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Coal jobs were lost to automation, not trade

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A commenter named dwb left this comment: The “technological change” that killed coal jobs is the 1-2-3 punch of cheap natural gas, low electricity demand, and Obama’s war on fossil fuels. At least he doesn’t blame trade.  Even so, this is basically false—except for very recently, coal jobs have been lost to automation. Here’s employment in the coal industry: It’s even worse than it looks, as office jobs were added in 1973, creating an artificial surge in the data.  If you just count actual miners, the job losses have been far worse.  But even this graph shows a loss from 870,000 jobs to about 110,000, slightly worse than in steel. So you might assume that our coal industry is being overwhelmed by imports, right?  No, over the past 5 years we’ve been net exporters of coal, in the range of 7% to 12% of total production. If it’s not imports, then production must be being hammered by competition from oil and gas, right?  Not really, as the following graph shows, the coal industry has been increasing production in recent decades, until the past few years when competition from oil and gas really did eat into production: So why have so many coal jobs disappeared?  The answer is simple, automation. We are producing nearly twice as much coal as when I was young, and we are doing so with far fewer workers.

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A commenter named dwb left this comment:

The “technological change” that killed coal jobs is the 1-2-3 punch of cheap natural gas, low electricity demand, and Obama’s war on fossil fuels.

At least he doesn’t blame trade.  Even so, this is basically false—except for very recently, coal jobs have been lost to automation. Here’s employment in the coal industry:

Coal jobs were lost to automation, not trade

It’s even worse than it looks, as office jobs were added in 1973, creating an artificial surge in the data.  If you just count actual miners, the job losses have been far worse.  But even this graph shows a loss from 870,000 jobs to about 110,000, slightly worse than in steel.

So you might assume that our coal industry is being overwhelmed by imports, right?  No, over the past 5 years we’ve been net exporters of coal, in the range of 7% to 12% of total production.

If it’s not imports, then production must be being hammered by competition from oil and gas, right?  Not really, as the following graph shows, the coal industry has been increasing production in recent decades, until the past few years when competition from oil and gas really did eat into production:

Coal jobs were lost to automation, not trade

So why have so many coal jobs disappeared?  The answer is simple, automation. We are producing nearly twice as much coal as when I was young, and we are doing so with far fewer workers.

Some commenters think that job loss due to automation is less painful than job loss due to trade.  In fact, they are equally painful.  Jobs lost to automation don’t occur gradually over time, through attrition, they occur in waves, often during recessions. Thus in steel, 1000s of jobs are lost when US Steel or Bethlehem shut down old mills, and Nucor and Chaparral open new more efficient mills in other parts of the country. Lots of steel jobs lost in Pittsburgh are replaced with a smaller number gained in Texas.

Something similar happens in coal.  Big new strip mines in Wyoming use huge shovels that replace 100 workers in a West Virginia mine that shuts down.  Here’s the production of coal by state:

Coal jobs were lost to automation, not trade

If Wyoming were another country, the West Virginia miners would be screaming at their representatives that they need “protection” from cheap Wyoming imports. But because Wyoming is as American as apple pie, nobody advocates tariffs, even though the economic issues are exactly the same as when Ohio steel is impacted by Chinese imports.

I see an orgy of sanctimonious commentary in the media about how we have to pay more attention to the suffering of Ohio steel workers and West Virginia coal miners.  OK, but how many of those pundits realize that the interests of those two groups are diametrically opposed?  If Trump pursues a protectionist policy to help steel, it will hurt American coal exports.  TPP would be a boom to West Virginia, while threatening Ohio manufacturers.

But at a deeper level, the problems facing coal and steel are exactly the same.  In the US, and indeed almost everywhere in the world, automation is rapidly reducing employment in mining and manufacturing.  That problem is not going to go away, indeed with advances in robotics it will get even worse.  Trump can make a few symbolic moves (Carrier, weaker environmental laws, etc.) which will save a handful of jobs, and cost other jobs that are invisible to the public, but it won’t change anything fundamental. It will just give us a dirtier, hotter planet.  And rust belt workers will still be angry.

It’s always comforting to demagogue the issue by blaming foreigners for our woes; but they are doing the same—blaming other foreigners, including us.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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