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Posts Tagged ‘fiscal cliff’

Fiscal collapse of coal towns all but certain, new research shows

Wednesday, July 17th, 2019

New research shows that communities in coal country are at an increased risk of fiscal collapse. The data is the latest blow to President Donald Trump’s ongoing but faltering efforts to rescue the industry and its workers.

Local governments dependent on coal are failing to account for the financial implications of the industry’s demise, according to new findings from Columbia University and the Brookings Institution. That trend is likely to worsen should the federal government take action to curb carbon emissions, which would be likely if a Democrat were to triumph in 2020.

Released Monday, the new report looks at 26 counties in 10 states, all in Appalachia or the Powder River Basin in Montana and Wyoming. Those areas are all classified as “coal-mining dependent,” meaning that the industry is a major employer there, with some 53,000 workers noted by the study.

Coal also serves as a major contributor to local governments in those places. Despite that dependency, however, the report finds that those areas, already hard-hit by coal’s decline, are not prepared for the implications of potential climate policies.

“If the United States undertakes actions to address the risks of climate change, the use of coal in the power sector will decline rapidly,” the report observes, while going on to note that coal-dependent governments “have yet to grapple with the implications of climate policies for their financial conditions.”

With the backdrop of the plummeting coal industry, the study broadly examines the fiscal risk posed to communities heavily reliant on that sector. Between 2007 and 2017, coal production fell by a third, a decline that is set to continue even under current policies with a pro-coal federal government. But even a “moderately stringent climate policy,” the researchers note, could lead the industry to plummet by around 75% into the 2020s.

That would likely be disastrous for unprepared communities. School districts and other systems in these areas rely on coal-dependent revenue and local economies are heavily intertwined with the industry. Historically, the study argues, “the rapid decline of a dominant industry” has led to the fiscal collapse of local governments, threatening their long-term well-being.

And despite the risk that coal’s decline poses to reliant communities, government filings fail to capture this. “[M]unicipalities are at best uneven and at worst misleading (by omission) in their characterizations of climate-related risks,” the report notes.

Those findings come at a grim time for the industry. Coal has been declining for years, a trend due largely to market factors. Renewables and cheaper fossil fuels, like natural gas, have dethroned coal in recent decades. But Trump has made rescuing the industry a key mission of his presidency, going so far as to float bailing out coal, along with the also-struggling nuclear power sector.

Trump’s efforts to save coal have been primarily concentrated in regulatory rollbacks and rule-weakening. In May, the Environmental Protection Agency (EPA) unveiled the Affordable Clean Energy (ACE) rule, replacing the Obama-era Clean Power Plan (CPP), which used the federal government to target the emissions produced by coal-fired power plants.

By contrast, the ACE rule largely turns that authority over to the states, in a move experts have argued would not save the coal industry but would likely drive up emissions.

New data similarly indicates that the administration’s efforts aren’t shifting coal’s trajectory, even short-term. S&P Global reported Monday that despite the ACE rule, several coal plant operators are still going ahead with scheduled retirements.

Those operators argue that even despite the rule change, the “dynamics” within the industry will not shift, such as the rising popularity of renewables and natural gas. Notably, more coal plants shuttered during Trump’s first two years in office than during the entire first term of the Obama administration.

Even as coal collapses, however, experts argue that more can be done to help impacted communities. Proposals like the Green New Deal, a blueprint for rapidly decarbonizing the economy, include calls for a “just transition” — a clause that would ensure protections for coal miners and other impacted fossil fuel workers. Many Democratic 2020 contenders have endorsed the Green New Deal along with calling for a just transition for frontline communities hit hard by efforts towards net-zero emissions.

But some unions have aligned against the Green New Deal, expressing concern over the impact of decarbonization on those workers, even as other unions — including Service Employees International Union (SEIU) — have backed the proposal.

As Monday’s study emphasizes, advance planning is needed as coal communities head towards collapse; this could include potentially a carbon pricing system that would see funds redistributed to those impacted.

“A new source of government revenue may be required to push a serious economic development program across the finish line,” the report says, underscoring that a “logical source of these funds would be a federal carbon price.”

Even that may be a hard sell in many communities. Trump has expressed no interest in a carbon tax and local efforts have struggled. Washington state failed last November to enshrine a carbon pricing effort after a record-breaking financial opposition effort from out-of-state oil companies. And last month, Oregon Republicans left the state in order to kill a similar effort.

Still, the coal industry is keeping close ties to the administration. Bob Murray, CEO of coal mining corporation Murray Energy, is hosting a private fundraising event for Trump’s re-election campaign later this month, according to Documented. The fundraiser will be held in West Virginia, one of the most coal-reliant communities.

This article was originally published at Think Progress on July 16, 2019. Reprinted with permission. 

About the Author: E.A. (Ev) Crunden covers climate policy and environmental issues at ThinkProgress. Originally from Texas, Ev has reported from many parts of the country and previously covered world issues for Muftah Magazine, with an emphasis on South Asia and Eastern Europe. Reach them at: ecrunden@thinkprogress.org.

Corporate Profits Hit Record High While Worker Wages Hit Record Low

Tuesday, December 4th, 2012

A constant conservative charge against President Obama is that he is inherently anti-business. However, businesses keep defying the storyline by making larger and larger profits, rebounding nicely out of the Great Recession.

In the third quarter of this year, “corporate earnings were $1.75 trillion, up 18.6% from a year ago.” Corporations are currently making more as a percentage of the economy than they ever have since such records were kept. But at the same time, wages as a percentage of the economy are at an all-time low, as this chart shows. (The red line is corporate profits; the blue line is private sector wages.):

 

Corporations made a record $824 billion in profits last year as well, while the stock market has had one of its best performances since 1900 while Obama has been in office.

Meanwhile, workers are getting the short end of the stick. As CNN Money explained, “a separate government reading shows that total wages have now fallen to a record low of 43.5% of GDP. Until 1975, wages almost always accounted for at least half of GDP, and had been as high as 49% as recently as early 2001.”

This post was originally posted on Think Progress on December 3, 2012. Reprinted with Permission.

About the Author: Pat Garofalo is the Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

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