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An Economic Transformation

Tourism Under Trump: Can Recreation in Appalachia Revive a Struggling Economy?

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It’s mid-April, and the New River flows lazily past the town of Thurmond, West Virginia between ridges marked by the mix of leafless brown and electric green that signals the moment just before nature explodes and rafters return.

Looking down from the Concho Rim high above the river, Haynes Mansfield talks about Thurmond’s history as a coal hub and resort town in the early 20th century. Today, sections of the historic town are part of the National Park Service-managed New River Gorge National River. Mansfield, marketing director for ACE Adventure Resort, describes the location of the resort’s private put-in, on a bend below the town, as well as the put-in for other regional outfitters just above.

On this day, the river looks vacant. But within a few weeks, tourists will start to flow into the West Virginia communities that sit along the river for adventures in whitewater, rock-climbing, mountain-biking and other outdoor pursuits.

“Rafting is still the bulk of our income, but the rafting industry’s been in decline since ’96,” Mansfield said. “For us, it’s all about saying what can you do with 1,500 acres in Appalachia to provide different opportunities for people in the outdoors. It’s kind of like summer camp for adults.”

Along with Adventures on the Gorge, ACE Adventure Resort is one of the two biggest outfitting operations on the New River Gorge. The resort has grown so much since opening in 1987 that it’s running out of space to place visitors. It rents out 52 cabins on site, which range from tiny houses to 1,500-square-foot five-bedroom cabins and — during whitewater season — they’re booked solid.

In 2015, ACE moved to build a 60-room lodge on the Concho Rim, just feet from where Mansfield stands, but was blocked by the West Virginia Department of Environmental Protection due to a lack of wastewater capacity. As a result, the nearby city of Oak Hill annexed the historic mining community of Minden, as well as ACE. The company then launched a $23.6 million wastewater treatment project that will provide capacity for the lodge, as well as remove a number of open pipes that drain into the New River.

Mountain bikes sit outside of ACE Adventure Resort in Fayette County, West Virginia. (Photo: Mason Adams)

For Oak Hill, the annexation represents more than just an infrastructure project and expansion of territory. It’s an investment in a growing outdoor recreation sector that took root in the rafting rush of the ’80s and ’90s, and now has matured into a core part of the community’s culture.

“I went out last night with some friends who trained here in the gorge with me in 2001,” Mansfield said Monday. “They’re married, still live here. She flies with the Air Force, and he runs the outdoor program at WVU Tech. Another friend is a teacher. None of us ever thought we’d stay here. It just gets in your blood.”

Throughout Appalachia, many communities are considering a similar shift in focus when it comes to economic development. Outdoor recreation has grown substantially over the last few decades, not just as a way to bring visitors but also as a talent magnet. In doing so, advocates of the slippery, sometimes elusive concept of “economic diversification” are trying to change the community narratives in towns that have seen longtime legacy industries decline or even depart.

Each of these communities faces a different combination of assets and challenges, and so the formula varies place to place. Ask around for an example of a place where this has worked, and many people point to Roanoke, Virginia.

Roanoke, which sits in the Great Appalachian Valley at the junction of the Wilderness Road and Great Wagon Road, took off in the 1880s when Norfolk & Western built its headquarters there. The city rose and fell on the railroad’s fortunes through the 1900s, but the last few decades have seen a decline as the railroad shifted its offices to Norfolk and Atlanta, culminating in 2015 when it closed its last administrative offices in town.

By then, however, Roanoke had significantly shifted its model of economic development, pursuing outdoor, tech and science-based initiatives including the Blue Ridge Marathon, the GO Outside Festival, a broadband authority and an extensive partnership between Carilion Clinic and Virginia Tech that created a new medical school and research institute. In 2016—one year after Norfolk Southern closed up shop—the Roanoke Valley landed production breweries by Deschutes Brewery and Ballast Point Brewing and Spirits, as well Italian auto-parts manufacturer Eldor. Coming in quick succession, those economic development wins became a rallying point and completed Roanoke’s transformation from a gritty railroad city to a hip mountain beer town.

“We don’t do tourism in the traditional sense, although there is a tourism byproduct,” said Pete Eshelman, director of outdoor branding for the Roanoke Regional Partnership, the region’s economic development group. “We’re focused on improving our community for the residents, and then making it that place where people want to be from a worker or talent standpoint. The offset is that’s where people want to go visit. Either way we’ve created a community with vitality, where people want to be.”

Other communities have taken note of how Roanoke and its sister city in North Carolina, Asheville, have used outdoor assets to build an economic development strategy that brings jobs that pay livable wages, not just seasonal service gigs. The approach varies by community, however.

In Johnstown, Pennsylvania, non-profit economic development organization Johnstown Area Regional Industries (JARI)  has shifted resources to supporting outdoor-related entrepreneurs, said President and CEO Linda Thomson.

“We believe that this is going to help with this new outdoor mountain town atmosphere,” Thomson said. “Now, when a company looks at our region, say they want to open a recreational business or something that supports that industry, we provide financing and technical assistance. We’re really handholding a lot of small companies today. It’s a deliberate step at being more supportive of homegrown small business and being more tuned in to the service sector.”

‘We’re seeing boomerangs’

The community narrative hasn’t always kept up with that forward movement, however. When the metallurgical coal market spiked several years ago, JARI found itself recruiting workers to fill 1,000 job openings in the mines. Thomson explained that some residents still hope to return to the city’s glory days as a coal-mining, steel-making industrial hub. As a candidate last year, Donald Trump’s pledged to revive both coal and steel as major employers. Such promises won him the support many Appalachian voters.

“We’re seeing people whose fathers worked in the steel mill saying, bring back that economy, and we won’t be satisfied if it doesn’t come back,” Thomson said. “But most people are very excited about living and working here. We’re seeing boomerangs—people who grew up here who are now coming back. There are amazing opportunities for communities like Johnstown to thrive in this new economy.”

Skip Glenn, a professor of marketing and entrepreneurship at the University of Pittsburgh at Johnstown, believes the election of Donald Trump in November may make those legacy issues more challenging.

“The steel collapse created a generation that felt betrayed,” Glenn said. “I hear that in people’s voices and stories here. With the arrival of Trump in office, they’re expecting coal and the industry to come back and save the region. It’s not going to happen.”

The Historic Fayette Theater sits along South Court Street in Fayetteville, West Virginia. (Photo: Mason Adams)

In Fayette County, West Virginia, a handful of surface and underground coal mines still operate, and many cultural indicators still point squarely at the legacy coal industry. King Coal Chevrolet billboards are everywhere, and the remnants of historic mining towns remain in places like Thurmond.

As with Johnstown and Roanoke, however, economic development organizations have shifted their focus. The New River Gorge Regional Development Authority, which serves Fayette, Nicholas, Raleigh and Summers counties, is putting lots of energy into boosting homegrown entrepreneurs. That includes small-scale farmers, as the organization works to build up the local food economy. It also spun off Active Southern West Virginia, a nonprofit that seeks to get more residents active and healthy—with the intended benefit of making the region’s workforce more attractive to prospective employers.

“We’re hoping, as many other rural places have, by focusing on entrepreneurship, those small businesses will happen in a grassroots kind of way,” said Lillian Graning, chief communications officer for the NRGRDA.“

As with Johnstown and Roanoke, changing the conversation and self-image of southern West Virginia is part of the challenge.

“We can be our own worst enemy as far as an inferiority complex, but just in the time I’ve been here the conversation has become more pragmatic and less emotionally charged,” said Graning. “We have been able to get away from the ‘diversification = anti coal’ idea into a larger pie model. We’re not taking anything away from somebody and giving it to somebody else; we’re growing the economy. We’re diversifying and building more businesses.”

But while the conversation is shifting, other challenges remain and the new administration may be adding some new ones. Trump’s so-called “lean budget” severely cuts federal programs that aid in regional economic development, slashing Appalachian Regional Commission, the Economic Development Administration and the U.S. Department of Agriculture’s infrastructure budget, all of which provide key funding for programs and infrastructure. Congressional leaders have said they’ll preserve these programs, but even partial cuts could set back economic development efforts in Appalachia.

Then there are the challenges inherent to Appalachia’s climate. The outdoor economy still operates largely on a seasonal basis. In the New River Gorge, rafting season runs from April through October, with mountain biking and rock climbing providing a buffer “shoulder season” on each end. The outdoor industry provides mostly service jobs and full-timers often work as guides during the rafting season, then head to ski towns during the winter months.

Kenny Parker, co-owner of Fayetteville retailer Waterstone Outdoors, said his business has grown slowly but steadily since it was founded in the mid-’90s. He’s seen the rise of a local outdoors culture that plays in the gorge but flocks to local restaurants afterward. Parker sees more potential, but also missed opportunities, such as a friend in computer programming who moved to Fayetteville for several years ago but recently left.

Adventure as the fabric of community

Kelly Jo Drey, who works in county offices practically next door to Waterstone, is among those trying to make a difference. Drey is the Fayette County resource coordinator, but also is training to become a guide for Adventures on the Gorge this season. She’s developing a proposal to turn an 84-acre property into a farm incubator, as well as considering how to revitalize empty downtown storefronts in Mount Hope, a nearby city hit hard by floods in 2010 that’s also the target of an Active Southern West Virginia trail project. Drey also oversees Wolf Creek Park, a 1,000-acre county industrial park that was launched in 2006 as a live/work/play/learn mixed-use development.

“We thought to market to the outdoor industry to see if manufacturing might occur here,” said Gene Kistler, who sits on Wolf Creek’s board and also co-founded Waterstone Outdoors with Parker. “The idea was we’ve got this great place, with the outdoors at your fingertips, and technology allows you to work from anywhere.”

The park’s momentum was damaged by the recession of 2008 that ravaged the global economy, but the property still remains the county’s focal point for leveraging its outdoor assets into well-paying jobs. As of April, it’s home to craft brewery Bridge Brew Works, tunneling equipment maker Robbins Company, the county’s E-911 center, a WVDEP office and several single-family homes.

Drey walks along a series of boardwalks across a wetland at the park, describing how the structure was envisioned as a place for children to learn and residents to meditate, bird watch or just take a few minutes out of their day. As if on cue, a pair of red-breasted mergansers flush from the underbrush and take to the sky.

Drey believes draw of the gorge and other assets goes well beyond tourists: Outdoors culture is baked into the community.

“Certainly there are plenty of tourists that come here to spend time in the gorge and sample what we have to offer, but there are also a lot of people who come and live here year-round,” Drey said. “There are a lot of adventure athletes who make their lives here. That adventurous spirit is an important part of the fabric of the community.”

Further into the park, however, the long-term vision for Wolf Creek runs into reality, as the road abruptly ends at a graded 6-acre pad that sits vacant. There’s more land to be cleared and graded in the 1,000-acre park, but the county has been using the sale of sites to fund road building, so it’s got to sell that cleared pad to obtain the funding for the next phase.

In a way, this spot works as metaphor for the outdoors industry in many Appalachian communities. The region’s path forward leads to wildlands and some feeling of the unknown. But with investment, hard work and some good luck, perhaps those outdoors assets can be leveraged into jobs.

A native of the Alleghany Highlands, Mason Adams (@MasonAtoms) has worked as a journalist in the Blue Ridge Mountains since 2001. He lives with his family plus dogs, cats, chickens and dairy goats in Floyd County, Virginia. 

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An Economic Transformation

Minimum Wage Hike Would Have Major Effect In Ohio Valley

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Photo: Steve Rhodes via Creative Commons

A new report from the Congressional Budget Office shows increasing the federal minimum wage to $15 an hour would boost the wages of 17 million workers and lift about 1.3 million people out of poverty. But the CBO warns that could also result in more than one million lost jobs and could diminish overall income for others. 

The report comes as Congressional Democrats prepare to vote on the first increase in the federal minimum wage in a decade. It’s a move that could have a tremendous impact in the Ohio Valley, where low-wage service sector jobs are replacing higher-earning positions in manufacturing and mining in many communities. 

Democratic Congressman Bobby Scott of Virginia, who chairs the House Education and Labor Committee, said the new CBO report makes a strong economic case for a higher minimum wage.  

“Raising the minimum wage will provide a boost in the economy by putting money in the pockets of workers who will spend that money in the economy,” Scott said in a press call. 

Scott is pressing his caucus for passage of the Raise the Wage Act of 2019, which would increase the federal minimum wage to $15 an hour over the coming five years. The bill would also eliminate the lower minimum wage for tipped workers. The federal minimum wage is currently set at $7.25 an hour and hasn’t increased since 2009.

Opponents are concerned that raising the minimum wage could strain employer budgets, add costs for consumers and result in fewer people being hired.

Click for an interactive map from Economic Policy Institute, which advocates for a higher minimum wage. Source: Economic Policy Institute

Regional effects

The Economic Policy Institute, a left-leaning think tank, conducted a separate analysis in February showing how the Ohio Valley region would be affected by a $15 minimum wage by 2024. The policy group’s research shows across the nation about 40 million workers would see an increase in pay and parts of the Ohio Valley would see some of the most pronounced effects in the country.

For example, the EPI report predicts that in large portions of eastern Kentucky, southern West Virginia and southeast Ohio, roughly 40 percent of workers would see some increase in wages.

EPI says some workers employed year-round in Kentucky could see an increase in their average annual income of about $4,000. In West Virginia and Ohio, workers might see about $3,000 more in average annual income. 

EPI Economist Ben Zipperer said, in general, raising the minimum wage can help workers who earn the least, and he said those are typically women and people of color. 

“Minimum wages, because they focus on the bottom of the wage distribution, they affect and raise wages for people who are the least-paid in our economy,” he said.

Zipperer said raising the minimum wage can help reduce pay disparities by gender and race. He also said a federal minimum wage increase would improve incomes even for those working above the current rate. 

“And then also you’re going to be raising wages for people who are just earning about 15 or a little bit more than that as there is some kind of ripple effect,” he said. “It does extend a little bit beyond.” 

The Economic Policy Institute report is based on data from the American Community Survey. The states are broken up into Congressional districts where people live and not necessarily where they work. EPI said the CBO’s report overestimates the number of job losses that would come from raising the minimum wage. 

The policy center of EPI is lobbying for passage of the Raise the Wage Act.

Opponents of raising the minimum wage worry it could cause employers to lay off workers and raise unemployment levels. There’s also concern that raising wages would cause production cost and prices to increase, forcing more people into poverty rather than lifting them out of it. 

The Heritage Foundation, a conservative think tank, argues small businesses would not be able to increase revenue enough to cover the cost of higher wages. The group also said employers would be forced to increase prices or cut costs by laying people off. 

The CBO report notes uncertainty about the responsiveness of employers to a wage increase and how incomes will increase by 2025. 

This article was originally published by West Virginia Public Broadcasting.

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An Economic Transformation

My Cold Kentucky Home: Coal Country Turning To Solar As Heating And Housing Costs Climb

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A solar array installed this month at housing nonprofit, HOMES, Inc. Photo courtesy of HOMES, Inc.

This article was originally published by Ohio Valley ReSource.

Joe Oliver and Tony Brown peered into the dark crawl space beneath a Letcher County, Kentucky, home. Already, they could see problems. The crawl space had been blocked off with just a thin sheet of plywood; the posts supporting the house rested on uneven blobs of poured concrete; the whole place reeked of mold. 

A gas leak detector beeped urgently at the meeting of two pipes.

Crawling on elbows and knees, ducking to avoid exposed pipes, Oliver and Brown found flood damage, poor ductwork and one very large spider.

Later, the pair hauled themselves into the homeowner’s attic, appalled at the poor craftsmanship. A flimsy internal door was all that stood between insulated space and an unsealed attic. This homeowner was likely wasting a huge amount of electricity.

Energy auditors assess a Letcher County, Kentucky, home. Photo: Sydney Boles, Ohio Valley ReSource

“I’d say this is about average for houses around here,” Brown said.

Brown and Oliver were conducting a home energy audit for the Appalachia HEAT Squad, a program through the nonprofit Fahe. The program helps homeowners and renters lower utility bills through energy efficiency upgrades.

“We’ve seen housing built without proper beams, foundations, ventilation,” Oliver said, “just numerous issues construction-wise.”

Stagnating incomes and high unemployment have left many in rural Appalachia struggling to cover basic expenses. Housing is no exception. Recent research from the Pew Charitable Trusts found that although prohibitive housing costs are thought of as an urban problem, rural Americans are fast catching up.

A person is considered cost-burdened when rent or mortgage costs exceed 30 percent of that person’s income. A person is considered severely cost burdened when those costs exceed 50 percent of income.

The data show 40 counties in Kentucky, Ohio and West Virginia where the percent of severely cost-burdened homes increased from 2010 to 2017, and more than half of those are rural counties. Nearly a quarter of the region’s rural counties (23 percent) experienced increases in severely cost-burdened households, far higher than the rate of all counties when more urban areas are included.

Click here to view the interactive map on the Pew website. Graphic: Alexandra Kanik, Ohio Valley ReSource

In Letcher County, 12.6 percent of homeowners are considered severely housing cost-burdened, up from 8.3 percent in 2010.

A significant part of that is the cost of energy. Experts say that once utility costs exceed 6 percent of household income, families struggle to meet other basic needs. In some eastern Kentucky counties, the average resident is paying more than 19 percent of their annual income on energy costs. In some counties, the average low-to medium-income household spent more than 40 percent of their income on energy costs.

“I’ve seen bills as high as $1,400 to $1,600 a month,” said Appalachia HEAT Squad project manager James Caudill. “It’s more of an epidemic than a problem.”

The average cost of energy in the state isn’t particularly high. Other factors, including the aging and substandard housing stock, contribute to the cost burden. Facing the combined effects of stagnating wages, growing utility bills and rising housing costs, more residents in rural coal country are looking to energy efficiency and solar power for solutions.

Cost of Warmth

Benham, in eastern Kentucky, was a coal mining town, and until the 1960s electricity was provided by mining company International Harvester. When mining operations closed down, International Harvester sold the power grid to the town. Benham, home to fewer than 500 people as of the last census estimates, is one of only a handful of municipalities in Kentucky to own and operate its own power company.

“Everybody takes care of one another,” Power Board chairman Danny Quillen said. “It’s a close-knit community.” Quillen, 50, grew up in the neighboring town of Lynch.

In 2015, the Benham Power Board began receiving donations for an energy efficiency program called Benham$aves. The program conducted five energy efficiency audits before it shut down for lack of funds. It recently restarted when it received an anonymous donation of over $200,000. Quillen hopes the money will cover 20 more audits.

Quillen received one of the five original audits and it helped cut his power bill from $400 a month down to about $180 a month in winter.

“This is an old coal camp, and these are old houses,” Quillen said, referring to towns that were built and owned by coal companies to house workers. “You’ve got a lot of homeowners in the city that are on a fixed income and are unable to upgrade things that need to be upgraded.”

In Harlan County, where Quillen lives, the average low-to-medium income household spends 27 percent of their annual income on energy costs. The average per capita income in Harlan County is $13,351.

Alexandra Kanik, Ohio Valley ReSource

The impact of energy cost burden on already struggling families can be dramatic. A nation-wide study from the National Energy & Utility Affordability Coalition, an energy efficiency advocacy group, found that 17 percent of people who receive utility cost assistance from the federal Low Income Home Energy Assistance Program, or LIHEAP, had moved in with friends or relatives due to the high cost of utilities. Six percent of respondents had become homeless. Significant minorities of respondents said that because of high utility costs, they had skipped meals, heated their home using their oven, or failed to pay the full energy bill.

Katrina Metzler, the executive director of NEUAC, said the need for energy assistance was much higher than the funds allocated for it. According to her organization, only 23 percent of Kentucky’s eligible population received energy cost assistance from LIHEAP.

“The average LIHEAP consumer is making well below $20,000 a year,” Metzler said. “After rent and groceries, there’s no money for anything else.”

A new homeless shelter in Letcher County has witnessed the impact of utility cost burden first-hand. Jimmy Scott, board member with Saving Grace Homeless Shelter, said he’s seen a number of residents seeking respite from the weather when they can’t afford their bills, or, in some cases, they are in houses that don’t have electricity at all.

“When it gets to the extremes, either in the middle of the summer too hot, or in the middle of winter when it gets close to zero, with no heat, then we see those people,” Scott said. “They have to come somewhere.”

Energy costs push some people to use Letcher Co.’s Saving Grace Homeless Shelter. Photo: Sydney Boles, Ohio Valley ReSource

Housing Woes

When Seth Long isn’t producing maple syrup on his family farm, he runs the Letcher County housing nonprofit HOMES, Inc. Long sat down with Fahe’s James Caudill and explained that functionally, HOMES was the only housing developer in the county.

“There’s not many trained professional builders out there building these houses,” Long said. “Most of these houses around here, you find a carpenter, you pay them an hourly rate, you buy the materials, and you end up with a home. But what you end up with are just energy hogs.”

Mel Jones, Associate Director at the Virginia Center for Housing Research at Virginia Tech, saw that pattern region-wide. “In the aftermath of the recession, we saw construction companies consolidating and smaller construction companies failing,” she said. “That really hit rural places.” Construction of new housing has plummeted since the recession, driving up the cost of existing units.

Much of eastern Kentucky’s older housing stock was designed for coal heat, which required a draft to let out harmful smoke. “Those houses weren’t really retrofitted to handle ductwork,” Caudill said.

Long said many of the audits his organization and Fahe perform on older homes don’t get to energy efficiency upgrades because they exhaust the available funds on safety upgrades first. “The roof is bad, the HVAC is out, the floors are falling through. There’s things that really need to be done. And you go through all that before you can really address the energy efficiency stuff.”

According to energy auditors Oliver and Brown, the most challenging homes to audit and upgrade are manufactured homes. Mobile homes that were built before the 1976 implementation of energy efficiency regulations are especially costly to heat, Jones found. There are about 31,120 such homes in Appalachian Kentucky and 36,106 in West Virginia, accounting for roughly 20 and 28 percent of all manufactured housing in those states, respectively.

Utility Tensions

Rural Appalachian ratepayers have also been hit by the loss of industrial energy consumers. According to the Kentucky Public Service Commission, Kentucky Power, the utility that covers much of eastern Kentucky, has lost 26 percent of its industrial and commercial load since 2010, more than every other Kentucky utility except one.

“The utility’s got certain fixed costs that it’s going to have to pay,” said PSC spokesperson Andrew Melnykovych. “If you have fewer industrial and commercial ratepayers to share that burden, that shifts those fixed costs to residential consumers.”

Because of the cost of transmitting energy and maintaining the system, it is significantly more cost-effective to deliver a large amount of energy to one big industrial consumer than it is to send the same amount of energy to many lower-consumption residential consumers. In order to spur economic development and attract more high-consumption customers, Kentucky Power has sought to offer competitive, reduced rates to certain industrial players.

“Few people want to go back to a time before electricity, so we want to make a system that works for all of us,” said Kentucky Power spokesperson Allison Barker., “That’s why we support economic development, it’s why we offer energy efficiency tips to our customers, and it’s why we want to help the communities that we serve through our acts of appreciation.”

The utility has offered reduced rates to companies including Braidy Industries, which plans to open a new aluminum plant in Ashland, and economic development grants to companies including truck parts manufacturer Silverliner in Pike County.

According to the PSC, energy efficiency, or demand-side management programs, are not primarily about saving customers money: They are meant to help power companies delay the need to invest in new power plants. In eastern Kentucky, the loss of major consumers has meant that wasn’t a risk.

The PSC in 2017 mandated that Kentucky Power eliminate all but one of its energy efficiency programs. Kentucky Power offers heating assistance programs through community action groups, and some customers make use of the utility’s Average Monthly Payment program, which reduces the spike in energy costs in winter months by charging customers for the average of their last 12 months’ usage.

Solar Solution

A recent analysis from the National Oceanic and Atmospheric Administration has shown that much of the Ohio Valley, including Appalachian Kentucky, will see an increasing energy burden as climate change progresses.

“It is very clear that energy expenditures in places like Tennessee, Kentucky, southern West Virginia and Ohio are going to increase 10 to 15 percent, according to the latest climate assessment,” said Union of Concerned Scientistsenergy analyst Joe Daniel.

“There’s increasing evidence that rooftop solar can reduce the energy burden,” Daniel said.

The housing nonprofit HOMES switched to solar power this month to save money as energy bills rise.

“We’re seeing the trend of this cycle and saying, we can’t be in business here 10 years from now if we just go along with this,” Long said. “Thinking about this made us think we need to invest dollars in solar so that in the future we’re not so impacted by these trends.”

Solar energy had already been gaining ground in coal communities, with the Kentucky Coal Mining Museum in Benham turning on its panels in 2017. Now a combination of factors has spurred a rush among groups in the region already looking to renewable energy to protect against future utility cost increases. In June, Letcher County’s Kings Creek Volunteer Fire Department and arts and media organization Appalshop, which is home to Ohio Valley ReSource partner station WMMT, added solar as well.

This is partly driven by a recent change in state policy. Even as HOMES and other nonprofits are looking to solar power as a solution, the state has made it harder for people to afford solar. Kentucky in 2019 passed legislation that reduced the potential return on investment for solar installations, likely slowing residential and commercial shifts to solar power. Like most utilities, Kentucky Power supported the legislation.

Solar systems in operation by the end of 2019 will be “grandfathered” into the law and would be allowed to retain all the financial benefits of switching to solar.

Gwen Johnson’s mother, Mabel, center, cuts the ribbon for the solar installation at Hemphill Community Center. Photo: Sydney Boles, Ohio Valley ReSource

Gwen Johnson runs the Hemphill Community Center in Letcher County. She grew up in coal camp housing. “They were just built out of slats and plaster,” she recalled. “The windows were just single-pane and they weren’t caulked very well, so in the winter when the wind would blow, the curtains would fan in.”

Now, Johnson knows others in her community are in need of a warm place to go. In winter, she opens the center as a warming station. “We just had showers installed, so that when folks have power outages or they have no power, they can come here and warm,” she said.

Johnson said energy bills were often Hemphill’s biggest expense. The community center celebrated the completion of its new solar installation on June 21.

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An Economic Transformation

Automation For The People? Ohio Valley At High Risk For Job Losses

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Amazon employs 2,500 people at its Jeffersonville, Indiana, facility. Photo: J. Tyler Franklin

Amazon employee Andre Woodson made his way among yellow bins traveling through a vast warehouse filled with boxes and envelopes to be packed, sorted and shipped. In Amazon-speak, this is a “fulfillment center.”

“Our Jeffersonville, Indiana, fulfillment center is about 1.2 million square feet, which is equivalent to about 28 football fields,” Woodson explained.

About 2,500 people work here. But looking out across the floor it’s sometimes hard to find a human among the boxes, bins and conveyor belts. Often they’re working closely with the machinery. At a packing station an employee is surrounded by boxes and envelopes of different sizes.

One of Amazon’s ergonomic pack stations. Photo: J. Tyler Franklin

“So here at our ergonomic pack stations our great associates interact with the technology to package customers’ orders,” Woodson said as the employee scanned items. A computer shows the optimal box size to be packaged. “The tape machine will push out the perfect amount to tape so they can seal the box,” he said.

There are about 20 Amazon fulfillment and distribution centers like this in Kentucky and Ohio. Some are the host town’s main employer. About 20 percent of the workforce in Campbellsville, Kentucky, for example, works at Amazon. UPS and other product delivery services have a large presence in the region as well, and all are likely to make more use of automation.

Amazon representative Andre Woodson. Photo: J. Tyler Franklin

“We have a lot of what we call ‘pick and pack’ warehouse facilities and those facilities have a lot of people in them, but they also have a lot of computers and robots,” Michael Gritton said. He’s executive director atKentuckianaWorks, a nonprofit organization focused on workforce development in Kentucky and Indiana.

“Over time you would expect those facilities to have fewer people and more computers and robots,” Gritton continued.

The Ohio Valley has seen its workforce disrupted from the decline in the coal industry and globalized trade’s effects on manufacturing. Automation is again changing the way we work and is predicted to lead to more disruptions.

That has planners like Gritton concerned about what rapid automation could bring, and it’s not just the warehouse workers at risk. A recent Brookings Institution report showed about one-quarter of all jobs in the Ohio Valley region have a high chance of being wiped out by automation, with service jobs, truck drivers, and office administrators among the most vulnerable. That could lead to disruptions in employment and greater income disparity.

Sectors vulnerable to disruption employ more than a half-million people in the Ohio Valley. Source: Alexandra Kanik/Ohio Valley ReSource

A

Growing Gap

The Brookings report ranked states according to the proportion of their workforce deemed vulnerable to dislocation. Indiana and Kentucky are ranked first and second, respectively. (Ohio comes in 13th and West Virginia is 16th.)

Gritton worries that disruption could result in more people moving to the bottom of the earning scale, further exacerbating income disparities. A graph showing the income and job distribution would begin to look like what he described as a barbell, with low-wage workers at one end and “a few, big super-winners, and not much in the middle.”

Brookings ranked states for the risk of job displacement due to automation. Indiana and Kentucky topped the list. Via Brookings Institution

More people could become reliant on jobs that involve irregular schedules and lower pay. “That doesn’t seem to be a recipe for a happy Kentucky, a happy Louisville or a happy America,” he said. “So that’s the conversation the country’s going to be having about this change as it happens.”

Gritton said education is going to be key in adjusting to changes in the workforce. He said government leaders need smarter strategies to invest in people more than one time in their lives.

“We’re trying to work to help people reskill and retool where they can,” he said, but noted that the demand for that is beginning to look daunting.

“There are going to be more and more people we’re going to run into who are going to be asking for this opportunity to upskill, to move their skill levels up to make them marketable in an economy that’s going to be demanding that. But I think it’s a big open question, who pays for that?”

This Amazon center is roughly the size of 28 football fields. Photo: J. Tyler Franklin

Constant Learning

Mark Muro is the lead author of the Brookings report, which does more than just point out potential problems. The report also showed that education can make places and people better able to adapt.

“We call it promoting a constant learning mindset, but it can’t simply be the responsibility only of the workers,” Muro said. “The whole system has got to change.”

Muro said the way the education system is set up now doesn’t encourage lifelong learning and the constant development of new skills.

He said people need affordable ways to develop the skills that are uniquely human by investing time into becoming creative problem solvers and developing interpersonal skills.

“Get better at being human,” he said. “What we should not do is try to compete with the robots because they will always do a better job at basic rote tasks.”  

Muro said the places with higher levels of degree attainment will have the least amount of exposure to automation. The Ohio Valley is at a higher risk because of the share of workers in agriculture, small factories and the service industry. But Muro said because the Ohio Valley region is mostly rural, it may have more time to adjust to these rapid shifts and prepare people for change.

“The technological possibility doesn’t mean reality and there is likely to be a time delay,” he said. “Which may be a time for the region to buy itself time and begin thinking about retraining some of its workers to make sure they’re in the most resilient and promising fields.”

Muro said it’s important to understand that new technologies will be able to do a lot of different tasks but not whole jobs. He said that means entire jobs or fields won’t be suddenly replaced by robots.

“It’s not like this has created an epidemic of joblessness and done away with wholesale employment, that’s simply a misnomer,” he explained.

The Brookings report looks at what it calls the Information Technology Era. When machines handle routine activities, it frees up the human capacity to create new products and tasks. For example, the report notes that the increase in consumer banking services was occurring as ATM machines were replacing some tasks bankers did.

“Over time you would expect…to have fewer people and more computers and robots,” says Michael Gritton of Kentuckiana Works. Photo: J. Tyler Franklin

Bargaining Power

Not everyone sees automation as the great threat some predict. Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities. He recommends a more nuanced view that emphasizes job quality over quantity.

“Try to understand less the extent to which technology is going to displace workers, because that’s actually pretty unknowable, and more thinking about its impact on the quality of jobs,” he said.

Bernstein said the problem with the argument that robots are coming to take jobs is that the country is creating about 240,000 jobs a month and unemployment is low.

“I don’t mean everything is fine by a long shot, but I think people face a lot of economic challenges that don’t have all that much to do with automation and have a lot to do with just their personally weak bargaining power,” he said.

Workers sort envelopes at the Amazon fulfillment center. Photo: J. Tyler Franklin

Bernstein said automation has changed jobs for those who have reskilled and made themselves complementary to the machines. He said it’s the responsibility of the government to push companies like Amazon in the right direction.

“Left to their own devices private companies would never invest enough to help workers make a transition because it’s not in their interest,” he said. “They can’t profit if they teach you to be more productive in a different industry or a different job.”

However, Bernstein warned, the government’s track record for preparing workers for these type of transitions is not good enough.

Rapid Change

Jane Oates agrees that automation and technology have always led to disruptions in the workforce. The difference this time, she said, is the pace of that change. Oates is the President of Working Nation, a national nonprofitfocused on what it calls the looming unemployment crisis. She said people need to understand that every sector is changing and those who aren’t willing to make changes to become lifelong learners are going to be left behind.

“We as a country had 140 years to move from an agricultural society to an industrial society,” Oates said. ”We could adapt to anything with that kind of warning time, but now things are changing over a weekend.”

A scanning and labeling machine applies address stickers with a puff of air. Photo: J. Tyler Franklin

Oates agrees with Bernstein that employers should be responsible for preparing the future workforce and she said there’s a way the government can reward workplaces that do.

“When you allow federal dollars to be spent for incumbent worker training, that sends a clear message that if an employer wants to do the right thing there are government dollars that could assist there,” she said.

That sort of proactive policy could be the difference as automation changes the workforce. Without it, it’s possible that a place like the Ohio Valley could be left further behind.

This article was originally published by Ohio Valley ReSource.

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