Rebuilding Coal Country

Graphic Designed by: Sana Imran

BRB Bottomline: “I can tell you what my grand-daddy always said. No matter how many times you beat and kick that dead horse, it’s not getting up to plow again,” a former coal miner shared with an Indiana University research team. While Appalachia’s coal country (extending from Pennsylvania to Northern Alabama) may not be a dead horse yet, the once foregone promise of stable jobs and small-town intimacy is little more than wishful thinking after years of dramatic declines in employment, increasing health issues, and subsequent regional poverty. 

Once the mono-product of the rural East, coal is now a bitter reminder of the economic and environmental effects an extractive industry can have on the lives of thousands of families and the communities they inhabit. What the people of Appalachia want are steady salaried jobs that reconnect communities and rebuild broken spirits. An economic paradigm shift, then, seems most beneficial for the region’s future prosperity. Investing in community-based startups and support programs coupled with a more concerted analysis of retraining opportunities and funding reallocation appear to be promising alternatives to current policies focused on regulatory rollbacks and large-scale grants.

Coal Country: Economic and Demographic Overview

In the early 1900s, coal was king: the industry boomed for decades as the unchallenged energy of choice for electricity, power, and industry. But beginning in the 1970s, with increased mechanization and a decrease in coal-based energy consumption,  the Appalachian coal industry began a slow decline that continues today.

According to a 2015 report by Drs. Michael Betz, Mark Partridge, Michael Farren, and Linda Lobao published in  Energy Economics, “Between 1990 and 2008, coal production from Appalachia fell by 37 percent and Western regions increased by 20 percent.” As of 2015, total coal production had fallen from a short-term 2008 peak of 1.172 billion short tons to just over 890 million tons, according to a Brookings Institute analysis.

Despite broad understanding and agreement that coal is no longer a sustainable source of revenue for Appalachian workers, the dominance of a coal mono-economy makes it hard for communities to break the trans-generational resource reliance that built the region. Economists refer to this trend as a “resource curse,” and econometric analysis done by Drs. Anne Walker and Stratford Douglas revealed the effect of the resource curse in rural Appalachia is such that an “increase of 0.5 units in the ratio of coal revenues to personal income in a county is associated with a 0.7 percentage point decrease in income growth rates.” Thus, even when coal revenues were growing in Appalachia (as a percentage of total economic income) communities were trapped in a negative feedback loop of low pay coupled with almost nonexistent job alternatives.

Decline in regional employment rates is the natural consequence of Appalachian coal’s decreased energy share and application. According to the Bureau of Labor Statistics (BLS), between 1985 and 2017, available coal mining jobs declined by about 71 percent, resulting in the loss of over 120,000 jobs in just 30 years. The Brookings Institute further reports that, between just 2016 and 2017, employment rates in the Appalachian coal industry fell 27.6 percent (about 12,000 jobs lost), an economic shock from which the region has struggled to recover.

Amid this stark economic decline stand the people of Appalachia. For over five generations the coal extraction industry played a vital role in maintaining the comparative wealth of rural communities as residents’ ancestors flocked to the region in search of work. Today, however, community residents flock instead to food banks and hospitals as mortality and obesity rates in former coal-producing regions swell.

Dr. Michael Hendryx, a professor of Public Health at Indiana University who studied the impact of extractive industries, revealed that Appalachian areas suffered an average of 1,067 more annual deaths than the national average between 1999 and 2004, and all Appalachian regions showed mortality rates (per 100,0000) over the same period that were at least seven percent higher than the national average. West Virginia and Kentucky, states hit particularly hard by coal’s decline, have some of the poorest and least employed counties in the country according to the Centers for Disease Control and Prevention (CDC) and BLS.

Beyond demographic data, however, fifty years of structural unemployment and community decline has cultivated an overwhelming “sense of grief,” as one respondent to the Indiana University report described it: a sense of lost culture and purpose. This despair slowly wears away at the region’s health and vitality, like a titrating drip of acid, that is perhaps the greatest challenge to overcoming the Appalachia’s economic crisis.

Politics and Policy: The Current Approach

Combatting coal’s decline by reforming the Appalachian economy is nothing new: regional stagnation has been a recognized issue since 1970. The current primary catalyst for economic recovery in the region is the Appalachian Regional Commission (ARC), which uses federal and state grants to provide funding for over 650 startup programs (as of 2015) that, according to Reuters, will help retain 23,670 jobs and retrain 49,000 workers.

The ARC is funded by a series of Obama-era federal grant initiatives, collectively entitled the Partnerships for Opportunity and Workforce and Economic Recovery (POWER) Initiative. POWER works by allowing eligible applicants in “coal-impacted communities” access to 64.6 million USD in grant funding, 45 million of which is provided via the ARC, for programs focused on economic diversification, job creation, capital investment, and workforce development. While the POWER Initiative has certainly provided much-needed capital infusion in the Appalachian region, it suffers from the same inefficiency that all top-down policies face. Federal, even state, funding, without local buy-in, has a limited effect on encouraging community-based revitalization projects.

However, the 2016 Election and populist ascendancy—what many saw as a clash between the middle-American production economy and wealthier service sector—brought the Appalachian plight to the political forefront. Both major party candidates promised economic recovery models for the region: Clinton proposed a 30 billion USD injection into the POWER Initiative model to “boost economic development by bringing clean and sustainable jobs to coal communities,” while Trump pandered to more visceral desires to “bring coal back to coal country” and roll back EPA regulations.

Though Trump’s platform won the voting hearts of Appalachian counties (400 of 420 ARC counties voted for Trump), neither his “turn back the clock” theory nor Democrats’ calls for ever-greater cash injections are long-term solutions for the region’s economic crisis. For that, a collaborative investment in local communities via startups and social programs coupled with top-down retraining initiatives appears to be a more promising way forward.

A Two-Pronged Strategy for Revitalization

Community-Based Startups and Social Programs.

The first step towards economic recovery in the Appalachia is restoring hope and vitality to drained communities, something often overlooked by sweeping policy decisions. A success story in this mentality shift is exemplified by the small mining community of Mount Carmel, PA.

After years of economic decline and the shutdown of the community’s church, Mount Carmel’s population was impoverished and inward-looking. In 2014, the diocese reopened Carmel’s church in coordination with job training programs provided by local Bucknell University. The symbol of the reborn church acted as a social catalyst for residents because, according to research published by Drs. Carl Milofsky and Brandn Green of Bucknell University, “local culture and identity are very important features of coal region towns, and the Catholic Church is embedded in the grammatical logic of coal culture.” Bringing back the diocese served as symbolic reinvestment in Mount Carmel that encouraged residents to change their mindset and increase participation in the University’s retraining offerings, a win-win for community and economy.

Community-based startups similarly seek to draw on both the social and economic rewards of “home-grown” economic activity in areas unaccustomed to development and labor opportunity. Startups like Coalfield Development Corp, founded by West Virginia native Brandon Dennison, allow former coal workers to take paying jobs providing renewable housing in their communities while also pursuing on-the-job training, according to research by Tiziana Bottino of Johns Hopkins University.

Similarly, Solar Holler, founded by West Virginia native, Dan Conant, employs former coal workers who develop skills in the renewable energy industry by installing PV cells on homes and buildings. Bottino also highlights the startup company BitSource, comprised of a team of former coal workers providing a 22-week intensive training program in computer coding that seeks to give former miners access to competitive and marketable skills in growing industries.

While local startups don’t necessarily provide long-term macroeconomic solutions to the problems facing Appalachia (for example, Coalfield Development employs only 40 workers), grass-roots entrepreneurship in rural areas does provide a renewed spirit of opportunity to the unemployed and helps break deeply-embedded negative psychological feedback loops. Community businesses and training programs like BitSource and Solar Holler are therefore as symbolically important as Mount Carmel’s revitalized church, and developing a sense of community in economically-disadvantaged regions forms the pivotal groundwork upon which more comprehensive economic policies can grow.

Job Retraining for the 21st Century

A quick look at data on Appalachia’s coal industry leads to one obvious conclusion: the industry is in deep and continuing decline. With this in mind, the next step after rebuilding community and restoring hope to families is the widespread retraining of laborers for the modern workforce. 

To analyze the potential costs and feasibility of industry- and region-wide retraining programs, as compared with smaller programs mentioned in the previous section, it is best to look at potential retraining options and case study projections. In particular, a study done by Drs. Edward P. Louie and Joshua M. Pearce published by the Michigan Technological Institute focuses on the costs and disruption associated with retraining all current coal employees for work in the photovoltaic (solar) industry. The study uses econometric modeling and worst vs. best case scenarios (worst: all employees need retraining, best: only those without transferable skills need retraining) to analyze the total cost of a full industry transfer.

Based on these models, Louie and Pearce conclude comprehensive retraining would cost anywhere between 181 million USD and 1.872 billion USD, depending on the level of training required. To put this in regional and federal budgetary perspective, the program would cost anywhere between 100 and 1,200 percent of the ARC’s 2019 budget of 152 million USD, but would, according to the study’s estimates, amount to only 0.0052 percent of the federal budget (as of 2013). Given the burdensome cost of shouldering such an ambitious retraining program exclusively on the local level, it appears evident regional funding in conjunction with federal cash injections would be required to effectively fund any similar project. Louie and Pearce come to a similar conclusion in their study and highlight four primary potential capital sources for maximizing economic stability and encouraging local buy-in: self-provided funding, industry-subsidization, state/regional funding, and federally grants.

While a complete and singular shift from coal to solar is certainly more an issue for economic theory rather than policy—raising questions ranging from local job availability to the solar industry’s growth rate—the projected comparative low cost of such a program is at least an indication that the social and labor return-on-invested-capital is high for retraining programs in Appalachia. Retraining thousands of workers for computer software and healthcare industries, for example, could provide stable jobs for coal workers as well as generate positive externalities for society more generally. A diverse combination of retraining programs for several industries based on local needs and skills is likely the most practical and realistic way a large-scale labor market shift could be initiated.

As for funding sources, in addition to the methods discussed by Louie and Pearce, two other major potential revenue sources for job retraining initiatives have been proposed by lawmakers in recent years. In 2015 Ohio Governor Ted Strickland (R), in conjunction with Greg Dotson and Matt Ashley,  expressed support for increasing the royalty rate and rental rates of surface mining contracts to pay for programs helping displaced miners, and in 2017 Senator Mitch McConnell (R) introduced the RECLAIM Act, which would allow funds from the Mining Reclamation Act of 1977 (SMRCA) to be reallocated to coal community revitalization.

Bipartisan support for increasing federal funding to Appalachian laborers appears then to be a promising source of capital fuel, particularly when coupled with current ARC funding and regional presence, to stimulate more ambitious coal retraining programs.

Take Home Points

Rarely in a region as large as Appalachia has one industry had such a profound impact on the livelihoods of so many individuals. The decline of the regional coal mono-economy since the 1970s severely disrupted the quality-of-life and community identity previously enjoyed by coal employees and their families. But throwing money at the problem via federal subsidies and cultivating rhetoric to play on hopes of a return to coal’s preeminence have proven ineffective solutions to the daunting task of reinvigorating Appalachia. A community of people with a deficit of hope, overlooked by modern economic development, and poor in capital resources will need a variety of top-down and bottom-up economic initiatives to see real change in their economic reality. While it’s doubtful joint federal-state job retraining programs and the prioritization of community startups will act as a proverbial “silver bullet” for an economy experiencing half-a-century of depression, they are at least strong starting points to begin effectively combating the region’s economic, and associated human, crisis.

Appalachia’s economic situation may look bleak from a conventional standpoint, but if you can’t beat a dead horse into plowing again then it’s time to invest in a tractor.

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2 Comments

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