In 2014 when the Obama administration proposed new regulations to reduce carbon emissions, critics argued it was a job killing proposal. However, as Eric Roston of Bloomberg said 3 years ago “Coal companies are in the business of producing coal, not jobs.” A declining trend in coal mining jobs well predates the Obama administration, going back multiple decades. Automation and lower prices from alternative energy have historically killed more coal jobs than environmental regulation. Even without environmental regulation the lower cost of natural gas has pushed the demand for coal down. A decline in coal isn’t from a government boogeyman, it’s capitalism. The negative externalities of coal mines, the reduced price of competition, and the cheap cost of automation vs labor, are why labor demand in mines have decreased, not government regulation.
In fact, according to a report by Appalachian Voices coal mining employment was higher under Obama than Bush. The national coal mining average under Obama was 88,152, under Bush it was 76,470. Now this data may be skewed because it only covers Obama’s first four years compared to all eight of Bush’s, so instead of observing averages it would be more fair, or may even benefit President Bush, to compare modes. Under Obama, national mining jobs peaked between 90 and 95 thousand and he never had a year under 85 thousand in his first term. Bush only passed the 85 thousand mark once in his eight years.
However, coal production was higher under Bush than Obama. Despite reduced employment, aggregate output grew. Unlike jobs this is most likely linked to the reduction in regulations. So if the current administration’s promise was to increase coal production a reduction in environmental regulations would make sense, however if the goal is to increase jobs then allowing unchecked expansion will most likely result in an increase in automation rather than labor. Historically that has been the case. Going back to Bush 41 production and employment have trended in opposite directions. The number one killer of jobs in the coal industry is not government regulation but automation.
Based on historical trends and data the current administration may lead us to higher coal output, but will most likely fail to reverse the over three-decade decline in coal jobs. To benefit the average American laborer, it may be more efficient to invest in energy with growing employment trends such as solar, which is growing 12 times the rate of fossil fuels.
Watch for our next blog discussing solar energy.
Views expressed are the opinions of Jeffrey Goldfarb and the Financial Advisors at Goldfarb Financial and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete.