(Bloomberg View) -- You know the standard line these days on coal: It's economically insignificant, employing fewer people nationwide than the Arby's fast-food chain. It's been on a long decline, pushed aside in electricity generation by cleaner natural gas and renewables. And it's not coming back -- people need to get over it and move on.
There's something to these arguments. I've made versions of most of them in past columns. In May, coal mining companies employed only 51,000 people in the U.S. -- less than not only Arby's but also Southwest Airlines, Morgan Stanley and Bed, Bath & Beyond (just to name a few corporations in a similar size range). That amounted to just 0.03 percent of total nonfarm payroll employment, and while the coal industry creates jobs beyond just the companies digging for coal, it has clearly become a tiny factor in the overall labor market.
Some of that tininess is new, though: As recently as January 2012, coal mining employment was 89,700 -- the highest it had been since the mid-1990s. And while even then coal mining didn't amount to much on a national scale, it was quite significant in some of the states (Wyoming, West Virginia, Kentucky, Illinois and Pennsylvania are the big five coal producers, in that order, and another 10 states produce in significant quantities ) and especially the counties where it is mined. In the 10 counties with the most people working in coal mining in January 2012, as reported by the Bureau of Labor Statistics, the industry accounted for a much more noticeable 3.8 percent of payroll employment. Throw out the three largely urban counties with a lot of other stuff going on, and it's up to 21.9 percent of employment. Coal mining pays a lot better than most of the other work one can find in a rural area, so its share of total wages was even higher: 39.4 percent in the first quarter of 2012.
So in coal mining counties, coal mining really matters. It's an obvious enough point, but when a colleague suggested that I back it up with some numbers, I couldn't resist. I initially wanted to track all of the nation's top 10 or 15 counties for coal employment over the course of the downturn that began in 2012, but I was thwarted by the BLS's confidentiality rules. If there are so few establishments in an industry in a county that the employment numbers reported in the Quarterly Census of Employment and Wages might reveal how many people are working for a particular employer, the BLS suppresses the data. This is a little perverse in the case of coal mines, given that state regulatory agencies and trade groups often publish employment totals for individual mines. But it nonetheless makes for lots of months of missing data for lots of coal counties, so I focused instead on one major coal county for which numbers are readily available for every month since January 2012.
Boone County, population 22,816 (down from 24,629 in 2010), is in southern West Virginia, just south of Charleston. It is named for frontiersman Daniel Boone, who lived from 1788 to 1795 in the nearby Kanawha Valley (he spent a few years before and after that in Kentucky, with which he is more closely identified). It does not have an Arby's.
Coal has been mined in Boone County since at least the 1850s, although the industry really began to take off in the early 1900s. The great majority of the county's coal production long came from underground mines, but in the late 1990s surface mining made big gains, driven by the controversial (even in Boone County) practice known as mountaintop removal. For most of the past quarter-century, Boone County led the state in both coal production and mining employment. First, production:
Next, employment:
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The first half of the 20th century did see a precipitous drop in coal employment nationwide as mines became more mechanized and efficient, but after the 1950s the decline slowed and at times reversed. In West Virginia, coal production didn't hit its all-time peak till 2001 (the same appears to have been true for Boone County, but I don't have the data for a long-run historical chart).
So after going through a very rough patch in the late 1970s and 1980s as Rust Belt industrial customers went out of business by the score, West Virginia coal made a pretty impressive comeback in the 1990s. Coal had long been the country's main source of electrical power, but its use grew as electrical demand rose, oil-fired generators were retired, and the country stopped building new hydroelectric dams and nuclear reactors.
Then, in about 2008, everything started going wrong, for the coal industry in general and Boone County in particular. Per-capita electricity use peaked in the U.S. in 2007. The recession was the main culprit at first, but other factors such as the rise of low-energy LED bulbs seem to be keeping demand down even as the economy recovers. Meanwhile, fracking and horizontal drilling unleashed a natural gas boom, while subsidies and efficiency improvements led to big gains for wind and solar power. New Environmental Protection Agency rules on emissions of mercury and other toxins also weighed on coal use, as did pressure on utilities to reduce carbon dioxide emissions to slow climate change (although the EPA's formal carbon rules never took effect, and seem to be dead now). Even among coal-producing regions, Appalachia lost out as new sulfur-dioxide scrubbers in power plants led to a revival for high-sulfur Illinois Basin coal. And Boone County and its southern West Virginia neighbors lost out especially because their coal seams have been mined so extensively and for so long that what's left is relatively expensive (and dangerous) to get out.
Coal employment began to decline in Boone County in 2007 and began to collapse in 2012. In early 2012, coal mining accounted for 41.7 percent of employment in the county (51.5 percent of private-sector employment) and 60.7 percent of total wages. That employment share bottomed out in June 2016 at 10.9 percent. Wages from coal mining in the county had fallen 86.5 percent, and total wages 58.9 percent. Now that's what you call an economic depression! It was softened a little by people commuting to jobs in and around Charleston, about a half-hour's drive from the county seat of Madison, and by federal and state benefits. But it's still been pretty awful. There's ample reporting on just how awful it has been. There's also been lots of reporting on how the troubles of the past few years appear to have changed political loyalties in coal country, but I figure it can't hurt to show this one last chart:
Yes, the voters of Boone County have over the past eight years soured big time on the Democratic Party to which they were long quite faithful (in 1972, Democrat George McGovern won just 17 electoral votes and didn't even carry his home state, so that shouldn't really count), and they responded with great enthusiasm to the promises of Donald Trump to bring coal back.
And it has come back in Boone County, an itty bit. According to county employment and wage statistics released by the Bureau of Labor Statistics this morning, coal mining employment in the county rose from a low of 555 last June to 583 in December. That's not much, I know, but Kris Mitchell, executive director of the Boone County Community and Economic Development Corporation, told me a few mines have reopened this year -- meaning there may have been bigger gains since December. The county unemployment rate, which is reported with less of a lag than payroll employment but is subject to a lot more statistical noise, has fallen from 11.1 percent in January 2016 to 5.9 percent this past April, although it's hard to tell how much of that is the aforementioned noise, how much is people moving away or giving up looking for jobs, and how much is an actually improving employment situation.
Mitchell, for one, isn't banking on a big coal resurgence. "We're glad coal is back somewhat, but no one is relying on it coming back forever," she said. Also, the mines reopened recently all produce metallurgical coal used in steelmaking, which accounts for only a small portion of Boone County's coal reserves and is subject to different economic and regulatory forces than the thermal coal used in power plants. Still, it's clear that in a place like Boone County, the return of even a few hundred coal jobs would make a palpable economic difference -- and coal has come back after hard times there before.
The predicament of Boone County and its ilk probably shouldn't weigh very heavily in policy discussions of the nation's energy future. But it surely does matter to the politics of energy, because all politics is local. Well, some politics, at least.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
Defined by me, just now, as more than million short tons in
Tuscaloosa County, Alabama, home of the University of Alabama and a giant Mercedes-Benz auto plant; Jefferson County, Alabama, home of the state's biggest city, Birmingham; and Kanawha County, West Virginia, home of the state's capital and biggest city, Charleston.
To contact the author of this story: Justin Fox at justinfox@bloomberg.net.
To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net.
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