jobless ranks grew by 90,000 last month, that will translate into a jobless rate of around 15 percent.
That would be the highest rate in nearly four decades.
West Virginia was hit hard by the back-to-back U.S. recessions between 1980 and 1982. The state’s jobless rate soared during that period from 10 percent to 18.8 percent in February 1983.**
But even then, the near doubling of the unemployment rate in West Virginia took over two years. Now the jobless rate is expected to more than double in just four weeks!
Dr. John Deskins, Director of WVU’s Bureau of Business and Economic Research, predicts March will mark the beginning of a significant economic downturn.
“We are entering into what may very well be the deepest recession that we have suffered in West Virginia in decades,” Deskins said. “And right now, it is impossible to say how long the recession will last because it depends on the spread of the virus and how long the stay-at-home policy will last, and we just don’t have a good answer to that.”
The good news continues to be that West Virginia’s infection rate is running consistently at around four percent. That means the virus is not surging here. However, we know that the restrictions, advisories and shutdowns of March are probably going to last through April.
Additionally, the $2 trillion Coronavirus Relief Bill will pump an historic amount of money into the economy to help keep local businesses from shuttering and sustain those who have been laid off with an extra $600 per week on top of their state unemployment benefit.
“I am optimistic that measures that are being taken by the federal government and the Federal Reserve will help soften the blow of this human and economic crisis,” Deskins said.
Yes, those federal measures will help significantly, but they are also temporary. It seems unlikely that the economic bounce back will be as rapid as the fall. Even businesses that avoid a knockout will take a standing eight count before they get back on their feet and rehire those employees.
**(The highest jobless rate on record in West Virginia was 25 percent during the Great Depression.)