“A Tsunami of Economic Impact” hits Morgantown’s economy after the former Mylan plant closes, new study finds | news
According to an economic impact study released this week, the local economy could take a decade to recover from the closure of the former Mylan Pharmaceuticals plant in Morgantown, with the effects being felt almost immediately.
The layoff of 1,431 workers will result in the loss of 4,642 jobs in Monongalia County over the coming year, economist Michael Shuman noted in his July 31 economic analysis of the shutdown. This corresponds to almost 6% of the existing jobs in the district.
Shuman has a law degree and two bachelor’s degrees from Stanford University and has studied community economics and the enduring effects of dozen large plant closures for more than three decades. The study was commissioned by Democracy Collaborative, a national laboratory for advanced research and economic development in the community.
In all of his years studying plant closings and the holes they leave in the local economy, Shuman said the impact of the Mylan shutdown represented some of the most noticeable numbers he has ever seen. There are three reasons for this: the direct result of the immediate layoffs, the reduction in spending in other companies by Mylan itself, and the reduction in employee spending in the local economy.
The number of indirect job losses is so high in Mylan’s case and different from most of the closings he has investigated, Shuman said because of the facility’s troubled history in the community and its high-paid union workers.
“It is very unusual for one direct job loss to result in two other indirect job losses. It’s usually about half or less, ”Shuman said on the phone. “That makes this a particularly devastating event.”
“That’s because the company paid these workers relatively high wages and because the company has been part of the Morgantown economy for many years and has all of these supplier relationships,” he continued.
One company hit hard by Mylan’s departure is the local water company, which last month approved 13% rate hikes for water customers, 12% for sewage customers, and 18% for storm water companies as a direct result of the expected shutdown. The utility claimed a hit of $ 936,000 for its “bottom line”.
And Mylan’s workers have historically made more than three times the median wage of $ 24,705 in Monongalia County, Shuman found, which makes them more active participants in the local economy. Over the past few months, Mylan employees have been pointing out a specific store, Kegler’s, a popular sports bar near the busy factory that is sure to be hit by the closure. You mentioned a number of local restaurants, bars, and shops outside of Morgantown that are frequented by Mylan workers.
Employees also said they expect local contractors they’ve used for years – landscaping, construction, roofing, fencing, home repairs, HVAC, etc – to lose their business if they move away this summer and fall. Employees said they expect businesses from gun stores to mom and pop restaurants to lose dozens to hundreds of common customers.
Many of Mylan’s workers are non-college graduates, and some told Gazette-Mail on a May 28 layoff profile that they didn’t graduate from high school. Mylan was the dream job in this town. Once you found a way, no matter your age, you dropped everything and accepted their offer, they said. This was the job you would retire from that will grow your family.
“These employees no longer have the purchasing power in the economy,” Shuman said.
Layoffs will steal $ 403 million in wages and more than $ 1 billion in added value from the county’s economy next year, which is the local economic equivalent of gross domestic product, Shuman found in his study. In addition, layoffs will eliminate $ 62.8 million in state and local tax revenue and $ 82 million in federal tax revenue.
“I think it will be an economic impact tsunami for the next six months to a year,” he said.
Mylan’s plant shutdown is unique in that it’s set in the pharmaceutical industry, which is why Shuman said it was hard to find anything like it that he’s studied in the past. But he pointed to a Millinocket, Maine paper mill that closed in 2008, laying off 1,500 workers. The city had about 10,000 residents compared to Morgantown’s 30,000 and is more isolated than Monongalia County, Shuman said, but the numbers from both economic analyzes are similar.
“Even today, [Millinocket] has not recovered to its previous strength, ”Shuman said.
The larger a region’s population, the faster its potential return to the same economic level, Shuman said, which will benefit Morgantown. West Virginia University has also long received state and private funding for the city and region.
“Maybe it won’t be 20 years, maybe five or ten years – it depends on how the community reacts to it – but it’s just going to be a huge body blow,” Shuman said.
Shuman predicted that the Mylan shutdown would hit the American economy in an oversized way. After former President Bill Clinton signed a number of trade deals in the 1990s, Shuman said many garment factories in Virginia and North Carolina closed and their jobs went off the country. But the employees did not need a high level of knowledge to work in these plants, which is why they were easily relocated abroad.
This is unlike in Mylan, where the workers have more than half a century of pharmaceutical manufacturing experience. The facility was once the American gold standard in the industry before corporate governance globalized operations for corporate profits. Shuman said the United States would pay for the loss of this knowledge by outsourcing the work of a “high-knowledge industry” to India and other countries.
Shuman lists his calculations as conservative because they don’t take into account the impact in the region outside of Monongalia County, where a number of workers live and commute. A final point of the study also highlights the secondary effects on the unemployed themselves, “especially during a period of economic downturn, including depression, alcohol and drug abuse, divorce, suicide, etc.”.
Viatris, the company that now owns the Mylan facility, will close its doors next Saturday and lay off 1,246 workers. A further 200 workers are to be employed until the plant is completely closed in March 2022 and then laid off.
Two Hail Marys were thrown on behalf of Mylan workers this week – the first Monday to come by Delegate Barbara Fleischauer, D-Monongalia, who officially requested the Department of Homeland Security to designate critical infrastructure to keep its doors open and to employ its staff at the federal government. On Wednesday, a national political organization called on President Joe Biden to invoke the Defense Production Act to keep the country’s largest generic drug maker running.