The coal industry is often spoken of as if it is synonymous with West Virginia’s economy. While coal companies certainly remain a significant employer of West Virginians — over 22,000 jobs in 2008 — data show that the industry has provided fewer and fewer jobs and wages over time compared to the state economy as a whole.
The following graph shows the number of jobs provided by the coal industry as a percentage of the total number of jobs in the state. Direct coal employment has clearly experienced a significant decline over the last 40 years. The particular decrease that begins in the early 1980s is the result of breakthroughs in mining technology that minimized the need for human labor.
Looking at the ten-year averages of West Virginia’s reliance on coal for employment presents an even crisper picture:
Another way to measure the economic importance of an industry is to examine the amount of wages its jobs as a share total wages. The next graph shows steady dips in wages from coal due to industrialization in the early part of the twentieth century, followed by the technological innovations in the 1980s.
Again, the ten-year averages for wages provided by coal in West Virginia show a clear trend:
The implications of these data are obvious. The conventional wisdom is that West Virginia’s economy and the coal industry are one in the same. Ironically though, the state is becoming less and less dependent on coal — an industry that is, in turn, clearly dependent on the prevalence of a finite resource.
Failing to diversify the labor market by investing in alternative energy industries — like solar and wind farms — that can provide jobs simply because coal played a much larger role in the state’s economy in the past would be shortsighted and self-defeating.
Notes:
- The Bureau of Economic Analysis (BEA) defines “salary disbursements” as commissions, tips, bonuses, voluntary employee contributions to deferred compensation plans (e.g. a 401(k) plan), employee gains from stock options, and receipts-in-kind that represent income. In short, the graphs above capture the earnings that coal industry jobs provide to West Virginia’s workforce.
- When calculating employment (number of jobs), the BEA can count some workers twice. For example, if a person works two part-time jobs, the BEA will count both of them toward the final employment count. This pertains to both the number of coal industry jobs and the number of total jobs above.
