Why West Virginia is so Poor

The wealthiest county in America is not in Silicon Valley, it’s not in New York, but rather it’s here—Loudoun County, Virginia. This DC suburb boasts the highest median household income in the US. What it lacks in billionaires it makes up for with a massive upper middle-class working six-figure desk jobs at government contractors—Northrop Grumman, Raytheon Technologies, Neustar, and more—leading to a landscape peppered with one, two, and three million dollar homes; Ferrari, McLaren, and Rolls Royce dealerships; resorts, horse farms, and polo fields. But perhaps the most bizarre part of Loudon County is its western border. On one side is a place where the average household brings in $157,000 a year. On the other is a state where that same average is less than $51,000. In comparison to its Mid-Atlantic surroundings, West Virginia sticks out remarkably. Its GDP per capita is just $53,000—second-lowest in the country. Poverty is at 17.1%—fourth highest in the US, and far higher than the region around. Life expectancy is just 74.7—second lowest in the US, and roughly equivalent to that of the nation of Slovakia. But beyond the statistics, at its core, West Virginia is, and long has been, a region in decline. Its population peaked the better part of a century ago, in 1950, and has been on a slow, steady slide down ever since. Nowadays it's one of just three shrinking states and it’s by far on the fastest pace partially since year after year, unlike in every other American state, more people die than are born. Self-reported mental health is at an all-time low—in one study, the thirteen American counties with the worst scores were all in West Virginia. Perhaps as both a cause and effect of that, drug use is absolutely rampant—across one six-year span, pharmaceutical companies sold the equivalent of 400 opioid pills for every person in West Virginia, and that was only the supposedly legal trade. The state, as a whole, is in a bleak situation, but even within that average, there are shades of bleakness. Essentially every issue reaches its most acute form here—McDowell county. This southernmost slice of the state regularly ranks as its poorest, and one of the absolute poorest in the nation—per capita income is just $14,000 which means the economic situation of its residents is roughly analogous to that of those of the nation of Panama. Life expectancy is just 70.4 years—the same as that of Iraq. Having declined from a peak population of 100,000 to just 18,000 today, the landscape is that of neglect. Towns are mere shells of what was. And few have fallen further than its county seat, Welch.  The Elkhorn Creek and Tug Fork cut right through its downtown while the mountains rise straight up above it. Straddling such rough country, Welch has been forced to compromise, adopting not a traditional grid, but a street pattern that follows the contours of the rivers below and the mountains above. And just as McDowell Street, Virginia Avenue, and US route 52 follow the path cut by cascading West Virginian waterways, so too does the railway, the single piece of infrastructure that explains why this town, split by rivers, hemmed in by mountains in all directions, even exists in the first place.  Before Welch, or McDowell county, or southern West Virginia was known for what it lacks, where it falls behind, or why it’s so different from the rest of the country, these rails made this region the middle of American might. Since before the Civil War, West Virginia’s wealth in coal was well understood—it was simply an issue of getting to the resource, then getting it out. First, it was the east-west running Baltimore and Ohio line that connected northern coalfields to midwest and eastern markets, then the Chesapeake and Ohio, and finally, near century’s close, it was the Norfolk and Western that collectively opened the state for business. Now with means to move it, the coal-rich West Virginia boomed from north to south. From a state of 440,000 people in 1870, West Virginia nearly crested a million by 1900. In the same span that the population more than doubled, coal production from the state went from 600,000 tons to more than 22 million a year, almost a 40-fold increase. Along railways, mines, and the accompanying camps; tiny hamlets; and company towns popped up practically every other mile. And the boom had only just begun.  Late to the party, McDowell county now led the charge. Connected to the rest of the nation by rail and home to the famed Pocahontas coalfield, the state’s southernmost county became one of industrial America’s most important. US Coke and Coal, a subsidiary of the titanic US Steel set up the company town of Gary to produce coke on sight and ship to steel mills in the midwest, then it set up Gary 2, Gary 3, Gary 4, all the way through Gary 11, neighboring and competing with an array of other privately funded pop-up towns. The interest in McDowell’s bountiful endowment went beyond the private sector, too. The US Navy also turned its attention to the region, as some Pocahontas coal burned so clean that it became their first choice. They called it smokeless coal—a relative term by today’s standards—but the Navy absolutely fired US war ships with it all the way through mid-century. In just a matter of decades, McDowell, its county seat of Welch, and its quality Pocahontas coal seams were the muscle behind American industry and, by filling the hulls of Theodore Roosevelt’s Great White Fleet, had become the literal fuel of America’s growing international prestige. As the 1900s progressed, some things changed. With the onset of the labor movement, working conditions became less horrific, wages rose and came to be paid with real currency rather than company currencies, while American naval ships, then all ships, moved from coal to oil. What remained consistent, though, was West Virginia’s sole economic loyalty to coal mining. From 1910 to 1950 McDowell’s population went from about 20,000, to nearly 100,000, while statewide coal production now definitively outpaced all other contenders, unearthing some 144 million tons of coal on the year, nearly 40 million more than the next highest producer, Pennsylvania. And leading the highest producing state was McDowell, now the nation’s highest producing county. But then more change. Demand for coal in post-war America from traditional users diminished. As American industry slowed, steel slowed, so demand for coke slowed. Undeterred, West Virginian mines, rather than slowing production, pivoted to overseas export and power generation. As American environmental regulations and awareness pressured domestic coal fired power plants out of business, more coal went to energy hungry markets like India—as the world shifted, West Virginia found ways to keep shipping product. Not until 1997 did West Virginia finally reach peak production. By this point however, the connection between population, job creation, and production had been long severed.  Since the 1950s, McDowell’s population has been on the decline, in short, because of machines. Of the 25 and a half million tons of coal produced in McDowell county in 1940, more than 23 million tons were mined and loaded by hand. Just ten years later, in 1950, of the county’s nearly 21 million tons of produced coal, under just 9 million were procured by hand, as cutting machines and conveyors had quickly taken hold. The result of such mechanization entirely decoupled McDowell’s production from its population, as the county entered steady decline through to the end of the century. As margins tightened every time the industry had to pivot, it became more and more critical to cut costs. For those who stayed employed, the operational and managerial roles were solid middle class jobs, but jobs that were becoming rarer and rarer, and jobs that, as they dried up, simply weren’t being replaced within the borders of McDowell county, or, for that matter, anywhere within West Virginia. Coal, therefore, cleanly explains West Virginia’s fall, but it doesn’t explain why it hasn’t been able to pick itself back up. There are plenty of rural area in the US—the majority of the country is rural—and while there is a significant degree of economic disparity in comparison to the country’s urban areas, the rest of rural America is not nearly in such a dire state. So why is West Virginia different?  The West Virginia Department of Economic Development strived to answer this question in their 2022 development plan. They offered a handful of explanations for the state’s poverty, but almost every cited factor was simultaneously a cause and effect—crumbling infrastructure, lack of broadband access, low education levels, poor health, abandoned urban areas. Poverty is a vicious cycle—the state of poverty perpetuates poverty—but all cycles have to have had a start. The one cited factor that is not both a cause and effect—just merely a cause—was geography. West Virginia is the least flat state in America—just 12% of its land is considered even relatively flat—and this one simple fact creates a web of consequences.  The largest employment sector in rural America writ-large, based on the Census’ sectoral definitions, is the combination of Educational Services, Health Care, and Social Assistance. This includes teachers, nurses, caregivers, and other people-servicing jobs that exist essentially everywhere. The second largest rural economic sector is manufacturing—representing 12% of jobs outside of urban areas. As a proportion of overall US employment, it’s still 9%, yet in West Virginia—an almost entirely rural state—it’s just 7%. Now, the seven factories that the West Virginia Department of Economic Development touts as “top manufacturing related businesses'' paint a picture as to why the sector struggles. Rubberlite is in downtown Huntington—a city that developed across the naturally-flat banks of the Ohio River. Kingsford Charcoal is in a more rural area, but along the also naturally-flat banks of the North Branch of the Potomac River. Mylan, Covestro, and Fiesta Tableware too are located in near-identical riverside spots. The only of these seven not in a similar situation are American Woodmark and Procter & Gamble, but they’re both in the atypically flat eastern portion of the state. Rather universally, manufacturers are not building factories on hillsides, and most of the elusive flat spots are already developed.  The appeal of locating manufacturing in rural areas is the ability to achieve lower costs through cheap labor and cheap land, but West Virginia lacks the second part of that equation. Rather than spending to develop a site where it’s tough or paying the premium for already-prepared spots, manufacturers can just go quite literally anywhere else.  Now, the weakness of the second-largest rural economic sector is a problem in and of itself, but its effects are disproportionate. That’s because average wages from the first, third, and fourth largest rural economic sectors are dramatically lower than those of manufacturing. This sector, at least on average, is a key source of higher-pay, middle-class jobs in rural America. West Virginia, meanwhile, has to deal more with the lower-income sectors. Of course, another major rural economic sector is agriculture, and agriculture has long been a key part of West Virginia’s economy, but the landscape that’s been there for millennia is presenting new challenges for this sector. The state’s geography is convoluted, but remarkably predictable. Whereas out west one tends to see massive mountains with proportionately larger valleys in between—enough space for larger towns and productive agriculture—in West Virginia the scale is shrunk down on both fronts. This means that, consistently, towns pop up on flat sections of riverbank, then most valleys are centered by a single road flanked by houses—areas known as hollows. Sitting in between are the hills which, by and large, are either destroyed by now-dead coal mines, or are untouched wilderness. This has consequences. First, there’s little crop farming in West Virginia—the type that relies most on large swaths of flat land. The little that exists is primarily in the flatter eastern and northern sections. The state focuses more on cattle and poultry as this agricultural sector requires far less land and produces far more value per unit of land.  But the farms that do exist are also small. Whereas across the US approximately 11% of agricultural sales come from farms selling less than $250,000 a year, 29% of West Virginia’s do. With hills sitting in the way, farms can only get so big. In the past this was hardly a barrier as most farms nationwide reached no larger than what one family could manage, but that’s no longer the case. Much of the nations’ cattle, for example, now comes from large, factory-style farms like this—the Kismet, Kansas branch of Cobalt Cattle.  If one were to try to place this feed lot in West Virginia, it simply wouldn’t fit. But the reason why agribusiness is now the norm is because of the economies of scale it unlocks—Cobalt Cattle is simply able to produce at a lower cost which puts downward price pressure on the industry as a whole. That means the small family farms in West Virginia are having to sell their cattle for less while still maintaining high operating prices, shrinking already-narrow profit margins and putting this key economic sector on the path of decline. It’s therefore no wonder why the state’s cattle inventory is at almost half of its all-time high.  Of course, there are other places with land that is incompatible with agriculture or industry. The vast majority of Nevada, for example, is simply too dry to make farming worthwhile. Alaska, as another example, is simply too far for manufacturing to make sense. Even neighboring Kentucky has near-identical geography inhibiting development in a near-identical way, but crucially, it also has this—its urbanized west.  These days, cities are the centers of wealth creation. But West Virginia barely has any—its largest is Charleston, with a population of 47,000. Only Vermont has a smaller largest city, even though West Virginia is far from the least populous state. Now, one of the effects of this is that the state lacks the wealthier urban areas that, in most states, pull the averages up on indicators like income, poverty, lifespan, and more, but there’s also a far more real effect of a lack of spill-over from urban to rural wealth through taxes, industry creation, and consumer spending.  But there are cities in the broader region around—in fact, there are some of the wealthiest cities in the world. Therefore, the very factor that is holding the state’s manufacturing and agriculture industries back can be a key asset for another sector: tourism.  West Virginia has long recognized this. Its promise is demonstrated by places like Snowshoe—home to the mid-Atlantic’s largest ski resort. With relatively high elevation and relatively large slopes, the resort offers arguably the best skiing experience one can get within a four-hour drive from DC. This and other outdoor experiences in the surrounding area not only attract tourists for a weekend, but tens of thousands have bought vacation homes in the area which brings yet more spending to the state. And yet, Pocahontas County, which encompasses the resort, sits at just about the state average for income and poverty—its tourism industry has not fixed much. After all, while tourism can be big business, the employment that it creates is primarily in the service sector whose wages are hardly better than other rural economic sectors. There’s little path for someone working as a waiter or lift operator or housekeeper to work their way towards making a middle-class income. And other tourism-dependent economies have demonstrated that in cases where the industry grows successful enough to truly transform an area and push wages upwards, cost of living tends to rise in step which dilutes any gains.  The state is certainly trying other things—it’s trying to attract remote workers to relocate, it’s developing industrial parks, it’s searching for funding for mine cleanup efforts—but the state has been trying to transition out of its coal dependency for decades upon decades upon decades and failing. There are plenty of economically inhospitable landscapes across America—across the world, even. But humans don’t live in these areas because human migration tends to follow economic incentive. That was no different in West Virginia—people moved in as coal moved in. The reason why West Virginia seems to have such an acute issue is because there was that economic incentive, but now there isn’t. There just aren’t many other industries that pay living wages that this landscape can support and therefore its population is left in a state of mere survival. Places like Appalachia are harbingers for the future that awaits if policymakers ignore the downstream effects of the transition to a greener grid. Coal, as an industry, is dying regardless—increasingly bested in price by renewable sources like solar—but as the mix of policy and economics spurs a similar result with other fossil fuels, more and more places risk sliding into a similar state of decay.  In democratic political systems, the perpetual lack of solutions in places like West Virginia has, and will continue to be a political barrier to the further decarbonization of the grid. Economic transition is therefore not just a matter of what’s right or what’s fair, but a practical necessity for achieving the most ambitious climate goals. If policymakers can intervene and successfully develop a viable rural economy in West Virginia, then perhaps Texas and Wyoming and North Dakota will have optimism for their futures beyond fossil fuels. But right now, the brutal truth is that history has given those living and working in fossil-fuel dependent places every reason to fight for the continuation of their industries—as much as it might feel regressive or selfish or backwards, it's also a pragmatic matter of self-survival. The impetus of the decline in Appalchian coal production is quite complex, but perhaps the largest factor is that the industry itself changed its operations in a way that made production out west, in places like Wyoming, far more cost competitive than in West Virginia. As much as we wanted to cover that in this video, there just wasn’t time so rather we decided to make an entire episode of our series Logistics of X on how coal mining works, and why it moved out west. It's all far more complex and advanced than I ever could’ve imagined, and I think the bit that surprised me most is how few coal mines there really are these days—they’re just operating at such a tremendous scale that the entire nation is largely supplied by just a few dozen mines. If you want to watch this, it’s on Nebula which I’m sure most of you have already heard about, but clearly you weren’t convinced enough to sign up yet because you’re watching this video on here and having to sit through an ad—on Nebula, myself and a curated group of around two hundred creators upload every single one of our videos ad-free, but that’s far from the only thing to make the platform worthwhile. I think the best part of Nebula is its Originals—like the Logistics of X. 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