Ohio Valley Continues Unprecedented Surge Of Unemployment Thursday, Apr 16 2020 

Unemployment insurance claims are still reaching unprecedented levels across the Ohio Valley region.

At least 287,576 people in Kentucky, Ohio and West Virginia joined those seeking help during the economic downturn caused by the coronavirus pandemic. That’s in addition to the roughly 755,000 claims form the three states in the previous two weeks.  

The data released Thursday morning by the U.S. Department of Labor showing more than 5.25 million unemployment claims around the country. 

Labor Department figures for the week ending  April 10 show Kentucky with 115,763 claims; Ohio with 157,218; and West Virginia with 14,595.

Officials from the three states are looking to the jobless figures to understand how deep of a recession the region could be in for. Backlogs across Kentucky, Ohio and West Virginia continue to be a problem with some people initially being rejected for their unemployment claim.   

Kentucky officials announced this week that the additional $600 a week federal unemployment benefit has been sent out to 156,931 people totaling over $139 million. According to Josh Benton, the Deputy Secretary of Kentucky’s Workforce Development Cabinet, the state has had 521,592 unemployment claims since March 16. 

Kentucky Center for Economic Policy Executive Director Jason Bailey said the unemployment assistance program is dealing with an unprecedented amount of claims and that raises an important question. 

“Are the levels of support and benefits we’re offering people adequate for the kind of economic calamity that we’re really facing at this point?” 

Bailey said unemployment claims could begin to decrease only to be followed by a second surge of claims as the economic fallout begins to affect different sectors of the economy. 

He said the reported claims are just one portion of people who are unemployed and need assistance. It doesn’t include people whose claims are still waiting to be decided, employers who are challenging those claims, or those who aren’t yet eligible for unemployment benefits.   

Ohio Lt. Gov. Jon Husted said there have been more unemployment claims made in the last month than there were in the last two years and the state is also still dealing with a backlog of those applications. 

“We’re in this battle with the system that we have and it worked well. When the unemployment rate was 4% it worked fine. Both in terms of technology and staffing. It was adequate for the task it was being called to do.” 

Husted said before the pandemic there were about 42 people working in the unemployment call center and now there are almost 1,200. 

The Lt. Gov. said the Ohio Department of Job and Family Services hopes to have 337 more people trained and working to address the backlog in unemployment assistance applications soon. Additionally, Husted announced that by the end of next week Ohio will begin processing the additional $600 a week in assistance from the federal CARES Act.   

West Virginia Governor Jim Justice said the state is processing nearly 40 times what they would normally see in unemployment applications and they are also still trying to address a backlog. In an attempt to get payments out to West Virginians sooner Justice announced people will be able to get a direct payment instead of having a debit card mailed to them. 

Ohio Valley Outlook: Expect A Slower Regional Economy In 2020 Monday, Jan 13 2020 

The Ohio Valley’s economy could see slower growth in 2020 amid continued anxiety about trade, and possible downturns in both energy and manufacturing, according to analyses and forecasts by regional economists.

Michael Hicks directs the Center for Business and Economic Research at Ball State University in Indiana where he forecasts the health of the manufacturing sector. Hicks expects manufacturing to slow down, and he blames the tariffs levied under President Donald Trump’s administration. Hicks said the costs imposed by the trade war are playing out in markets across the region and he predicts the Ohio Valley’s economic growth to slow dramatically in 2020.

“You will see layoffs certainly, lower hours, less generous bonuses both this year and next year, less demand for power which is going to be important particularly in Kentucky and West Virginia, as manufacturing firms both use less metallurgical coal and less coal for electrical power,” Hicks said.

‘One tweet away’

A report Hicks co-authored shows the impact of manufacturing employment on the overall health of the United States economy has diminished. Production is still a large share of the economy. But, he said, the economies of Kentucky, Ohio and West Virginia are heavily dependent on exports, which is why the trade war has and will continue to have a large impact.

The Trump administration has made some recent moves to improve trade relations. The United States Mexico Canada Agreement or, USMCA, would replace the North American Free Trade Agreement or, NAFTA. USMCA has passed the House and is still pending in the Senate. But Hicks said that trade deal doesn’t offer much assurance.

“The USMCA passage is essentially for your typical manufacturing firm it improves the confidence that we’re not going to have a trade war with our big partners in Canada and Mexico,” Hicks said. “But to just speak candidly, we’re always one tweet away from a new adversary in the trade war.”

He said if European firms are less interested in buying higher-priced American products it’s enough to cause a significant decline in the demand for goods produced in the U.S. Hicks said that could have a bigger effect in the region than in the country as a whole.

“Which is enough to push Kentucky and West Virginia, Ohio, Indiana, Illinois into a localized recession,” he said. “It’s not enough for a national recession, but it’s enough to give us the feel and taste of what a recession would be like.”

Of the three states, Ohio’s larger economy is also more diverse and follows national trends more closely. Zach Schiller is an economist with Policy Matters Ohio, an economic research institute.

“Ohio is not an island, you know, our economy is closely integrated into the national and international economies,” Schiller said.

Schiller said the largest employers in Ohio are either national or international companies and he expects any change in the state’s economy to be similar to what happens nationally.

Still Recovering

In Kentucky, manufacturing plays a significant role in the state’s economy. Jason Bailey director the left-leaning Kentucky Center for Economic Policy. He said manufacturing has grown in large part because of the auto industry, but carmakers are seeing a slowdown.

“We’ve lost a lot of manufacturing over the last couple decades across the state and industries like apparel or furniture manufacturing or computer parts manufacturing, that has often been to cheaper locations like China and in Latin America,” Bailey said.

Bailey said Kentucky still hasn’t fully recovered from the last recession and it’s facing a tough year ahead with state budget cuts likely.

West Virginia is in a similar position with even fewer signs of economic recovery. West Virginia University’s College of Business and Economics is predicting the economy will expand by about point two percent annually for the next five years. The Executive Director of the left-leaning West Virginia Center on Budget and Policy Ted Boettner said that’s the lowest growth rate WVU has predicted for the state in the past seven years.

“You know since our last economic recession that began in 2007, West Virginia has seen less than a 1 percent increase in job growth over that time,” Boettner said.

Larry Dowling/West Virginia Public Broadcasting

Pipeline stacked in Morgantown, WV.

Boettner said the state’s economy has always been on a “roller coaster ride” based on energy markets. The downturn in coal has hit hard, of course, but that was somewhat offset recently by a boost from natural gas and pipeline construction work. Now, however, one major pipeline project is complete and some others have been halted by legal challenges. Boettner said that focus on natural resource extraction can hamper other kinds of growth.

“A lot of other industries, especially ones based in the knowledge-based economy don’t really want to be around extractive industries,” Boettner said. “They don’t want to be around a lot of pollution, and things like that. So you really are choosing one over the other in some sense.”

Boettner said the state has never had big urban centers to build a diversified economy around, but he thinks investment in education could help with that.

“I mean, unfortunately, it’s gotten to the point where I think the only way that West Virginia is going to really thrive, potentially thrive, over the coming decades will be unless there’s massive federal investment in the state,” he said.

Deficits Despite Growth

The U.S. is in the longest period of economic recovery in modern history. Hicks said normally that would mean the country would be running a budget surplus and could start paying off debt or taking on big projects.

“We would have made some long term investments in infrastructure, highways, roads, particularly with transfers to local governments that are, you know, facing a lot of aging infrastructure,” Hicks said.

Instead, Hicks said, the federal budget has a deficit of more than a trillion dollars after tax cuts and what he calls unsustainable federal spending, including the trade bailouts for farmers. And he said those economic policies are not having the degree of stimulus they should, largely because of the negative effects of the trade war.

A report from Ball State notes the Trump administration’s 2018 Tax Cuts and Jobs Act was meant to spur private, non-residential investment. But whatever effect could have been expected was muted by a similarly large tax increase due to tariffs associated with the trade war.

“We are running a budget deficit of $1.1 trillion, which is considerably more than the American Recovery and Reinvestment Act of 2009,” Hicks said. “That was Obama’s large stimulus package passed in February 2009. That was only $856 billion”

As economists across the region watch for signs of the next recession, they also look to infrastructure investment as an area for potential growth. The Ohio Valley has massive funding needs for its roads, broadband internet access, and aging water systems.