Coal ports: Will they cost communities their "second paycheck"?
For four and a half years, coal exports and the massive terminals proposed at Longview and near Bellingham have been a subject of local debate. Millennium and Gateway Pacific (GPT), respectively, are still far from approval and may never see the light of day. Throughout this time, terminal developers Ambre Energy and SSA Marine have made one basic argument: Jobs and economic growth will result from the terminals. These, in turn, will result in still more jobs for others and higher revenues for governments.
Terminal opponents — a variety of environmental and sustainability organizations — seized on health issues from coal dust and diesel fumes, traffic snarls from long trains, fishery impacts, the effect of coal on climate change, and more. They had the upper hand in public meetings in 2012, packing large arenas with objectors. The developers have been patient, in it for the long run and waiting for possible political help as environmental reviews continue.
Opponents tossed some new terminology on the table Tuesday -- the term “Second Paycheck." Its roots are in the region, having been coined by University of Oregon economist Ed Whitelaw and two colleagues five years ago. It was re-introduced by David Eichental, a managing director of PFM – a large national consultant based in Philadelphia – who conducted an economic impact study on the coal ports. This report was presented to CommunityWise Bellingham, a persistent challenger to the huge coal-export facility proposed at Cherry Point, north of the city. (CWB’s link to the study is here.)
The term refers to quality of life amenities such as outdoor recreation, clean air and water, scenic vistas, local food and culture, and livable neighborhoods. These amount to a “paycheck” that can’t be cashed at your bank. However, they are so important to people that they accept lower-paying jobs or small, expensive living spaces in order to experience the benefits of a particular place.
Bellingham, in the opinion of many, is such a place. Small or mid-size cities with colleges or universities are often Second Paycheck cities – Eichental listed Burlington, Vermont and Ashville, North Carolina as examples. The Northwest’s two major cities, Seattle and Portland, also might qualify. An article in the Sunday’s Seattle Times Pacific Northwest magazine touches on the same theory in its descriptions of how people — not all of them young — cope with high prices and low wages to live in Seattle. A case was made by Pacific Standard magazine in 2014 that Portland’s youth-oriented culture also falls into the Second Paycheck theory.
In communities such as Bellingham, Eichental said a project that erodes livability and the community’s image can actually have a negative economic image. The report notes this may already be happening in the city, with a soft market for homes near the BNSF railroad tracks, even in high-income areas. Indeed, a trip down the scenic eight-mile Chuckanut Drive from Bellingham to Larrabee Park reveals at least a dozen “for sale” signs in a normally sought-after area where many houses abut the railroad.
I’ve lived in Portland and Bellingham over the past 45 years, and seen changes in both cities that suggest the Second Paycheck effect. Clearly it resonates with a large number of Western Washington University grads who simply won’t leave Bellingham after graduating, enamored with the region’s outdoor and cultural attractions. But it also applies to retirees or those nearing retirement. Both Bellingham and Portland are magnets for them, with pensions and Social Security being the first paycheck and the region’s amenities amounting to a second paycheck.
Such a theory is difficult to quantify. But the Pacific Northwest is becoming a magnet for those who are opting for quality of life, and may de-prioritize a smaller first paycheck in order to cash a second paycheck with a mountaintop view, a rushing river or an open-air concert.
“The region’s natural amenities appear to be at the core of the economic engine, particularly in Bellingham, which is the county’s economic engine and in close proximity to the rail line,” Eichental stated, referring to the city’s concerns about increased rail traffic adjacent to its downtown and several residential neighborhoods. The city is 40 to 45 percent of Whatcom County’s population, but generates about 60 percent of its economy.
Terminal backers, predicting economic growth and high-wage jobs from transporting millions of tons of coal, scoff at reports such as the PFM study.
“This is the tortured logic of someone who doesn’t have to worry about where their next paycheck will come from,” said Craig Cole, SSA Marine’s Whatcom County representative. “Having recommended in 2012 ‘the attraction of high wage residents’ as an alternative to industrial job growth, they now recommend that creating high wage jobs for the people who already live here is somehow a threat, because the less well-to-do are happy being that way. This is Alice in Wonderland economics and the report is almost completely lacking in hard facts.”
SSA prefers to cite two economic studies in 2011 that claimed 2,115 temporary jobs in construction over two years and 430 permanent, fulltime operational jobs. SSA’s consultants also predicted hundreds of “indirect and induced” jobs because of employee spending and services to the terminal.
PFM agrees that jobs will be created, but disagrees with SSA’s methodology and believes the negative impacts may outweigh the impact of 430 permanent jobs.
Their report identified two contrasting views of economic development: the extraction view and the environmental view. The extraction view “assumes that to spur development it is necessary to extract resources from the natural environment for export to external markets. The income generated from this export activity is multiplied throughout the economy and puts additional people to work.”
The environmental view, “argues that environmental quality is at the root of economic development. Improvements in environmental quality attract workers and businesses to move to the area and increase the amount of retirement income. The new economic activity leads to diversification of the economy and additional jobs and income.”
Development-focused economists, such as those working for SSA Marine, will be likely to take the extraction view, while economists engaged by environmental or progressive organizations will be likely to take the other view. If the Gateway Pacific Terminal reaches the Whatcom County Council for permit approval, perhaps in 2016, these rival views of the economy will be argued vigorously by competing elements. The economic reports are aimed ultimately at the Whatcom County Council.
The PFM study, with its emphasis on Second Paycheck theory, may be of less importance with regard to the state’s other proposed coal terminal at Longview. There community support is widespread, and the theory may not apply. As the debate approaches its fifth year, however, the theory could play a role in Bellingham and other parts of Washington and Oregon where major export projects have been floated.