Study: Coal job losses to keep hurting Appalachia, beyond

Coal isn’t back — though it may hold steady near today’s level — but the long-term decline of mining in Appalachia will have a ripple effect on related businesses, health, education and regional population, according to a new study.

While coal has boom-and-bust cycles, its long-term trend has been downward, said Matt Murray, University of Tennessee economics professor, associate director of the Boyd Center for Business & Economic Research and director of the Howard H. Baker Jr. Center for Public Policy.

“We may see some further declines, but I think the coal industry is close to bottoming out,” he said. “So the worst is behind us. I think the real impacts are in those small number of communities that still have some coal activities going on.”

The five-part study, “An Economic Analysis of the Appalachian Coal Industry Ecosystem,” notes that coal production in Appalachia fell nearly 45 percent between 2005 and 2015, more than double the rate of the national decline during the same period.

Researchers at the University of Tennessee and West Virginia University did the study, funded by the Appalachian Regional Commission, a state and federal economic development agency covering parts of 13 states. UT’s team included researchers from the Boyd Center for Business and Economic Research in the Haslam College of Business, the Center for Transportation Research in the Tickle College of Engineering and the Howard H. Baker Jr. Center for Public Policy. Murray coordinated UT’s three research groups on the study, and worked himself on coal’s impact on jobs and education.

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Coal mining jobs in the United States increased by 771 from 2016 to 2017, a rise of 1.4 percent, but most coal states actually saw coal mining jobs decline, according to a post by Jeremy Richardson, senior energy analyst for the Union of Concerned Scientists, which was not involved in the UT/WVU study.

The areas hit hardest by coal’s decline are West Virginia and eastern Kentucky. Tennessee never had a big presence in the coal industry, Murray said.

Knox and most surrounding counties were listed as “moderately” coal-dependent in both 2005 and 2015. None of the 25 most coal-dependent counties in the multi-state Appalachian region covered by the study were in East Tennessee. The greatest reliance on coal in Tennessee is in a string of counties northwest of Knox County.

“We’ve only got in the state 178 (coal mining) jobs, but they are in relatively close proximity to Knoxville,” Murray said.

TVA coal use down but steady

The biggest coal user in Knoxville, and probably in Tennessee, is the Tennessee Valley Authority. The agency still has seven coal-fired plants, of which five are in Tennessee, including the Bull Run Fossil Plant in Oak Ridge and Kingston Fossil Plant.

“Coal makes up 25 percent of our generation currently,” TVA spokesman Scott Brooks said. Nationwide, 35 percent of electricity comes from coal, according to the study.

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All of TVA’s coal is mined within the United States, but only 3 percent from the Appalachian Basin. More than half comes from Wyoming’s Powder River Basin, Brooks said.

“Coal remains an important part of our diverse generation portfolio,” he said. TVA doesn’t plan or need to build any new plants, of any kind, in the near future, Brooks said.

TVA’s board has approved building a gas-fired plant at the Allen site, according to the agency’s annual report. At the Paradise Fossil Plant in Drakesboro, Kentucky, TVA shut down two of the three units in April 2017, replacing them with a gas-fired plant. One coal-burning unit there remains operational. Once the Allen gas plant is complete, TVA will have cut its coal-fired power output by 46 percent from 2010.

The agency’s current coal plants don’t have a defined operational life, so long as TVA keeps them in good repair and in compliance with environmental regulations, Brooks said.

“We have retired all the units we intend to, with the exception of the Allen plant in Memphis, which is scheduled to retire by Dec. 31, 2018,” he said.

TVA closed five coal plants from 1966 to 2016, including three since 2012: the John Sevier Steam Plant in Rogersville, the Widows Creek Fossil Plant in Stevenson, Alabama, and the Colbert Fossil Plant in Tuscumbia, Alabama.

“in keeping with our commitment to generate safer, cleaner energy, we’re beginning to retire older, less efficient coal-fired plants and replacing them with low- or zero-emission electricity sources,” the agency’s website says.

Jobs follow consumption

Coal generated 74 percent of electricity in Appalachia in 2005, but that figure was down to 53 percent in 2015 — and that was still higher than the rest of the country, according to the report.

President Donald Trump pledged during the 2016 campaign to “bring back coal.” His administration has canceled a number of environmental and workplace regulations, but a recent attempt to subsidize coal power plants failed.

Despite those moves, U.S. coal consumption fell by 2.4 percent in 2017, hitting its lowest in nearly 40 years.

In 2016, there were fewer than 50,000 American coal mining jobs, Murray said.

“We have more jobs in Tennessee transportation equipment sector alone than the total number of coal mining jobs nationwide,” Murray said.

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Even in West Virginia, the state most dependent on coal mining, only 1.4 percent of the workforce was directly employed as miners in 2016, according to the Bureau of Economic Analysis.

Coal mining jobs in West Virginia peaked at 130,000 in 1940, and fell nearly 90 percent by last year, Richardson wrote. Part of that decline was due to mechanization, part to larger operations in western states; but low natural gas prices, less use of coal to generate electricity and the rise of renewable sources cut into coal jobs too, he wrote.

Economic models suggest natural gas prices, not environmental regulation, are “the main driver” of demand for coal, Richardson wrote. If natural gas prices are steady, or renewable energy costs drop, domestic coal use should continue to decline — along with coal mining jobs.

“The reality is that a relatively small bump in coal mining employment does not suggest a major resurgence of the coal industry,” Richardson wrote.

Losses hurt more than miners

For some rural counties, coal mining was the only well-paying job available, Murray said.

“The average wage for a coal worker is north of $70,000,” he said. “That’s a good salary anywhere, but particularly in rural Appalachia, that job is golden.”

Much of that money was spent locally, creating other jobs; or used to send children to college, Murray said. What new jobs do exist in coal regions tend to be seasonal or low-wage, he said.

But after more than a century of mining, much of the easily accessible coal in Appalachia is already gone, Murray said. Easier to reach, and therefore cheaper, is coal from huge open-pit mines in western states, he said.

The working-age population in Appalachia has declined while poverty increased. Coal mining counties have less education and worse health, on average, than non-mining counties, according to the study.

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It’s already common for many in Appalachia to commute to jobs in another county, but that may increase further, the report said.

Those employees and their families probably come to Knoxville for major purchases, so there is some retail impact; but the bigger influence is on coal-related businesses like railroads and TVA, Murray said.

“There are a whole host of firms out there that are in some way servicing the coal industry in Tennessee. They may be servicing the coal industry more generally in Appalachia,” he said.

The good news for Knoxville, and Tennessee in general, is that it is not directly dependent on coal, Murray said. He’s not aware of a single company in the region which relies solely on coal for its business.

The decline of coal impacts related industries, such as equipment manufacturers and transport. The collapse of coal demand for power plants cost nearly 2,000 railroad jobs in just two years, the report found.

Future job prospects for coal miners are no brighter, and the loss of well-paying jobs means less tax money for education that could help the next generation find better jobs, the study’s authors said.

“Coal communities have consistently spent more per pupil than the national average since 2000,” the report says. “However, current per-pupil spending did decline between 2010 and 2014 in Kentucky, Virginia and West Virginia, as well as in a number of coal communities in Alabama, Ohio and Tennessee, despite growth in total state and local revenue per pupil.”