The wage gap between the coal industry’s top executives and average coal workers has expanded from 2004 to 2016, while low-end pay has stagnated, government data show
Glenn Kellow, the coal executive who led Peabody Energy through bankruptcy, just collected an estimated $15 million stock bonus. John Eaves at Arch Coal, another recently bankrupt coal giant, got an award valued at $10 million.
The view from the coal pits is far less rosy.
An analysis of recent government data shows that the wage gap between the coal industry’s top executives and average coal workers has expanded, while low-end pay has stagnated.
From 2004 to 2016, the average annual wage for chief executives in the coal industry grew as much as five times faster than those of lower-paying jobs in the industry, like construction or truck and tractor operator jobs. Executive pay averaged $200,000, up 60 percent from $125,000, while paychecks for truck and tractor operators rose just 15 percent, to $43,770 from $38,060. Pay for construction jobs in mining rose just 11 percent, to $35,080 from $31,470.
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Pay for chief executives in the coal industry also grew much faster, on average, than that of their counterparts across the wider economy, while the average pay for coal-industry construction workers failed to keep up with similar jobs in other fields. The data exclude bonuses, share options and other perks, which often inflate executive compensation — and the pay gap — many times more. Kellow’s stock options in the last year, for example, are worth almost 350 times what a typical coal truck and tractor operator makes in a year.
“The company boards seem to think they need to keep executives from fleeing a sinking ship,” said Sarah Anderson, an executive-compensation expert at the Institute for Policy Studies, a Washington, D.C., research group. “But when you protect people at the top from risk, you’re not incentivizing them to shift to another approach, like making a transition toward more renewables.”
The lopsided pay structure in coal is a reflection of an economy marked by widening income inequality, where gains at the top of the income scale have come amid stagnation, or losses, at the bottom. But with coal mining, the yawning gap takes on an added significance. President Donald Trump has made lifting the fortunes of blue-collar and rural Americans a centerpiece of his administration.
When Trump signed an executive order in late March to roll back Obama-era climate change efforts, which would have spurred a shift from coal to renewable forms of energy, he was flanked by coal miners who applauded the move.
Though employment in coal mining has been growing since the fall after a long period of decline, the numbers have been minuscule — a net increase of 100 jobs in the latest jobs report for March. Since September, overall employment has increased by 1,700 to just over 50,000 workers, according to the Bureau of Labor Statistics.
And the work is a far cry from the stable, well-paying union jobs that were once the industry’s norm.
Average pay for a miner under a United Mine Workers of America contract comes out to at least $61,650 a year, and closer to $85,000 a year with overtime, said Phil Smith, a spokesman for the union.
But just 2.5 percent of coal-mining jobs were unionized in 2016, compared with over 40 percent two decades ago, according to Unionstats, a census-based database.
Instead, many coal miners now compete for temporary jobs, which pay by the hour and offer few benefits. An online posting for an underground coal-miner job in Waynesburg, Pennsylvania, offered as little as $17 an hour.
Mike Grose, who runs Elite Coal Services, an agency based in Summersville, West Virginia, said monthly placements had surged to more than 100 by January, from about 20 in October. The positions were mostly temporary jobs, though they could turn into permanent positions if there is a wider revival, he said.
“I’m getting guys that used to be in the coal industry who left and went to work in oil and gas, and bringing those guys back,” said Grose, who places workers at some of Appalachia’s biggest coal producers. “It went from nothing to something.”
Carlos Combs, 64, a third-generation coal worker in Cumberland, Kentucky, knows about the jobs offered at the mines these days. For over 30 years, Combs fixed continuous miners, gargantuan jagged-toothed machines, and dusty shuttle cars deep in the mines’ reaches. But when he lost his union job in the early 1990s, he found himself settling for shorter-term work at lower wages.
“These small outfits, if you didn’t produce, you were gone,” he said. “You couldn’t say nothing. You had to take what they gave you.”
Combs was laid off at least five more times before finally, in 2014, his doctor told him his body was giving out to black-lung disease. He now lives with his wife on Social Security and pension payments.
“None of them are worth that,” he said of the coal executives. “They get that money on the backs of the men working here.”
The steep executive salaries have come despite dismal recent performances by coal companies that have driven a string of former giants into bankruptcy. Coal executives misread the market in China, racing to develop mines there only to see demand falter, which also caused U.S. coal exports to slump. At home, they have been unable to stem a slide in the domestic market, driven by cheaper natural gas.
Despite those woes, top coal executives have continued to draw hefty rewards.
Peabody paid its executive team around $75 million from 2012 to 2014, according to its filings with the Securities and Exchange Commission. In the same period, the company lost nearly $2 billion.
In 2016, Alpha Natural Resources secured a $12 million bonus package for its executives during bankruptcy proceedings, saying they should be compensated for navigating the complexities of the process. The previous year, the company lost $1.3 billion.
Seven Arch Coal executives received about $8 million in bonuses three days before the company filed for bankruptcy in January 2016, seeking to cut $4.5 billion in debt. An Arch Coal spokeswoman, Logan Bonacorsi, said that the company had consistently given out bonuses in the first quarter of the year, and that they were driven mainly by safety and environmental-performance metrics.
Some workers at Arch Coal sites, including some truck drivers, are employed by third-party businesses, and the company had “no insights into wage rates” at those companies, she said.
Vic Svec, a Peabody spokesman, said that average industry wages were lower than those at Peabody, whose coal miners “can earn wages and bonuses nearing six figures per year.” He said the majority of stock bonuses would be shared by employees below the company’s executive ranks, though he declined to give a detailed breakdown.
An Alpha Natural Resources spokesman, Steve Hawkins, declined to comment.
Coal miners face other woes. Trump has proposed eliminating funding for programs that support laid-off miners in Appalachia.
Congress, however, reached a last-minute deal this week to finance health benefits for more than 20,000 retired miners — miners whose employers have long gone bankrupt, leaving taxpayers to pick up the tab.
“You don’t have to guess who they think most of,” said Bob Cox in Beaver Dam, Kentucky, who worked in Appalachia’s mine tunnels for 35 years before losing his last coal-mining job in 2002, at age 56. Cox has an early stage of black-lung disease.
“I feel like I gave them the best part of my life, and they paid me — guess the way it was supposed to be,” he said. “But in the end, it didn’t turn out in my favor.”