Arch Coal Inc. has laid off hundreds of eastern Kentucky coal miners this week due to an increase in government regulations and a decrease in demand.
The miners face dimming prospects for finding new jobs as the U.S. economy has all but stalled, according to recent jobs reports. Kentucky’s unemployment rate is 8.2 percent, same as the national rate.
Many Arch employees will be looking for opportunities to replace relatively high-wage jobs in a region of Kentucky where high unemployment rates haven’t budged in years, according to Bloomberg Businessweek News.
"It's a tough, tough situation," said Jeff Whitehead, executive director of the Eastern Kentucky Workforce Investment Board, a nonprofit group that matches employers with people looking for work. "Eastern Kentucky doesn't have a real diverse economy."
Friday, Whitehead said approximately 1,500 miners have been laid off this year in a 23-county region in the heart of the eastern Kentucky coalfields. Word of a major layoff came Thursday, when Arch said it was cutting about 750 jobs in Kentucky, Virginia and West Virginia. Eastern Kentucky, with 600 jobs lost, bore the brunt of the cuts.
Coal miners in eastern Kentucky on average make up to $70,000 a year, according to Whitehead. There are not many jobs available that even come close to matching that income, he said.
"I just see no prospects for them at this time," said Knott County Judge-Executive Randy Thompson.
Arch, based out of St. Louis, stated the layoffs were necessary due to market pressures partially caused by the challenging regulatory environment that has pushed U.S. coal consumption to a 20-year low. Utilities are increasingly converting from coal to natural gas to generate electricity. The price of natural gas is going down as supplies grow.
In Knott County and surrounding Appalachian Kentucky counties affected by Arch layoffs most non-mining jobs are small businesses that offer minimum wage or slightly higher, he said.
Knott County stands to lose about 250 jobs from the Arch cutbacks. The county had already lost another 250 or so mining jobs since last year and the amount of mining done there has greatly diminished.
Thompson worries that as mining jobs dwindle, the region could face another outmigration as people seek opportunities elsewhere.
"I see another exodus like we saw in the '60s and '70s from east Kentucky at that time to Detroit," he said. "Except there's no Detroit to go to because of the auto industry's decline. “I'm not sure what people are going to do."
Coal mining has been the only sizable industry in the Knott County, the jobless rate was 12.5 percent in May. The rate doesn't reflect people who have given up finding work, he said, estimating nearly one in five adults is out of work in the county.
The decline of coal production is as devastating as the loss of the Toyota plant would be to Georgetown in central Kentucky, said Thompson..
"Go in today and just say, 'All right, everybody is laid off' and see how that affects Georgetown," he said. "It becomes a ghost town. That's what's happened to Knott County."
Merchants in the area’s small towns will be hit hard by the latest round of layoffs.
Jeff Blair, a funeral home director in Knott County, said mining layoffs have caused more people to fall behind in paying off funeral bills as they try to scrape together enough money to pay for food and electricity, he said.
"We'll have people come in and say, 'Look, times have gotten hard. I've lost my job. I can't pay you guys.'"
Coal mining jobs in Kentucky have dropped from 17,800 in May 2009 to 15,600 last month, according to figures from the state Office of Employment and Training. In May 1992, the work force was 24,400.
Kentucky Gov. Steve Beshear said he was "extremely disappointed and disheartened" by the layoffs. He said the state will dispatch teams to assist displaced Arch workers in seeking new work or training to gain new skills.