Economist's View: Mining generates 10 times more economic value than leisure, hospitality
This month, the News Tribune published a commentary by Sandra B. Zellmer and Alexandra B. Klass of the Center for Progressive Reform. In it, they argued against Twin Metals and the possibility of sulfide-ore copper-nickel mining in Northeastern Minnesota (Professors' View: "U-turn on Twin Metals a massive giveaway of irreplaceable public resources").
"(A Twin Metals) mine promises to be an economic loser," they contended, saying that, "A 2017 study by Key Log Economics showed that copper-nickel mining in the Boundary Waters watershed would cost Northeastern Minnesota $288 million in lost revenue from visitor spending and lost property values amounting to about $509 million. The 4,490 local jobs at risk would be 10 times the number of new mining jobs expected to be created, according to a study from the School of Business and Economics at University of Minnesota Duluth. The total tab? Between $402 million and $1.6 billion in lost annual income."
The Key Log Economics' report was subtitled, "The Need to Consider Real Tradeoffs," and this need is certainly very real. But assuming for a moment this report is correct in assessing mining's impact on the region's tourism industry, what are the economic benefits brought by mining that have to be weighed against this? To consider real tradeoffs, we need those numbers, too.
That is why we at the Center of the American Experiment have produced our forthcoming report, "Unearthing Prosperity." In it, we estimate the potential boost to Minnesota's gross domestic product from proposed copper and possible titanium mining. We estimate that developing these resources would increase the state's GDP by $3.7 billion annually. That's the economic equivalent of hosting 10 Super Bowls every year. This would support approximately 8,500 jobs with total wages of $635 million. And this would add approximately $198 million in tax revenue for state and local governments.
According to data from the Bureau of Economic Analysis, each job in mining and logging generates an average of $447,603 annually in gross value. On this measure, it is Minnesota's 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 state's 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.
Nobody wants to see the beautiful Boundary Waters Canoe Area Wilderness damaged, but, as our report explains, it is possible to carry out these proposed operations in an environmentally responsible manner. Modern mines, like the proposed copper-nickel mining in Minnesota's Mesabi Iron Range mining district, are designed, built, operated, and eventually closed using effective and proven environmental safeguards that provide comprehensive protection for all elements of the environment. Minnesota's environmental regulations establish and enforce stringent environmental protection criteria and monitoring requirements for all Minnesota industries. Mining is no exception.
Economically, northern Minnesota will not flourish by relying on catering to well-off urban dwellers on their holidays. Bureau of Labor Statistics data shows that, in St. Louis County, the average annual wage in leisure and hospitality in 2017 was $16,500. In mining it was $83,000.
The people of northern Minnesota deserve the opportunities from high-paying jobs and prospects that those elsewhere in Minnesota take for granted.
John Phelan is an economist at the Center of the American Experiment (americanexperiment.org), based in Golden Valley, Minn.