Job Creation and Unemployment

On Friday, the Bureau of Labor Statistics released its monthly unemployment numbers. “Both the unemployment rate (7.9 percent) and the number of unemployed persons (12.3 million) were essentially unchanged in October, following declines in September.” This was based on household survey data from the US. This number only accounts for persons who are still actively looking for work. It does not count people who worked odd jobs for pay, are underemployed or have become discouraged and stopped looking for work. My sense is that the actual “unemployment rate” would look far worse if we adjusted our metrics to really include the full picture of the working family in America.

We focused on understanding the three main components of unemployment: cyclical unemployment, is due to lack of demand for labor; frictional, which reflects the time it takes to match job seekers with those looking to hire; and structural unemployment, which is a mismatch between the skills in the labor force and the skills needed by firms. In Norm’s blog, he discusses the political arguments that both parties make to force our unemployment numbers to fit more cleanly into one of these categories to assign blame on why unemployment is so high.

So how does this relate back to coal export terminals? Last week’s initial search yielded not a financial statement from Millennium, but rather an economic report published by the company to show its projected positive future impact based on this terminal development. It included many tables and graphs illustrating many variables, including education, current income levels, population statistics, and fiscal expenditures for Cowlitz County. I thought that this document would be interesting to review this week with our economic focus on unemployment, as well as relate to our discussions of environmental justice.

The Millennium terminal in Cowlitz County is a great example of how industrial and environmentally burdensome projects can move into a community, with many local community supporters. According to the report, here are a few key statistics about Cowlitz County.

• Cowlitz County has a population of 102,410

• The largest employment sector in the county is manufacturing, which employs about 20% of the total workforce; construction comprises 8% of total county employment

• In 2010, the county had an unemployment rate of 11.1% and a median household income of $41,000 (in 2012 it was up to 12%)

• County general tax revenues have been hard hit by the recession.  Adjusted for inflation, revenues have declined both in total and on a per capita basis since 2006

• About 52% of workers living in the county are employed within the county; the County has a net job outflow of more than 8,000 jobs

Clearly, the county needs jobs, and the local workforce is skilled for industrial type work. With an unemployment rate higher than the national average, this could be an appealing proposal. A company coming in promising that “state and local benefits will include new and significant jobs, wages, output, and tax revenue. It is also expected that the majority of the positions would be filled from the local labor pool.” What especially when the first publicly published information is about initial jobs: Construction activity is estimated to support 1,350 temporary direct jobs, with an additional 1,300 additional jobs in the related community. However, this rosy and significant number drops significantly after construction stops. The long term estimate of the job creation from this $643M project is 135 direct jobs, and 165 subsequent secondary (indirect and induced) jobs. For a population of over 100,000, that is not a very significant unemployment solution.

For some sections of the community, this proposal’s positive benefits far outweigh the environmental risks. They are focusing on the positive impacts this development could bring, including the cleanup of the brownfield site, more jobs and economicstimulus. “I could see us hiring another large group of workers to come in for good family-wage jobs with benefits,” he said. “That trickles down through the economy. It’s not only a benefit to us, but to local businesses, schools and the tax base.”

For the moment, these two sides are at odds, and working through the NEPA, SEPA and public comment process before any plans are finalized. What jobs will roll out of the final decision will wait to be seen.