June 03, 2014
Like building a new airport, restricting carbon dioxide emissions will cost jobs. (If it’s not obvious that building a new airport will cost jobs, then you better study more economics. The new airport will pull business away from other forms of transportation and other airports. That will cause people to lose jobs. On net, there will likely be job gains, but there will definitely be people who lose their job as a result of the new airport who either don’t get another job or at least another job that is comparable to the one they lost.)
The reason that many people may not immediately realize that most government measures to improve the infrastructure, or really promote any form of economic development, lead to job loss is that the media generally ignore the job losers. They don’t talk to the workers at the airports that are losing business, the truck drivers who might be displaced by air freight, or all the workers in restaurants, stores, and hotels who served the old facilities.
That is clearly not the case with measures to restrict carbon dioxide emissions. We have already heard numerous accounts of how this will devastate the economies of large parts of the country that are dependent on coal. NPR ran two such pieces on Morning Edition today.
It would be helpful if these stories gave some idea of the numbers involved. According to the Bureau of Labor Statistics there are just under 80,000 employed by the coal mining industry. This is less than 0.06 percent of total employment. If the economy generates jobs at the rate of 200,000 a month (roughly its pace over the last year), the total number of jobs in the coal industry are equal to the number that would be generated in 12 days.
Of course the measures proposed by Obama would not immediately eliminate all the jobs in the industry. They are supposed to be phased in by 2030 and even then the number of jobs in the industry is not likely to be zero. If we assume that the job loss occurs at an even pace over the next 16 years, it comes to a bit less than 5,000 jobs a year.
While this may not seem large relative to total employment, there are a small number of states in which the industry is heavily concentrated. In West Virginia the industry accounts for 32,300 jobs out of a total of 772,000, or 4.2 percent of total employment. In Kentucky it employs 11,600 workers out of total employment of 1,846,000, or 0.6 percent of total employment. In Virginia, the industry employs 9,900 people (this includes people employed in logging) out of a total employment of 3,768,000, giving coal mining a share of less than 0.3 percent of total employment. The employment shares in other states that are often referred to as “coal states” like Pennsylvania, Ohio, and Illinois would be even lower. There are counties in which coal is very important, but these are almost by definition small since the total number of coal miners is small.
Furthermore, as noted above, none of these states will be losing all these jobs immediately. Even in the case of West Virginia, in the complete disappearance scenario, we would be talking about the state losing less than 0.3 percent of its jobs a year due to the emission restrictions.
By comparison, our trade deficit means that an amount of demand equal to 3 percent of GDP is being spent abroad rather than in the United States. This directly translates into a loss of roughly 4.1 million jobs. If we could lower the value of the dollar relative to other currencies by enough to reduce the trade deficit by just 10 percent (0.3 percentage points of GDP), it would lead to 410,000 more jobs in the United States. This is more than five times as many jobs as we stand to lose in the coal industry over the next 15 years. In principle the reduction in the trade deficit can be accomplished in a relatively short period of time. Declines in the value of the dollar led to sharp reductions in the trade deficit (more than 2 percentage points of GDP) in the periods from 1987-1989 and 2005-2010.
The coverage of job loss in the coal industry also can’t be explained by a special concern that the media have for the jobs of coal miners. We lost 75,000 jobs in the coal industry from 1985 to 1993, an eight year period, a time when the labor force was less than 75 percent as large as it is today. This much more rapid pace of job loss received almost no attention from the media at the time.
In short, it is difficult to explain the media’s focus on the potential job loss in the coal sector either from the standpoint of a concern about jobs in general, since they usually don’t express such concerns or even from a concern about coal miners’ jobs, since they have been very willing to ignore larger job losses in the past.
None of this should take away from the fact that coal miners and these communities will take a real hit from addressing a problem that is not their fault. They deserve real compensation since they will be asked to pay a much larger price for slowing global warming than the rest of the country. However concerns for these workers and their communities cannot explain the media coverage we have seen on the issue to date.
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