The Decimation of Coal Production and Alienation of the Working Class

coal_production

In rejecting the extension of coal tax credits Friday, Governor Terry McAuliffe noted that the number of coal miners employed in Virginia has tumbled from 11,100 in 1988 to less than 3,000 in 2015.

At one time — the late 70s and early 80s, as I recall — coal mining employed more than 20,000. Since then, many jobs have been lost to automation, and more to declining production. Coal has been mined in Virginia for more than 100 years, and all the thick, easily accessible seams have been tapped out; it’s not easy extracting coal profitably from three-foot-thick coal seams. In the past decade came the fracking boom, which allowed natural gas to displace coal in the utility market, as well as the Environmental Protection Agency crackdown on mercury and other toxic byproducts of coal combustion. The Clean Air Act, assuming it moves forward, likely will be the death knell of steam coal in Virginia, leaving only a handful of mines producing metallurgical coal for steel making.

From 1988 until 2015, McAuliffe said, coal mine operators, electricity generators and other coal-related companies claimed more than $610 million in tax credits. “It would be unwise to spend additional taxpayer dollars on a tax credit that has fallen so short of its intended effectiveness,” stated McAuliffe in a press release.

It seems cruel to kick the coal mining industry when it’s down, but McAuliffe has a point. A 2012 report by the Joint Legislative Audit and Review Commission (JLARC) found that while the credits had slowed the decline of coal production and employment, both declined at the same or even faster rates than were predicted before the credits were created.

If we want to help the economy of far southwestern Virginia, there are probably better ways to do it. If there are only 3,000 coal mining jobs left, there’s nothing much to save anyway!

Not surprisingly, inhabitants of Southwest Virginia are among the most disaffected and alienated in the state, as can be seen by these two maps from the Stat Chat blog showing the percentage of votes that went for Donald Trump in the Republican primary, and, less lopsidedly, to Bernie Bernie Sanders in the Democratic primary.

trump_voters

sanders_voters

Buchanan County, in the heart of Virginia’s coalfields gave 70% its votes to Trump in the Republican primary.

Clearly, alienation is not limited to coal miners — it permeates the southern tier of counties across Virginia where local economies traditionally were built around tobacco, textiles, apparel and light manufacturing. Trump voters have been the losers in the world of globalization and the knowledge economy.

I wish I had an answer for what it takes to salvage Southwest Virginia, but I don’t. The Tobacco Indemnification and Community Revitalization Commission has been throwing money at the problem — workforce development and incentives for light manufacturing, mostly — but doesn’t have much to show for it. The region is just too rugged, too isolated, too hard to get around, and too bereft of workers with skills valued in the knowledge economy to attract much investment.

Sadly, the only long-term solution may be the emigration of young people in search of job opportunities elsewhere.

— JAB

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20 responses to “The Decimation of Coal Production and Alienation of the Working Class

  1. The coal tragedy is the spear tip of a much bigger problem with a lot of 20th century industry and jobs.

    We’re looking at a generation of people – not just in coal country that have been stranded by the stark confluence of the loss of jobs for people with minimal 20th century educations.

    It also is the in-your-face reality of what others who do have jobs end up with in terms of taxes and for what purposes.

    It’s easy for folks to say they’re not going to pay for health care and education of those who don’t have it. They harrumph to and fro about the “takers” who don’t deserve to be “subsidized” but the harsh reality is – we simply do not walk away from these folks – although I’ll admit more and more of us – would -these days.

    To Gov McAuliffe’s credit he has tried to do something about health care and education for these folks – who inexplicably see him as a govt-loving “liberal” and continue to vote for their reps in the General Assembly to shut down MedicAid and advocate for coal tax credits (for the coal producers) while letting the workers twist in the wind.

    Go figure .. but as Jim points out – these parts of Va vote RED RED RED and the Virginia General Assembly reflects those votes despite the silly proposition that there are Sanders supporters… like we have such guys elected to the General Assembly in Virginia – NOT!

    nope – these folks don’t think that way at all – they think this way:

    https://youtu.be/3cQNkIrg-Tk

  2. We do seem to be leaving out some things:
    (1) Coal companies, including Massey in Richmond, have been exploiting coal from the Central Appalachians for a century and a half and have given precious little back in terms of local wealth.
    (2) Bringing Trump into this is a bit after the fact. Southwestern Virginia started shifting from Democrats to Republicans years ago.
    (3) Conservatives like Jim Bacon do go on with supposedly insightful pieces like this but he also opposes expanding Medicaid to where it is needed most — the dying coalfields. Don’t believe me? Go to a RAM free clinic in Wise or Pikeville, KY and watch a couple of thousand people stay up in line all night for free health care.
    (4) Alpha Natural Resources, the state’s largest coal company, is planning on emerging from bankruptcy soon. While in the red, it still managed to pay its executives bonuses, threaten its retirees’ pension funds and still rank in as one of the largest corporate political donors in the state. The vast majority of their money goes to state GOP candidates. The hear Jim Bacon tell it and display it with graphs, the popularity of Trump out there is a reaction to Bernie Sanders.

    Jim, when was the last time you were actually in the coalfields? Nineteen eighty seven?

  3. So we’re throwing the whole area from Roanoke to Bristol “under the bus” due to a few mountains? There is I-81. I think they need to get into cars and stuff like Tennessee with Nissan Leaf production, etc.

  4. Jim missed a big part of this story – namely, the endless corruption of Virginia’s state government. McAuliffe was ready to sign the extension of the tax credits if two SouthWest Virginia state Senators would support the his recess appointed judge of the Virginia Supreme Court. In true crime family style McAuliffe sent his bag man Dick Saslaw to make the offer.

    The two senators declined to support McAuliffe’s appointed judge.

    McAuliffe vetoed the bill extending the tax breaks.

    Remember Virginia’s motto – Virginia is for grifters.

  5. I don’t know Massey or others responsibility for the future .. don’t know if the miners go pensions and health care like Mid west states manufacturers that closed down. Some had to be taken over by the PBGC folks.

    But manufacturing as a replacement for coal is not going to happen – it’s also going away.

    My understanding is that McAuliffe vetoed the coal credits last GA session also – and it was not quid pro quo with judges on that go around.

    but it is unconscionable that the GA will not expand Medicaid for these folks since it is already paid for and the most that Va will ever have to pay is 10%.

    The money to pay for it comes not from general revenues.. it adds not one penny to the deficit. It’s totally funded from earmarked taxes and lowering some of the tax breaks like raising the itemized deductions for medical from 7.5 to 10% and doing away with allowing over the county drug deductions for HSAs.

    • Larry, what would your view on Medicaid expansion be if the state’s share 10%, or whatever it turns out to be over time, were to be funded solely by taxes on: 1) all health care providers; 2) all corporate, including nonprofit, healthcare providers; or 3) all “large” health care providers? “Large” TBD.

      I think the argument would go that, since the health care industry wants expansion of Medicaid, it ought to pay for it 100% (of state costs). That way all other state programs and taxpayers would be protected, which has been a big argument against expansion. I’m not intending to re-debate this with you. I’m just curious as to how you (and anyone else for that matter) would react to the health care industry paying for its new revenue source.

    • Last year McAuliffe didn’t have a judge pending conformation to the Virginia Supreme Court. This year he did. Saslaw & Co make no bones about the fact that McAuliffe was willing to put away his veto pen this year if two coal country state senators would have agreed to support McAuliffe’s nominee. These tax breaks were a bad idea last year and they are a bad idea this year. However, McAuliffe was more than happy to subsidize coal companies using money that would ultimately have to be collected elsewhere in the state in order to get his favorite appointed to the Virginia Supreme Court.

      Virginia is for grifters.

  6. TMT – is it your position that we’re not going to pay for charity care for these folks – that the least cost to us is to not expand Medicaid and not pay for their charity care either?

    not a debate here… a question ….. do you think we don’t pay for their charity care right now?

    I see this as choosing the most cost-effective, least costly way to pay

    you apparently see it as if we don’t provide MedicAid, we don’t have costs, right?

    I think we have those costs – the COPN debate basically said that, right?

    • Larry, I guess your answer is “no.” I’m not going to reply to your comments. We’ve beat the entire team of horses to death on expansion.

      I see the health care industry on Medicaid expansion as similar to the Tysons landowners on the Silver Line – they want more profits and someone else to pay for it. ‘Nuff said.

  7. The MedicAid expansion will create jobs and create them in these rural places where the coal mining is going away.

    It will give young people a Community College path to a job that will help them and their families and also give them a skill than can allow them to move to other areas if they want.

    Virginians have already paid the taxes that fund the Expansion. We’re basically forfeiting the money that we paid. This is like refusing to take Federal highway funding… it just goes to other states – we still pay the taxes.

    The Medicaid program is entirely voluntary. we can pull out of it anytime we want to .

    If we REALLY wanted to save costs on Medicaid – rather than denying even basic care to rural Virginians – why not look at 1/3 of the current costs that actually go to pay for care for middle and upper income people who shield their assets while using Medicaid for long term care – as pointed out by
    Thomas Jefferson Institute for Public Policy in their Report: ” The Index of Long-Term Care Vulnerability: A Case Study in Virginia”:

    ” Who Qualifies for Medicaid Long-Term Care in Virginia?

    Medicaid is a means-tested public assistance program often referred to as “welfare.” Yet that term is misleading. Federal law requires very generous income and asset eligibility rules in most states. For example, income rarely interferes with eligibility for Medicaid LTC benefits because most states deduct private medical and LTC expenses from applicants’ incomes before asking if they are poor enough to qualify. Very generous exempt assets also apply in all states, such as at least $536,000 in uncounted home equity,
    and, in unlimited amounts, a business, one automobile, prepaid burials, term life insurance, Individual Retirement Accounts, home furnishings, and personal belongings.22

    These generous eligibility rules are the reason why Medicaid is the dominant payer for long-term care throughout the United States–not only for the poor, but for middle- and upper-middle-class people as well. ”

    http://www.thomasjeffersoninst.org/files/3/LongTermCare.pdf

    It’s unconscionable for Virginia to pay for Medical care for middle and upper income people and deny even basic Medical care to the indigent and unemployed coal miners.

  8. The coal production graph is interesting, looks like Va. coal production peaked approx. 1985 and has been falling rapidly up to 2008, and that’s way before the fracking boom and the price of natural gas really started to kick coal out of the mix. Starting about 2012 is when coal’s % of power generated really started to decline.

    I’d like to know current coal tons produced and how well that balances with the coal-fired power plants we plan to have in operation.

    • re: coal

      there are two kinds of coal mining these days:

      1. – the kind that is found in large veins that can be strip mined in huge quarries like this:

      2. – coal mining in mountains in Appalachia where the seams are smaller and much harder to get at and requires either deep mining or blowing the tops off of mountains.

      There are two types of coal – low sulfur and high sulfur.

      Low sulfur coal is found in the large strip mines out west and the Mid west and high sulfur primarily in the East and in Appalachia.

      The coal mined in Appalachia is simply more expensive to mine and cannot compete with coal being mined in easier terrain but even if it could be – it’s more polluting and less desirable.

      coal itself is a highly polluting, noxious fuel – try burning some of it in a fireplace or wood stove and see what happens. There is a reason why you don’t see it sold as a competing fuel with firewood or wood pellets for fire place/wood stoves even though it is much more energy dense and can easily outlast wood for hours of burning.

      If you burned it in your neighborhood – you’d have people at your door in short order with complaints.

  9. Larry,
    Not to be a pest but I have some to add to your post:

    Wyoming and Montana coal in the Powder River Basin is very low sulfur, but it also is very low heat in BTU/pound. So, you have to burn about twice as much to get the energy from Appalachian coal. Its saving grace is its huge, easy-to-mine seams near the surface on rolling land as your photo suggests.

    Central Appalachian coal in SW Va. and southern WVA and Eastern Kentucky is also typically very low sulfur and very high heat. But it is hard to mine. Higher sulfur coal is typically in Northern WV and Pa. and Illinois.

    All of this has become less relevant because scrubbers have allowed the use of higher sulfur coal. The Illinois Basin is doing fine, for instance.

    Another big factor that everyone leaves out is met coal for steel. That is the big strong point of Central Ap coal — it can go either way. A lot of SW Va coal is met coal. The problem is that starting in the 1980s, U.S. blast furnaces started shutting down in favor of rollingmills that melt scrap. The big blast furnaces are in South Korea, Brazil, China and Europe. A lot of the downfall in production and jobs in the Virginia mines is due to changes in the international steel market. Some coal was exported but the market has crashed after China’s downfall economically.

    This is something Jim Bacon leaves out and it has absolutely nothing to do with Donald Trump or Bernie Sanders as his use of charts seems to suggest, but, in fact, conflates a lot of stuff.

    • “A lot of the downfall in production and jobs in the Virginia mines is due to changes in the international steel market.”

      I understand your point about met coal. However, Virginia’s coal production has been in steady decline since 1990 (with a one year bump of about 5M tons probably attributable to met coal). The rise of the so-called BRIC economies didn’t reverse the overall trend; the days of China’s roaring economy didn’t reverse the overall trend.

      My concern about making qualitative (yet accurate) comments about met coal and developing economies is that it holds out hope that things will return to the good old days in Virginia’s coal country. Those days are gone no matter what happens to the economies of developing countries.

      Coal mining has been in precipitous decline in Virginia for 26 years. Tobacco funds were sent to Virginia coal country, tax breaks were given to Virginia coal mining operations. Nothing has made even a bit of a difference apparently. The state politicians from coal country are still trying to keep tax breaks to prop up an industry that is dying in Virginia.

      This has been a classic case of failed government. The decline in coal mining has been obvious for decades. Money has been spent, special tax incentives have been given. Nothing has worked. Yet somehow progressive think that if only government had more of our money everything would be just fine. It won’t be fine. Our government is broken.

      I also find it interesting that the pseudo-conservatives in Virginia rail against wealth transfers to “welfare mothers”. However, decades of intra-state wealth transfers to coal country are just fine and dandy. Hypocrite asshats.

      • What’s most galling about this is the Tobacco Commission. I give Jim Bacon some credit for doing more than any other media outlet to shine a tiny bit of light on this oft-forgotten agency.

        But let’s remember: the monies from the national settlement in 1998 were supposed to be recompense from the tobacco companies to states for health care costs. Those health care costs were all over the state. Yet, tobacco region legislators, along with Attorney General Earley and Governor Gilmore, rammed through the Tobacco Commission so that an enormous portion of the settlement went to tobacco farmers (the indemnification part of the Commission’s title) as well as “economic development” for the tobacco region.

        Why did so much money for the entire state get funneled to about 15% of the state’s population? Why doesn’t the Assembly re-examine the yearly payments from the tobacco companies and place them in the general fund instead of to the Tobacco Commission?

  10. the tobacco money could easily go to pay for the Medicaid Expansion and be in line with it’s original purpose.

    in terms of high sulfur, low sulfur, Met, etc, et al – I’d defer to Peter on the facts… but agree with Don on the policy although a serious and practical question about the limits of what govt can do (or not) with respect to replacement economic development to rescue failed/outmoded/obsolete industry is a question but Don is correct that the Va GA is feckless and hopelessly incompetent on these issues.

    We are looking at, I’m sorry to say, EXACTLY what our Founding Fathers intended with “elected” govt; the folks in Richmond -we put there.

  11. Thanks Larry,
    In 1983, I joined McGraw-Hill in DC as an editor on a coal industry trade newsletter. I literally flew around the country for one year visiting coal fields and trying to get pricing and market intelligence. I had to memorize all kinds of obscure junk about coal that is totally useless anywhere else.

    I had to move after one year. I couldn’t take it.

    • Peter, add a Kardashian or two and a family of 14 kids and you’ve got a hit reality series on your hands. Perhaps, “Coal Rush – Virginia”

  12. Anyone who wants to understand the social and environmental degradation of Appalachia, and the role of coal (pre mountain-top removal), should read Harry Caudill’s “Night Comes to the Cumberland,” published, I think, in 1961 or so. It’s one of the great American books. I spent an evening with Caudill in 1971 iat his home n Hazzard, Ky. His only remedy for saving his part of the country: flood it with a new TVA!

  13. re: a new TVA

    I’d agree with the general sentiment – combined with education.

    In other words – infrastructure for those who are probably too old to received 21st century education and too young to retire but for the younger – education and job retraining.

    A good part of Appalachia needs to have the lands remediated. There are thousands of mines leaking acid, mountain-tops blown off that need to be re-forested and more modern roads needed.

    Interestingly enough – the major National Forests – the George Washington, Monongahela, Jefferson, and others in Appalachia were acquired by the Federal Govt after they had been clear-cut and abandoned, the wood used to build Eastern cities and the rivers and streams devastated by runoff and floods. The TVA, was created, in part, to control the flooding that resulted from earlier destructive forestry practices.

    So, we’ve essentially repeated that legacy, this time from coal by blasting off the tops of mountains on lands that were not in the original National Forests and deep mines now leaking acid into streams.

    Those now flattened mountain tops could be used for wind and solar – giving jobs to build it and continuing income from feeding it to the grid and perhaps the income used to provide health care and education.

    With the right kind of a plan – there is no reason – that the Appalachians could not become modern day Poconos providing some kind of an economic base consistent with the land and the people on the land.

    we could do that – or we could just say it costs too much and just continue to pay for welfare and entitlements forever.

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