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An Economist's View: Minnesota’s economy hinges on the new mining jobs

John Phelan

Mining is vital to Minnesota's economic future.

What matters most for the economic health of a state or a nation is the GDP (gross domestic product) per capita, or GDP per population. To increase individuals' incomes, the GDP needs to grow faster than the population.

As we with the Center of the American Experiment show in our forthcoming report, "The State of Minnesota's Economy: 2017," our state is facing some challenges.

Minnesota's population is aging. As a result, its labor force participation rate is projected to fall from 69.1 percent in 2016 to 64.6 percent in 2035. A smaller share of the population will be working, producing goods and services and contributing to GDP growth. This will lead to lower GDP per capita unless the remaining workers can become more productive. There is pretty broad agreement that increased productivity is what Minnesota's economy needs in the coming decades.

Where can productive jobs be found? According to the Bureau of Economic Analysis, each job in mining and logging generates an average of $447,603 annually in gross value. This is the second-best-performing industrial sector after financial activities.

In leisure and hospitality, on the other hand, each job generates an average of just $47,986 in gross value, making it the worst-performing sector.

Yet, since 2000, Minnesota has lost 23.5 percent of its mining and logging jobs and increased the number of jobs in leisure and hospitality by 18.9 percent.

So mining jobs aren't just important for northern Minnesota, they are important for people all over the state, including those in the Twin Cities. These higher productivity jobs are key to the state's economic future. A way must be found to tap into the resources of northern Minnesota so our children can have the more-prosperous future we have come to take for granted.

Of course, there are valid environmental concerns that must be addressed if mining is to go ahead. I wrote in the News Tribune in August about the immense ecological harm caused by the Silver Bay refining plant in the 1960s. This must not be allowed to happen again.

But not all opposition to new mining is as valid. Recently, New York Times magazine carried a lengthy, very good article on mining in northern Minnesota. In it, former Minneapolis lawyer Reid Carron, the husband of former lawyer and Ely native Becky Rom, vice chairwoman of the pressure group Save the Boundary Waters, was quoted as saying, "Resentment is the primary driver of the pro-mining crowd here — they are resentful that other people have come here and been successful while they were sitting around waiting for a big mining company. ... They want somebody to just give them a job so they can all drink beer with their buddies and go four-wheeling and snowmobiling with their buddies (and) not have to think about anything except punching a clock."

I should declare an interest here. My mum's side of the family was filled with miners back in England. They were, by all accounts, short, hunched men who coughed black dust and were blind in anything more than moderate light. They worked hard and died young. If, along the way, they had a pint with their friends once a while, they earned it. What they hadn't earned — like the mine workers of northern Minnesota — were snobbish sneers like the one expressed by Carron.

A way can be found to undertake the necessary industrial activity in northern Minnesota without ruining the environment. Our state needs it, whatever the snobs might say.

John Phelan is an economist at the Center of the American Experiment (americanexperiment.org) in Golden Valley, Minn.

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