The Two West Virginias

A different way of looking at the state's economy


West Virginia is a rural state. By the census definition, which considers all persons living in places of 2,500 or more to be urban residents, over 64 percent of West Virginia's people lived in rural areas in 1990. Among the 50 states, only Vermont had a higher proportion of rural residents, and only three other states had more than half of their populations living in rural areas.

Since unemployment rates and most other economic measures are generally not available below the county level, it is not practical to use the census definition of urban and rural residence to examine West Virginia's labor market. We can, however, split the state into urban and rural counties. While the definition we will use follows no official scheme, it does provide us with a different and useful way of looking at our economy.

We will consider all counties located in metropolitan statistical areas to be urban. These include Kanawha and Putnam, in the Charleston Metropolitan Statistical Area; Cabell and Wayne, in the Huntington-Ashland-Ironton MSA; Wood, in the Parkersburg-Marietta MSA; Ohio and Marshall, in the Wheeling-Bridgeport MSA; and Brooke and Hancock, in the Steubenville-Weirton MSA. In addition, Mineral County forms part of the Cumberland, Md. MSA and Berkeley and Jefferson fall within the Washington, D.C. metro area.

This leaves out several counties with cities of some size, which do not quite qualify for MSA designation. So we will expand our definition to include any other counties with cities of 10,000 population or more. This adds five other counties to our urban list: Monongalia, Marion, Harrison, Raleigh, and Mercer.

The 17 urban counties had a population of 1,117,479 or 61 percent of the state total, in 1995. The other 39 percent, or 710,661, reside in the remaining 38 rural counties.

The first chart plots unemployment rates over the past decade for West Virginia, the urban and rural counties, and the United States. The state unemployment rate fell to 7.9 percent in 1995, reaching its lowest point since 1979. Over time, the rate for the 17 urban counties has been consistently below the state average. In 1995, it was only 6.3 percent, or seven-tenths above the 5.6 average for the United States.
West Virginia Urban Counties Rural Counties
Resident-Based Data
Population 1,828,140 1,117,479 710,661
Civilian Labor Force 790,000 516,400 273,800
Total Employment 728,000 483,800 244,300
Total Unemployment 62,000 32,600 29,500
Unemployment Rate 7.9 6.3 10.8
Employment/Population Ratio 51.6 55.6 45.2
Total Personal Income (millions) 1994 $31,191 $20,972 $10,219
Per Capita Personal Income 1994 $17,113 $18,851 $14,393
Establishment- Based Data
Nonfarm Payroll Employment 687,600 492,630 194,970
Percent Change 1987-1995 14.8 16.3 11.2
Total Wages (millions) $15,368 $11,345 $4,022
Average Annual Wage $23,498 $24,150 $21,835
Average Weekly Wage $451.89 $464.43 $419.91
Average Weekly Wage, Manufacturing $627.26 $704.50 $462.29
Number of Business Establishments 45,113 30,330 14,783
(all data for 1995 unless otherwise noted)

Unemployment rates for rural counties, in contrast, are uniformly much higher, typically about double the national average. In 1995, unemployment in the 38 rural counties averaged 10.8 percent. Only ten rural counties had rates below 10.0, and four of those were in the Eastern Panhandle. None of the 17 urban counties experienced double-digit unemployment in 1995; Marion had the highest urban rate of 8.8 percent.

West Virginia's urban counties have also captured most of the state's new jobs in recent years. Of the 88,600 nonfarm payroll jobs added to West Virginia's economy between 1987 and 1995, over three-fourths nearly 69,000 jobs appeared in the urban counties, where the rate of job growth was 16.3 percent. Recent job growth in the rural counties has been slower, averaging 11.2 percent between 1987 and 1995.

An examination of job growth by industry, however, reveals some interesting differences. Transportation and utilities and finance, insurance, and real estate show healthy growth in the urban counties and little or none in the rural ones. Construction in the urban counties expanded at more than double the rural growth rate. However, services and trade, which account for most recent job growth, have actually grown at a slightly faster pace in the rural counties.

The decline in mining employment since 1987 has been more pronounced in the urban counties, especially in Northern West Virginia. The rural counties lost just over one in five mining jobs between 1987 and 1995, while the urban counties lost almost one in three. By 1995 almost 64 percent of West Virginia's mining jobs were located in rural counties.

The most surprising difference has been in manufacturing employment, which declined 11.3 percent in the urban counties between 1987 and 1995, but actually increased 14.1 percent in the rural counties. The reason for this can be found in two of the state's fastest-growing manufacturing industries, lumber and wood products and poultry processing, both of which generally concentrate in rural areas. The heavy manufacturing industries which have been losing employment, such as primary metals, glass, and chemicals, are usually located in or near cities. The different manufacturing industry mix in rural counties is reflected in a much lower average manufacturing wage about $462 weekly in the rural counties in 1995, compared to $705 in the urban counties.

The all-industries average wage shows no similar discrepancy. In 1995, wages in rural counties averaged $420 weekly, compared to $464 in the urban counties. Unfortunately, this statistic can sometimes be misleading, since it reflects wages paid by employers in a county, not necessarily wages earned by residents of that county. A county with a few high-paying employers, but little supporting trade and service infrastructure, may have a very high average wage but not enough jobs to go around. Boone County, for instance, has the highest average wage in the state but unemployment remains at double-digit levels. Coal mining dominates the economy, but residents go outside the county for shopping, health care, and other services, so there simply are not enough local jobs for the people who live in the county.

This lack of jobs in rural counties is reflected in the employment/population ratio. Only 45.2 percent of the persons 16 years of age and over in West Virginia's rural counties were employed in 1995. In the state's urban counties, 55.6 percent of the 16+ population had jobs. The national average was 62.6 percent.

Fewer jobs in rural areas mean less money to go around. Unlike the average wage, per capita income is a statistic relating to the persons who actually live in a given county or other geographic area. In 1994 per capita income in the urban counties was $18,851, well above the state average of $17,113. In the rural counties per capita income averaged only $14,393. Total personal income in the urban counties was nearly $21 billion in 1994, compared to just over $10 billion in the rural counties.

To sum up, a cursory review of basic economic statistics reveals that problems of high unemployment, low employment, and low per capita income are generally much more serious in West Virginia's rural areas. However, there are notable exceptions. Hardy County, site of a considerable poultry industry, had a 1995 unemployment rate of 4.4 percent third lowest in the state, and well below the national average. Per capita income was above the state average, while the employment/population ratio was a whopping 76.1 percent, higher than any state in the Union. Hardy's example suggests that, while there may be no single answer applicable to every county, solutions to the economic problems of West Virginia's rural areas are within the realm of possibility.