Metal mining Is a Surprisingly Small Source of Jobs and Income
Despite massive losses of jobs in iron mining and processing in Minnesota in general and on the Iron Range in particular, the non-iron sectors of the economy have continued to expand, diversifying the overall economy and creating new sources of jobs and income. As a result, average incomes increased 30 to 40 percent over and above inflation since the collapse of metal industry jobs began in 1978. As real earnings from the iron industry fell by 65 to 75 percent in Itasca and Lake Counties, real earnings from the rest of the economy increased 65 to 75 percent. In St. Louis County, dominated by the Duluth metropolitan area, a 63 percent decline in real earnings in the iron industry was accompanied by a 21 percent expansion in real earnings outside of the industry.
After periods of relatively high unemployment rates on the Iron Range, the region has been approaching full employment with unemployment rates in the four to five percent range and shortages of skilled workers are being reported. As a result of declines in the iron industry and expansion of the rest of the economy, the relative importance of the iron industry as a source of income and jobs declined dramatically. By 2005, earnings in metal mining were the source of only two-tenths of one percent of total Minnesota personal income. In Itasca County the dependence on iron mining has declined from 23 to 4 percent and in St. Louis County, from 13 to 5 percent. Lake County has the largest reliance on iron ore processing, and its dependence declined from 43 percent to 13 percent.
The metal mining and processing projects proposed for the Iron Range will have a relatively modest impact on residents for several reasons. First, both the temporary construction workforce and the new workers are likely to have to come from outside the Iron Range because the region is approaching full employment and the aging existing industry work force will also have to be replaced.
Second, the number of jobs directly associated with each of the proposed metal mining and processing projects is relatively small compared to the 11,000 job losses that the industry has suffered over the last 25 years. The largest of the proposals, the Minnesota Steel Project in Itasca County, would employ 700 workers once it was operating at full capacity. If all of the jobs were filled by residents of Itasca County this would represent a 3 percent increase in employment. But the facility would be near the St. Louis County border and within commuting distance from Hibbing. As a result, the jobs are likely to be shared with much larger St. Louis County. Even when “multiplier” impacts are taken into account, the total employment impact is estimated to. be an eight and a half percent increase in Itasca County employment (although, again, most of these jobs would have to be filled by in-migrants or commuters).
Similarly, PolyMet Corporation’s proposed NorthMet Project in the Hoyt Lakes area of St. Louis County would hire 470 workers when operating at full capacity. This would add four-tenths of one percent to St. Louis County employment. Even with the multiplier impacts, producing a total of 1,000 jobs, the impact would be less than one percent of total employment, representing only about three months of the earnings growth seen in recent years.