What Happened to Coal?


  • The coal industry in the US has been on a downward trajectory since about 1970s.
  • Despite what is reported this is not primarily because of environmental regulations.
  • It’s also not because people are embracing alternative energy.
A brief history of US Energy.

The last 100 year history of US energy is a fascinating story… at least to me. But I’m primarily interested because I see the disturbing headlines of town and counties in part of our country: high rates of unemployment, rising poverty and the associated crime and drug use that goes with it. Along with those headlines is the narrative of industries, like coal, shrinking and dying and the finger pointing… primarily at environmental regulations and subsidies being showered on environmentally friendly energy sources, specifically solar and wind
The conflict is often positioned as a fight between jobs and environment; as if environmental industries somehow don’t employ people.

The reality is completely different and it’s well summarized by this graph anyone can go find on the energy information agency’s website.

What has happened to coal over the past 100 years is very clear. It was first replaced by petroleum (1908-1950) and then later by natural gas (1950 – 1990 and then really accelerating after hydraulic fracturing made extracting natural gas much more affordable).
In the grand scheme of the American energy landscape, “other renewables” is barely a blip on the radar.
So from a policy perspective if you just eliminated ALL renewables, rolled back hydroelectric and banned biomass and you somehow prevented petroleum and natural gas from increasing market share, the actual improvement to caol would be less than 10% of the total energy pie. that would make 2016 look roughly like 1997 from a market share perspective.
The heady days of America being a primarily coal driven energy country are gone… over… forever. Unless you want to ban petroleum and natural gas as sources of power, forget it.
So when politicians talk about putting money into coal, it’s incredibly financially irresponsible as well as being cruel and dishonest to the people who work in that industry.
One other area that is discussed is exporting it. Sure, America is moving away from coal in what looks like a long term and permanent way, but what about other developing countries that need cheap, efficient energy?
Well, the obvious players here are China and India. For many years China did have a strong appetite for coal, but that peaked in 2013 and has gone down ever since.
And who can blame the Chinese. Their air quality is so poor they have to essentially close down cities. Do we really want to believe that significant investment in coal plants in the US today will translate into coal sales in China tomorrow? No way in hell.

What about India? Well, while that is a possible market, it turns out India has a lot of it’s own coal it can mine. And guess what… Indian miners earn a lot less than US miners. So unless the future of US coal is somehow extracting the coal for less than they can do it in India (including shipping costs and potential import taxes) there’s no future there either.

I will say this. It’s POSSIBLE that some kind of new use for coal is discovered that previously doesn’t exist and can’t be predicted. It’s also possible that we run out of natural gas or petroleum before those sources are replaced and the reliance on coal comes back.

That sounds far fetched, but consider two examples from history.

Standard Oil’s primary product was kerosene for lighting households. That market was crushed by electricity as it became available which forced them to pivot to gasoline. Before the automobile gasoline was a dangerous byproduct that was considered worthless.

Similarly, during the early days of whaling, it was only the whale oil that was extracted, the bone was thrown away. It wasn’t until bone was used for making things similar to the way plastic is used today that it became valuable.

So there are examples from history where things that look like they are dying find a second life because of new uses. But those things don’t require intervention… the market tends to discover them.

This is the really nasty issue. I’ve commented a lot about basic income and I still think this is a potentially good idea, but it’s also long term and doesn’t help people today.

There are longer term ideas, like investing in high energy wind farms in Western Kentucky. Those also required skill workers for both construction and maintenance and Western Kentucky has a combination of moderate the high winds as well as lots of land. It’s also a lot healthier to work on a wind turbine than in a coal mine, and the clean up costs are not quite as high. The problem, of course, is that wind isn’t all that efficient today so the economics don’t make sense…. but hey… the economics for coal don’t make sense either so if we’re going to subsidize maybe it should be in something future looking?

Another possibility is to focus on natural gas production in Kentucky. The major problem with this is that other sources are much cheaper to develop and extract.

The state itself also should look for future investments in high tech industry generally. Somewhat more outlandish thing like Pittsburg’s focus on self driving cars. The city essentially restructuring itself from steel to technology.

Right now Kentucky gets 85% of it’s energy from coal vs. the national average of 32%. I suspect this is because the industry has a lot of power and is desperately trying to cling to the past at the cost of the current and future people of the state.

I’m not picking on Kentucky. It’s a beautiful state with vast resources and some of the most breathtaking scenery in the country. It’s not fair that hard working people who spent decades of their lives doing back breaking work in dangerous conditions get the shaft because of long term economic trends beyond their control. It’s just as bad that they are being lied to and given false hope so that a small number of people can extract the last pound of flesh for their own enrichment.

I believe the way our of these situation is a combination of building for the future while exercising some compassion and care for people when they become victims of circumstances beyond their control. I actually think it’s entirely valid to declare a state of emergency in cases like this and treat the people in these areas the way we would people caught in hurricanes or massive fires. While those are “naturally occurring” disasters, they are just as devastating and just as difficult to control at the individual level.

How to get a job.

Recently, my nieces and nephews have started entering the “job market.” Some are in college, some are in high school, some are starting high school. As a result I get to overhear conversations about finding and getting jobs… something I haven’t had to do in many, many years.

When I say “find” and “get” I’m talking about the situation where a young person who has ZERO work experience is trying to get some kind of job. Usually their primary motivation is money; but there’s also some amount of building a sense of freedom and responsibility as they transition from being “kids at home” to “responsible adults.”

The normal process starts something like this.

1) Recognize money is a thing that’s needed.
I think the first step is waking up one day and realizing money is a “thing.” My kids are 2 and 4. For them money is coins they can spin and throw around with no connection to the house, the toys or the food. When kids get older they make this connection and start negotiating for allowances/ad hoc money/pay for chores or any other mechanism so that they can have money providing them with greater choice and freedom from mom and dad. The next phase pushes them to not want to ask mom and dad at all. After all, even though allowance is “your money,” parents are still in the background judging your decisions… if there was someway to get money without asking parents at all, they can’t do this anymore. (Of course, us adults know that our parents STILL do this, but let’s not ruin it for the kids 🙂 ).

2) Figure out where to get it.
This is where things get interesting for me. What I see happening is that my nieces and nephews almost immediately see a single possible transaction mechanism. Specifically that they have to “do” something for someone else (a company) and they “get” paid to do it. This is a simple labor for money transaction. Thus the goal is to figure out how to get as much money for as little labor… that is a high $/hour wage. From what I can see there is not a ton of focus on passion, resonance with employer, long term prospects, etc. and it makes sense because mostly these are young adults looking for spending money over the summer. Real jobs don’t come until after college, as per script.

3) Figure out HOW to get it.
The next phase is to figure out how to get the job in the first place. So you learn about job applications, cruise around town looking for places that have “hiring” signs, go in, get an app, fill it out, give it back and get ready for rejection. After enough rejections, you’ll somehow get hired. Maybe the manager thought you were cute or took pity on you. Maybe there were few other candidates and you were the only one that spelled things correctly. Maybe the timing worked out well. Who knows. In any case, it’s kinda like dating… you see what’s available, make a move and hopefully get to the next stage.

4) Figure out what work REALLY is.
Here I’m totally speculating, but what I learned when I had 2 “medial” jobs (Pizza Place, Software Store) is that most people don’t care at all, and this annoyed me. I think it annoys most people… even the ones who don’t care… and partly why they don’t care is because no one else cares. Since no one in school teaches you how to care about something everyone else doesn’t care about, it’s a new thing and you probably don’t know how to deal with it.

Another thing you learn about is power structures in a financial compensated setting. In school, the power structure is simple. The teachers have it all, the students have none…or very little. In the SOCIAL part of school it’s much more complex. Work is more like the social part of school with money thrown into the mix. So we learn about the person who is sucking up to the manager to get a raise. You learn about the abusive manager, the empowering manager, the manipulative manager, and so on.

You also learn the most important things. What you DON’T want to do. I think most people DON’T want to work an entry level retail/food job for the rest of their lives. Even if you stay in retail or food (nothing wrong with that) you presumably want to move “up.”

I have to say, I approached this whole thing quite differently.

My first job was at Little Ceaser’s Pizza back in 1993. I was close friends with the manager and I talked to him about it for a while before applying. The store was right across from the bus I took to college (which I later dropped out of) every evening. So strategically it was perfect. It paid minimum wage, but I got to take some pizzas home AND there was basically a supply of food while working. The combination of flexible hours, free food and convenient location made it perfect.

1) Engage and Innovate… anytime, anywhere.
I tried to innovate things when I started.

I found out scrubbing the giant sinks sucked balls, so I started a process where you fill the sink with water, add a bunch of cleaning materials and then stir vigorously to generate a huge vortex taking most of the crusty pizza dough off the sides of the sink.  I also learned that customers HATE waiting, even when they show up early and even more especially if they had kids. So if it was late at night and there was a rush and I was working alone or with one other person, we’d hand out free crazy bread and this had a huge positive effect.

Essentially I tried to look around and see what problems there were and just assumed that I was totally empowered to try and fix them. I didn’t ask for permission or wait for approval. I highly recommend this, even if it gets you fired. Work is MUCH more fun when your attitude is “how can I make things better” rather than “how long am I stuck in this dump.”

I call this the “Lazy/Persistent” approach. I basically think “hmm… how can I do little or no actual work but still get the job done.” Without the persistence I’d just be lazy and that’s no good… but together it’s like the necessity/mother thing.

2) Follow your passion.

I almost immediately realized that I didn’t want to work in pizza.
So what did I want? Well… I loved playing games, so I went to the local GameStop (at that time Electronic’s Boutique).  But I didn’t just ask for a job right away. I hung out there, talked to the manager, talked to the employees, watched the customers, tried to get a sense of everything. THEN when I knew the time was good (getting close to holiday season when these stores get crushed) I applied for a job. I knew what they needed, I knew how the store worked, and I knew the people that worked there. I also knew that the company allowed employees to take games home to try them which took a big chunk of costs from my entertainment expenses. Also, the store was close to campus so it was convenient.
I can tell you right now if you know when a store needs headcount and you know how their systems work, they WILL hire you. So when you see everyone applying for a job at the beginning of summer break and no one applying right after school starts… do the opposite; you might even get a higher starting wage. If you want to work at Subway or Cold Stone… hang out there for an hour or two a couple times a week and get a sense of how the work is done. Talk to people. Show an interest.
On the side I was trying to make money writing game reviews. If you want to learn how to take rejection better… become a freelance writer. I figured if I can combine two things I like, even better, and being a reviewer for a game magazine seemed like the best thing ever. I guess today I’d start a game blog, YouTube channel or something similar.
The combination of these things lead me to meet a guy who was a journalist for a huge German game magazine, which leads to the next step.
3) Look for and Seize Opportunity, Always.
I noticed there was a guy who about once a month would buy pretty much every new game that was out. I was thinking “holy shit, this guy has the life! He buys and plays all the new games all the time.” I later found out his name was Markus and he was the US correspondent for PC Games (the biggest games magazine in Germany at the time). It just so happens that I speak German and lived in Germany for a number of years so when he came in the next time I was able to talk to him and meet him more.
After a couple of visits I found out that he was actually doing video documentaries on game companies like Origin, Sierra, etc. I was thinking “holy shit… could your life get any better? Free games AND hang out with game developers.” At one point he needed to go to Dynamix up in Eugene, OR and for some reason couldn’t go himself. He asked me if  I could go, interview people, take some video and pictures… and come back. I said yes immediately. Note that I had school and work… but that didn’t matter. I figured I could swing a work change (because my work colleagues were great) and if I missed a day or two of school, who cares… this was more interesting anyway.
Important to note. I had NEVER interviewed anyone before. I had NEVER recorded anything professionally. I had NEVER taken pictures for a magazine. I had NO IDEA what the fuck I was doing… but here was this guy who was willing to let me fly solo to Eugene, OR and represent this huge German game magazine. It would have been easy to get scared and not do it, but that would have been a giant mistake.
So how did it go. Well, it was kind of a disaster. I got there fine, I took pictures, recorded interviews, etc. But I screwed up basic shit. For example, I didn’t write down what people looked like so when the pictures were developed I didn’t know who was who :). Kind of a problem when you’re writing an article, right? I also didn’t know how to mic people properly or test for sound, so some amount of the footage was bad… and on and on.
That said, I took the criticism from Markus and doubled down to try to get better. Over the years we made many video/documentaries and it’s among the more educational experiences I had. Deadlines were not negotiable, getting content was super competitive, work hours could be long and frustrating (burning CDs in the mid-late 90s had about a 50% success rate and took 4 hours 🙂 ).
If you’re really interested, you can see some of them here: https://www.youtube.com/playlist?list=PLE808BA0D93C4813C. For some reason the Blizzard one isn’t on there… it used to be… maybe Blizzard asked to have it taken down. It had some Warcraft Adventures images on it as well as a commitment to a release date for a project that was later cancelled :). They don’t do that anymore. But it was a great trip because I got to see Blizzard before StarCraft was released. I think they were about 60 people back then. This visit made me thing “Holy shit. I HAVE to work in the games business somehow.” I distinctly remember Susan Wooly who picked me up from the airport, made sure I got to all my interviews, made sure I had lunch, followed up afterwards, etc. From top to bottom Blizzard was high quality… is the impression I had. It was one of the best experiences ever.
4) Never stop learning
Over time the whole internet thing got bigger and bigger and it put a squeeze on print magazines. Markus had some good ideas here, but I think he had a hard time convincing the publishers. Anyway, I’m not sure exactly what happened, but like all things, the videos came to an end and I needed to find something else.
Fortunately, Markus had a friend named Scott whos fledgling e-Learning  company (remember when that was a thing) needed work and had a CD Burner (those were rare and expensive back then). So Markus used them for this purpose, but also realize Scott was a really smart guy and a programmer. So when he was doing interface work for the magazine CDs he had Scott do some of this work. I got to know Scott pretty well and after the work with the game company fizzled I talked with Scott about it.
It turns out that the whole internet thing was exploding in the late 90s, so I got a job programming HTML ($15/hr, $22.50 overtime). I didn’t really know how to write HTML but it wasn’t that hard either since I had been doing programming for many years as a hobby. (Disclosure: despite making a living programming for many year, I never actually studied it in college. I studied English Lit, dropped out and eventually finished up a Sociology degree. Go figure.).
5) Rinse and Repeat
From that point it was just doing the same thing over and over. At Digital Creators (Scott’s company) I tried to find things that were inefficient, annoying, tedious and improve them. Most of my job was converting paper documents into HTML which is almost as exciting as making pizza. But it turns out there were things like OCD, scripting, regular expressions and so on that could make the job MUCH faster and less boring. So when you go from doing about 3-5 pages/hour to 15-20 pages an hour, customers like that when they pay per page/per hour.
During that job I got to do all kinds of neat stuff.
I worked on the 2000 census. I got to program a Davox phone dialer (directly in a live production environment with ZERO knowledge of how they work… yeah… that was stressful). I got to work with a big oil company. I got to work with financial institutions.
Eventually I started my own company with some co-workers… watched it grow fast and crash; eventually got into the game business (finally) and that’s pretty much where I am today. In 10 years… who knows.
I was just always trying to see where problems were, see what help people needed, see what I found interesting and just take risks and keep trying. All my jobs have been interesting and educational in one way or another.
I realize this isn’t a normal how-to, but more of a mini biography.
But that’s the whole point.
If you approach getting a job as a how to, a series of predictable steps… a known path to a known destination, you miss the ENTIRE point and run the risk of dying with tons of regret after having a job you hate for a long period of time.
It should really be an ongoing process of curiosity, passion, learning, and risk taking.
It should be an outward looking process as well as an inward looking one.
It should be about seeing yourself as an agent of change and meaning.
No matter how “crappy” the job is, it exists for some reason and there is opportunity buried inside of it. If you think and act this way, you will feel better and people around you will notice.
Don’t look for a predictable road. It’s not there.
Try to make the best of whatever opportunity has in front of you and when something unusually pops up, don’t be afraid to jump on it.

If you lost your good job in 2008, sorry, you might never get it back.

I’ll show two quick graphs.

The first is the % of the working age population (over 16) that is employed going back to 1948:

The second is real output per hour

As you can see the labor force size grew, albeit lumpy, over the decades. Recessions would cause drops in labor force and productivity. Then recoveries happen and employment returns and productivity continues it’s relentless march upwards.

2008 showed a different trend.
First, the drop was much steeper, which makes sense because the crisis was much larger.
Second, unlike in other recessions, the rise in productivity as the recession ends did not contribute to the workforce returning, and eventually exceeding, pre-recession levels.

Let’s compare 1965-1980 with the 2000 -2016


In this scenario we see a dip in labor force during recessions, followed by an increase “U” shaped productivity change and then a return to previous employment levels.


In the 2000 scenario both recessions see a dip in workforce, but notice there is no “U” shaped drop and there is also no return to prior levels of employment. We’re very focused on the 2008 recession because it’s more severe and more recent, but the 2000 recession had the same characteristics.

Why this is happening is hard to explain. My own opinion is that it’s related to shifts in technology and automation and NOT outsourcing labor and manufacturing.

It’s difficult to prove that of course and definition like “employment” and “productivity” are always subject to criticism. For example, the base of potential employees has shifted with an aging population on the high end and a large crop of “millennials” who have not entered the work force. That may put pressure on the 2010-2016 side especially.

There is no question that manufacturing has had a long term shift out of the US as companies try to reduce labor costs. That has also happened in many areas of Information Technology, service and other industries as well. Maybe companies figured after the recession they need to keep their costs lower so they moved jobs away or hired elsewhere.

In any case, I believe that the combined reality of a decreasing work force and an increasing productivity trend exacerbates the wealth distribution and polarizes politics. I think that’s why you see people like Trump and Sanders in the US, Brexit in Briton, LePen in France and so on.

I also think that despite the claims of many of these politicians, a nationally focused labor policy will not bend the curve. It’s hard for me to believe the politicians in the 1960s and 1970s were just better at managing the labor/productivity relationship or the corporate CEOs just weren’t that greedy.

It’s not all bad news though… in the salad days of the 50s and 60s, employment population rates were considerably lower than they are today. My own thought here is that this was because women were largely locked out of the labor market in most areas. An unfortunate side effect of women gaining equality is that inflation adjusted salaries can decrease as households move from one to two incomes. Still… even if the number is the same the path down is more painful to the path up. When you go from zero to a million dollars it feels very different than when you go from two million to one million.

So, I believe if you lost your job in the 2008 recession and it hasn’t come back… you might be in for a very long wait.