Pandemic Creates Economic Opportunities For W.Va.
West Virginia’s economy is made up of mostly small businesses – slightly higher than the national average. For Avinandan Mukherjee, the Dean of the Lewis College of Business at Marshall University and a professor of marketing, that is a good thing when it comes to the economic recovery after the coronavirus pandemic.
Many companies are looking to localize their supply chain and find a more reliable sourcing of materials. From a national perspective, he said he felt the job market was a level playing field around the country with the trend toward remote work.
“That means talent is all that matters now,” he said. “With cost-cutting and everything else that's going on, somebody can provide more value, more benefits and lower costs remotely. A lot of sectors were already trying to become nimbler, to become more digitized, but the pace wasn't fast enough.”
The coronavirus pandemic has made it faster.
Mukherjee said he thought West Virginia can literally leapfrog economic development and invest in the future.
“What we need to present is one coordinated, growing investment in the state,” he said. “I think one of the key factors here is for West Virginia to think like an entrepreneur. It's going to be that entrepreneurial and innovative thinking that's going to make a difference.”
He explained that risk taking has got to increase in the population.
“What we are trying to do is to create an environment where people would like to stay and invest and bring new ideas and innovate and provide solutions for the whole country,” he said.
He said if he were looking to start a new business now, he would focus on digital businesses and solutions.
“I would say digitize almost everything, every part of the value chain of a company, starting from product design and conception all the way up to consumption,” he said. “We have to break down the value chain into smaller parts and see how we can digitize every part of it. The more we can do that, the better off we are in the world that we are entering now.”
Aside from the human costs of the coronavirus pandemic, there have been incredible economic costs. Recent Gross Domestic Product figures indicate signs of a recovery, but many economists predict that it will take a while to know exactly what that will look like.
He said he sees the economic situation in the current pandemic as a “tale of two cities.”
“Literally, we have had the most uneven effect. Compared to the recession that we had in 2007 to 2009, or the Great Depression, this economic crisis was sort of externally induced,” he said.
He went on to explain that there was no structural problem with business behaviors, there was no overspending or huge debt on the consumer side, leading to this economic meltdown.
“It was an external shock. The pandemic came literally from nowhere,” he said.
Mukherjee listed four disparities which he found striking.
1) The gap between Wall Street and Main Street. Overall, larger companies have done very well in terms of their stock prices, and therefore 401Ks. The S&P 500 came back to its record high on August 21 from its previous February 19 high, so the markets are pretty much back to where they would have been if there was no pandemic at all.
On the other hand, the pandemic is still spreading throughout the country, and unemployment is still high.
“We are definitely still worse than the other two crises that we have seen in the last few decades,” he said. “When you look at the overall number of people who are without jobs, the unemployment rate was at 7.9 percent in September. That is better than the 14.6 percent we had in April, but it is far worse than the 3.5 percent we had in February, which was at that time, the lowest in half a century.”
2) The second disparity is in industry sectors. Mukherjee explained that there are some business sectors that are recruiting at a faster pace than ever right now while others have completely dried up.
“The high touch sectors are suffering. And the high-tech sectors are growing,” he said. Hi-touch businesses are ones that require direct human interaction.
“Businesses have redesigned their business models quite a bit. They are looking at record numbers of online shopping and online shipping. And we are looking at remote working more than ever.”
Mukherjee said he felt that West Virginia can benefit from that remote working trend in terms of the high-tech businesses that can come to the state and have people working from here.
3) Differences in consumer segments. Mukherjee explained that women have been disproportionately affected by the pandemic and so have people of color. The unemployment rates for those groups are much higher than the national average, for example.
“It is hard to figure out the reasons,” he said. “The virus has disproportionately affected people of color and lower income people and so on. That could be one of the reasons some of the jobs that have been lost.”
4) Geography. The virus has affected states differently. He noted that states that rely heavily on tourism have struggled because large cities have been shut down.
“West Virginia has been weathering this reasonably well,” Mukherjee said. “I don't think we are much better than the national average. But we are certainly not worse than the national average, either.”
Mukherjee said he saw the pandemic as an opportunity to reorient our economy.
“We are all talking about “pause, reset, and innovate,” he said. “We can come out of it better than ever before, if we redesign and remodel.”
One of the best things that happened to West Virginia was the Virgin Hyperloop investment that is coming to the state, he said. He sees more companies thinking of investing here because of lower costs of investment and operations and people moving back to the state because of the lower cost of living and probably a better lifestyle.