Estep's March 2, 2016 Article on Coal in EKY
March 2, 2016 4:57 PM
Report: Eastern Kentucky produces only 4 percent of nation’s coal
Region has lost market share, thousands of jobs
Loss of high-paying jobs has hurt wider economy
Another coal boom considered ‘improbable’
Statistics in a new report underscore the sharp decline in coal that has undermined Eastern Kentucky’s economy.
Consider the figure 4 percent.
That was how much of the nation’s coal Eastern Kentucky produced in 2014. The problem: It was down from 13 percent in 1984, according to the article by policy analyst Matt Klesta at the Federal Reserve Bank of Cleveland, which was released Wednesday.
900 Number of coal jobs lost in Eastern Kentucky on average each year since 1979
That’s how many coal jobs the region lost on average each year since 1979, according to the report.
The downward slide has accelerated sharply since 2012, but that’s the painful tail-end of an overall decline in jobs that goes back decades.
Coal employment peaked in the state’s eastern coalfield in 1948 at more than 66,000 workers. It has since gone down 92 percent, interrupted only by a relatively brief, temporary uptick during the 1970s coal boom, the report said.
By the end of 2015, the number of coal jobs in Eastern Kentucky was estimated at 5,077 — down 29 percent from 2014.
That was the lowest level in more than a century, though the state still has an above-average share of coal jobs.
79 Percent drop in coal production in Eastern Kentucky in 2015 from the all-time peak in 1990
And finally, 79 percent.
That’s how much coal production dropped in Eastern Kentucky in 2015 from the all-time peak in 1990, according to the report.
Nearly half the counties identified in the report as producing coal in 1988 no longer do.
Eastern Kentucky is part of the area covered by the Cleveland Fed, which does research on a range of economic issues.
Klesta said he decided to look into the decline in coal in Eastern Kentucky and how the region was trying to diversify its economy because that could provide information and lessons for other places.
Cheap natural gas, efforts to reduce carbon emissions — including through tougher environmental regulations — and other factors also will put pressure on other coal-producing regions in the country, analysts have said.
But in the same period Eastern Kentucky’s share of national production dropped from 13 percent to 4 percent, Wyoming’s share jumped from 15 percent to 40 percent.
Booms and busts are inherent in natural-resource production, causing many to hope the next boom is imminent, the report said. However, international and domestic changes in energy production, policy and pricing “make the next boom increasingly improbable” for Eastern Kentucky, the report said.
The report notes how the loss of coal jobs hurts the region’s wider economy.
4 Percent of the nation’s coal produced in Eastern Kentucky in 2014; that is down from 13 percent in 1984
In 2014, the average coal miner made $72,809 a year, far more than the average income of $35,982 in Eastern Kentucky.
“The loss of thousands of high-paying mining jobs represents a significant decline in local spending power,” the report said.
While the rest of the state and nation recovered from the deep recession of 2008 and 2009, Eastern Kentucky didn’t, and it has been declining the past four years, the report said.
In addition to the lost jobs, the drop in production has slashed the amount of severance tax the state and counties get on mined coal.
The tax generated $298 million in the 2011-12 fiscal year but only $180 million in 2014-15, the report said, “straining city and county budgets that have become dependent on the tax revenue for maintaining services.”
The slump in coal comes on top of long-standing problems, such as high rates of poverty and drug abuse, the report said.
Klesta said the situation was not hopeless.
There are “a lot of good committed people in the region” working for solutions, he said, citing ongoing efforts to diversify and boost the economy.
Those include Shaping Our Appalachian Region, or SOAR; work by the Eastern Kentucky Concentrated Employment Program to retrain laid-off miners; ideas to use arts and culture for economic development; and a plan to spread high-speed Internet service through the region in hopes of spurring job creation.
“It’s going to be a collection of a lot of things” to revitalize the eastern coalfield, Klesta said.
The report was the first of several the Federal Reserve plans this year on Eastern Kentucky.
Bill Estep: 606-678-4655, @billestep1