The prospect of “high wage” mining and energy jobs is
one reason Western communities might welcome extractive industries
(HCN,
2/18/08). Indeed, U.S. Bureau of Labor Statistics (BLS)
data confirm that mining and construction pay well, averaging $20
per hour, while workers in the “Leisure and Hospitality” industry
make just $10 per hour. So does the community benefit economically
when it attracts highly paid miners? Economists recognize that
there are three reasons the answer might be “no.”
First,
a major factor in the wage disparity is that the risk of death in
mining is more than 10 times that in the leisure and hospitality
industry. BLS data documents 25 deaths per 100,000 workers in
mining, but only 1.8 in leisure and hospitality. Moreover, the risk
of nonfatal occupational injury is more than 2.5 times higher.
Miners are compensated for taking these risks, but fatal and
nonfatal injuries impact the contributions workers make to their
families and communities. Also, some of the risks in extractive
industries are passed on to other sectors, especially through
uninsured workers’ compensation funds and private medical
insurance.
Second, higher wages in mining also compensate
workers for the risks of layoffs during bust periods. Employers
must pay high wages to offset the risk of unemployment, but the
boom-and-bust cycle associated with mining often leaves communities
reeling and investments in other businesses stranded. While some
jobs in the leisure and hospitality industries are also cyclical,
they are more predictably cyclical, compared to
the unpredictability of metals’ prices and miners’ jobs.
Third, mining and energy developments typically overwhelm local
housing and other markets and cause increases in the cost of
living. For example, Sublette County, Wyo., is in the midst of a
natural gas boom and has a cost of living 17 percent higher than
the Wyoming average. Although miners’ wages probably reflect the
increased living costs, the incomes of some others do not. Local
residents with fixed incomes, including Social Security and pension
recipients, are hurt by higher living costs because their incomes
do not adjust accordingly. For a more complete discussion, see
http://agecon.uwyo.edu/waea/WEForum/WEF-Vol.6-No.2-Fall2007.pdf.
Joe Kerkvliet, Resource Economist The Wilderness
Society
Bozeman, Montana
John Loomis,
Economist
Fort Collins, Colorado
This article appeared in the print edition of the magazine with the headline Higher wages and health hazards.
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