Coal jobs were lost to automation, not trade
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.
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:
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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21. December 2016 at 12:35
Wow, Sumner, you really are right on this: these coal jobs really are not coming back.
First impressive post I’ve seen from you where you show your work on the automation question.
BTW, now there’s this:
http://www.politico.com/blogs/donald-trump-administration/2016/12/peter-navarro-trade-council-232897
21. December 2016 at 12:39
BTW, read the 1984 Democratic platform. No wonder WV was a solidly Democratic state from 1948 to 1996.
21. December 2016 at 12:48
The problem with trade deficits (large capital inflows into housing) and open borders is property zoning.
If the supply of housing is constrained but there is population growth and capital inflows into housing, what are the likely results?
Do global economic imperatives require the abolition of local property zoning?
21. December 2016 at 13:46
Very good post. I find these graphs much more convincing than the last post at econlog.
21. December 2016 at 13:50
Scott this is perhaps the best article of yours I have ever read. I find myself disagreeing with you most of the time, but this is as succinct and as prescient description of coal and steel job losses as I have read, bravo.
21. December 2016 at 14:35
One quibble — I seem to recall from my brief brush with the mining business that Wyoming surface-mine coal is of a much lower grade than WV coal, and does not substitute in the same applications. So there may also be a complementary versus supplementary goods story here where usage patterns are shifting the mix of uses of coal toward cheaper grades.
Someone with more direct knowledge of the business might be able to confirm or reject that hypothesis.
21. December 2016 at 15:01
Even though true, it doesn’t necessarily follow that the deterioration of the Midwest has come due to this. It appears to me that it could be the case that the rhetoric on trade is a simple package for the numerous other complex reasons for why the Midwest has declined. Even though it can be the case that trade can’t be “fixed”, it can also be the case that bad government policy caused the Midwest to decline correlating with the increase in automation.
21. December 2016 at 15:32
Who is blaming “trade” for this trend?
I thought it was the commies from the environmentalist movement, whose politicking was translated as always into governmental hammers against free trade, that played at least some role, the other of course being more efficient and lower cost energy alternatives.
Who is blaming “trade”?
21. December 2016 at 17:27
Ignorance by Sumner. Read this article: http://www.economicshelp.org/blog/6498/uncategorized/the-decline-of-the-uk-coal-industry/ to see why the UK coal industry declined (note the peak in the 1920s-30s, same as in the USA) and note that technology indeed played a role, but more important was high labor costs (the UK imports Argentinian coal these days, imagine that, post-Falklands war) and alternative energy sources (coal is a Third World fuel–it’s popular there, less so here).
21. December 2016 at 18:33
Thanks everyone.
Grant, Yes, I recall that the WV coal is superior quality.
Ray, UK and US are not the same country, not since 1776. Hate to break the news to you.
21. December 2016 at 19:40
How to give Sumner cognitive dissonance:
http://www.dailymail.co.uk/news/article-4048268/Just-34-000-migrants-1-2million-arrive-Germany-two-years-work-government-reveals.html
B-b-b-but America was built and became prosperous with open immigration!
Uh, ya, immigration of people who wanted to live the American dream by working hard, not being herded into the country by disgusting globalists to go on welfare and suck the economy dry.
21. December 2016 at 21:18
It’s very strange how productivity and automation affects things.
On the one hand it causes job losses. On the other, it increases real incomes, and creates jobs.. which follows which? Is there a model that examines this question?
Or is it less productivity and more creation of new products that increases jobs ?
21. December 2016 at 21:32
Wow, turns out Major Freedom was a filthy statist all along.
Sad!
21. December 2016 at 21:37
Great post.
@Major.Freedom,
Immigrants have always had trouble adjusting. They have always lived in slums. They have always been fleeing their countries, whether for war, persecution, or famine. But they have always made their destination better in the long run.
Nothing is different now.
What immigrants are being herded here by force by disgusting globalists? You are off your rocker.
Why oh why is everyone so greedy?
21. December 2016 at 22:52
From here, Wyoming coal has less BTU’s per ton, but Wyoming is so much more efficient that WY produces 244,000 BTU’s/miner hour and WV produces 26,000 BTU’s/miner hour.
http://www.wvpolicy.org/7-things-you-need-to-know-about-why-coal-is-declining-in-west-virginia-2-of-7/
With 10 times higher productivity, I’m not sure how WV finds customers at all.
22. December 2016 at 06:03
@Matthew Waters – nice link. WY coal may be brown coal (lignite) that’s more dirty, perhaps WV mines burn cleaner bituminous or anthracite coal? To me, it’s amazing how low transportation costs are: China imports coal by ship from faraway places like Australia and Indonesia, amazing; rail transport is in fact even more efficient than ship transport.
22. December 2016 at 06:08
Oh, brain fart, I see bituminous coal has more BTU’s than lignite, I should have known that, so if anything WV mining is worse than I thought due to hard to reach coal as the article says, and of course mines don’t burn but mine coal. WordPress sux.
22. December 2016 at 07:53
Matthew, Keep in mind that Wyoming coal requires more capital.
22. December 2016 at 09:08
[…] Coal jobs were lost to automation, not trade http://www.themoneyillusion.com/?p=32209 […]
22. December 2016 at 09:37
The machines, or the Chinese, or some less expensive process does the work that a more expensive employee used to do, and the rest of us get cheaper stuff. And that makes us all a little bit richer.
As for the employee, you have a guy who is producing jack-squat. He loses his job, but it gives him the opportunity to produce jack + 1.
The sad sadistic truth is that job losses are great. The economy grows through destruction. The old is replaced by the new. It might not be nice but it is efficient. And this is just one of the reasons economics is dismal, and conservatives are a-holes, and utilitarianism has a nasty edge.
22. December 2016 at 11:24
ray, for China, Australia (or Indonesia) isnt that far away, and you may have noticed that trains dont cross oceans well. but moving bulk products by ship works very well, and is very efficient. unless you can build rail lines easily (or pipelines)
22. December 2016 at 12:10
course automation or AI will be coming for almost all of our jobs soon enough . even the low wage ones (per one of the new cabinet members who oddly enough runs a fast food chain. and wants to replace their high school student with a kiosk).
22. December 2016 at 19:09
the 15% dip from 2008 to the present is the 1-2-3 punch of cheap natural gas, low electricity demand, and Obama’s war on fossil fuels.
The job losses voters in Appalachia are complaining about are the recent ones, and the only ones the current administration is focused on: The ones lost since 2008. We are indeed net exporters of coal, and could actually be much larger exporters (Australia exports about 5x what we do) if we had the infrastructure and the huge ports the Aussies built.
Nice try, but no, people are not losing their jobs to automation or robots since 2008. The mines are closed.
Not all the coal production will return due to cheap gas. But some combination of higher growth, better infrastructure, and lower regulations will boost demand.
Technology is fixed, so with coal production, jobs will return as well.
I will without any hesitation whatsoever take the “over” on coal production in 2020 vs 2016 under Trump.
This administration is so fossil fuel friendly, I think that the secret plan is to burn so much coal that the seas rise and we drown coastal elite liberals. So, buy a boat.
22. December 2016 at 20:17
I don’t agree with you post. I think it’s a deception. I think you are trying to make eggs out of an omelette again.
Another word for trade would be open markets. Automation is driven by competition. Competition (especially in its disruptive form) is mainly driven by open markets aka trade. The more open markets you have the more competition you will have the more automation you will have. And that’s exactly what has been happening in coal mining and so on.
So the distinction between trade and automation that you are drawing here is very artificial. It has no real meaning in the real world. It’s the same side of the same coin. It’s one big omelette.
Telling the truth to the workers who lost their jobs would sound more like this: Yes trade and automation “destroyed” your jobs but that’s precisely the whole point of capitalism.
Not to be misunderstood: I very much support capitalism but I also can understand to some extent that workers who lost their jobs (and basically their whole profession) for good might be a bit disappointed. I guess there are ways that the (overall very positive) change enabled by capitalism is not as disruptive for those people. The trade-off of course would be that capitalism becomes less productive, less effective and the overall change less positive. So the decisions aren’t easy at all. But one thing seems sure to me: Obscuring the truth is not helping.
22. December 2016 at 20:34
course automation or AI will be coming for almost all of our jobs soon enough.
There will always be more than enough new jobs. Even the guys in Stark Trek (with their replicators) still have jobs, don’t they. The jobs might be just different, that’s all. (In fact, even in Star Trek most jobs are still the same: engineers, navigators, scientists, medical staff, officers, police, military personnel and so on. Not very creative for a series that plays like how many years in the future?)
23. December 2016 at 08:26
dwb, So the decline from 870,000 to 130,000 coal jobs is not the big issue. The big issue is the more recent decline from 130,000 to 110,000. Okaaaay.
See my earlier post on innumeracy.
Christian, When people say “jobs lost to trade” they mean “jobs lost to imports” I thought that was obvious.
You said:
“In fact, even in Star Trek most jobs are still the same . . . ”
I use The Jetsons to predict the future.
23. December 2016 at 19:38
ChargerCarl
“Wow, turns out Major Freedom was a filthy statist all along.”
Being against government immigration programs is not statist. It is the opposite.
Student:
“What immigrants are being herded here by force by disgusting globalists? You are off your rocker.”
I never said the migrants were being herded against their will.
“Why oh why is everyone so greedy?”
Tell that to the migrants who are given free welfare, free education, free food, free shelter, and yet rape and steal from people.
24. December 2016 at 06:12
Here is an interesting TED talk on the the impact of technological change on employment:
http://www.ted.com/talks/david_autor_why_are_there_still_so_many_jobs
24. December 2016 at 06:26
When people say “jobs lost to trade” they mean “jobs lost to imports” I thought that was obvious.
How do you know what “people” mean? It seems to me that you are taking the most wrong and narrow statements and then you “disprove” those statements. I don’t see the point in attacking semantics. It’s expectable that Appalachian coal miners don’t always use the correct economic semantics, it doesn’t mean that they got it all wrong.
I don’t see how attacking semantics and straw men is an honest approach. I think it’s beside the point. A more honest approach would be to explain that focussing on imports is wrong but focussing out can help a lot, automation is indeed driven by open markets.
24. December 2016 at 06:45
I think Major Freedom got it right this time. A lot of Americans won’t get this but migration to Central Europe and migration to the US is very different. US citizens would not tolerate conditions like in Central Europe for a minute. It’s a non-issue in the US, even most politicians from the Democrats get this.
24. December 2016 at 13:53
FYI…
Someone ~cough~ posted a link to this post on Reddit and among the kids there it currently is rated +1628 with 305 comments.
Merry Christmas, all!
24. December 2016 at 16:14
Hey, I forgot to put the Reddit link here. (May I have a less dementia-ridden New Year.)
https://www.reddit.com/r/Economics/comments/5jquyu/coal_jobs_were_lost_to_automation_not_trade/
At this writing it is the top post in economics with over 900 more upvotes than #2.
26. December 2016 at 13:09
Interesting post, Scott, I didn’t realize that first graph looked like that.
26. December 2016 at 22:32
https://en.m.wikipedia.org/wiki/Battle_of_Blair_Mountain
28. December 2016 at 09:56
Christian, You said
“How do you know what “people” mean?”
Oh sorry. You are right. When people mean jobs lost to trade they mean we lose jobs by exporting stuff. My mistake.
4. January 2017 at 19:55
EDIT: MADE AN EDIT TO THE POST ABOVE TO FIX TYPOS AND ADDED A SENTENCE TO THE 2ND–TO-LAST-PARAGRAPH TO CLARIFY A POINT
I laugh when I read posts like this – he’s wrong.
While the author claims that coal miners are being blind in their bias of blaming others, the author himself has so many blind spots. Time to adjust your mirrors, professor.
These graphs are handpicked just to prove his claim and he has ignored an ENORMOUS amount of data going against his claims on foreign imports, employment, competition, illegal immigration impacts, etc. in the industry. We all have blindspots in our bias, I understand, but if this bias was intentional on your part, you should be ashamed of yourself.
But the problem with approaching professors in academia is that no matter how much proof you give them that they are wrong, they will just not believe you. And I don’t blame them – After being bathed in compliments of intelligence throughout their careers, speaking at events feeling like a rockstar, having their claims confirmed by the very biased colleagues/textbooks they work with, and being the ones with full attention when teaching a college-level course, it’s difficult to rake off the feeling of false superiority.
I was once an academic myself (in the fields of finance and economics), but having worked in the coal industry the past decade has exposed to me the TRUE issues of why coals jobs are being lost. And the reality is that these graphs only take OFFICIAL data into account (of course, I would even the validity of the graphs/commentary itself, especially the ones on imports and annual production one, which are 100% wrong) but the reality is that unofficial powers in the indsutry – the impact of undocumented workers, underground deals in relation to production and coal trade, ACTUAL trade/import/export/production numbers based on internal company data (which differs from what is reported), etc – are the ones that are the TRUE issues….not just automation.
Simply reading from a textbook and pulling any graph/statistic to support your liberal claim is just plain stupid. DO me a favor – leave that golden academic throne of yours,and gain some GRASS-ROOTS experience in the industry and you will know the truth.
11. January 2017 at 17:38
The authour of this article blocks comments that go against his bias and conclusions – kind of ironic because he claims that trump supporters do that
11. July 2017 at 23:19
[…] House campaigned on saving coal jobs, but that isn’t going to happen. Where did they go? Automation. Could we replace them? Maybe, but we shouldn’t. Technology has moved on. We could, on […]
29. December 2017 at 13:51
[…] symbol for Trump when discussing jobs lost overseas. But most of those jobs were lost due to automation. When driver-less cars come online large scale, the US will see a loss of some 25,000 jobs a month! […]
18. September 2019 at 04:56
Permission to reproduce the above figures in a research paper.
Hi
I really enjoyed your article. I am writing a research paper to be published by IISD on new technologies in the mining sector. I would like to seek permission to reproduce the two graphs above.
Many thanks!
Kind regards