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The King Institute for Regional Economic Studies (KIRES) at King University has released
its seventh report, “Economic Impacts of Job Losses in the Coal Mining Industry.”
Coal companies in Southwestern Virginia announced a new round of layoffs in their
industry in early February 2013. Layoffs have been ongoing in the Central Appalachians
and other coal mining regions since the latter half of 2012.
According to Evans, “The US department of Energy in its February 2013 outlook for
coal production in the Appalachian region forecast a decline of 5.4 million tons in
2013, on the heels of a decline of 33 million tons in 2012. This forecast implies
that more layoffs may be in the offing.”
The newly released paper, KIRES Paper No. 7, presents estimates of the impacts of
potential job losses in the coal industry on the economy of the Coalfield region of
Southwestern Virginia. The paper was prepared by Dr. Sam Evans, associate professor
of finance and economics at King University.
According to the study, the role of coal mining in the region’s economy is enhanced
by significant multiplier or spillover impacts associated with coal production and
employment. For example, coal mining employment directly accounts for 7.5 percent
of total employment in the Coalfield region. However, after taking into account the
multiplier or spillover effects of coal mining, it is found that coal mining is the
basis for 17 percent of total employment in the region. Likewise, earnings paid to
households employed by the coal mining industry directly account for 16.5 percent
of total earnings paid to households employed in all industries in the region. But,
the percentage of total earnings tied to coal mining is 27 percent, after the spillover
affects of coal mining are taken into account.
The study found that each coal mining job supports 1.27 jobs in other sectors of the
region’s economy. The loss of 100 coal mining jobs, for example, would lead to 127
jobs being lost in all other industries, for a total loss of 227 jobs in the Coalfield
“Another important finding was that each job in the coal mining industry generates
nearly $128,000 in earnings paid to households employed in all industries of the region’s
economy,” added Evans. “A loss of 100 coal mining jobs would depress total earnings
paid to households employed in all industries of the Coalfield economy by $12.8 million.
The study concludes that layoffs in the coal mining industry have significant and
wide ranging impacts on the Coalfield economy. The short-term economic losses may
be mitigated somewhat by severance pay packages and unemployment insurance and/or
the extent to which terminated employees find alternative employment. However, the
unfortunate economic fact for the Coalfield region is that it takes the creation of
2 to 6 new service sector jobs, depending on the sector, or nearly two manufacturing
jobs to offset the total amount of earnings lost when one coal mining job is eliminated.
KIRES Paper No. 7, “Economic Impacts of Job Losses in the Coal Mining Industry,” is
available in electronic format at http://kires.king.edu.
KIRES Paper No. 8, slated for release in May 2013, will profile and present an economic
analysis of the economy of the First Congressional District of Tennessee.
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College, the University offers more than 90 majors, minors, pre-professional degrees
and concentrations in fields such as business, nursing, law, medical and health sciences,
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in business administration, education, and nursing. A number of research, off-campus
learning opportunities, and travel destinations are also available. King University
is a NCAA Division II and a Conference Carolinas member with 25 varsity athletic teams.
For more information about King University, visit www.king.edu. King University does not discriminate against academically qualified students of
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Richlands, VA 24641.