Sunday, August 26, 2012

Does Frac Sand Create Socioeconomic Well-being?

by Thomas W. Pearson, Assistant Professor of Anthropology, University of Wisconsin-Stout

The recent boom in frac sand mining in Wisconsin has been touted as a source of economic growth, and especially job creation. Some frac sand corporations have adopted the slogan "sand = jobs," a phrase repeated by many sand mining advocates. But the role of frac sand in community economic development is much more complex. Local elected officials, policy makers, economic development planners, and citizens need to think more critically about the claim that “sand equals jobs.”

‘Job Euphoria’

In the wake of the economic recession and in a highly charged political atmosphere where the economy remains a hot button issue, “job creation” has become empty political rhetoric. Often it's nothing more than an obligatory phrase for elected officials seeking support among voters or corporations seeking the consent of economically battered communities. Who would possibly be against job creation, right?

We regularly hear people say that sand mines create dozens, hundreds, even thousands of jobs, with the assumption that any amount of jobs must be a good thing. But what does that mean? Has the euphoria of job creation become a rhetorical smokescreen that obscures other issues we should be talking about instead?


Sand mining corporations and their advocates use the rhetoric of “job creation” as part of their public relations efforts. We have to remember that a frac sand corporation is motivated by their bottom line, by a lust for profit, not by some benevolent desire to help rural communities in Wisconsin address unemployment, poverty, or other social problems.  

In late July, for example, the legal firm Weld, Riley, Prenn, and Ricci, which represents sand mining interests in Wisconsin, gave a presentation titled “Moratoria Madness” at an industry conference in Colorado.[1] In the presentation they dismiss the concerns of citizens and paint “anti-frac sand people” as reactionary and extremist. They unfairly suggests that the moratoriums adopted by cautious township and county officials--moratoriums which give local governments time to study the impacts of sand mining and adopt appropriate policy--are merely cover for their “unstated intention” of opposing frac sand.

Among the cynical “strategies for dealing with moratoria,” they recommend that their corporate clients “hold a press conference,” “host a job fair,” “have a open house,” and “give away t-shirts.” These strategies have already been followed by some sand mine corporations. The bright-yellow “sand = jobs” t-shirt sponsored by companies such as Glacier Sands is increasingly seen at public meetings.

In other words, mining corporations are willing to exploit people’s economic vulnerability as part of a public relations stunt, giving away t-shirts to generate press coverage and to cultivate a public image as a “job creator.”

Job Creation in Context

Yes, sand mines employ people, and thus create jobs. But we need to consider this in context.

For instance, in a recent article with the simplistic headline “Frac Sand Boom Creates Thousands of Jobs,” the Wisconsin Center for Investigative Journalism, citing industry representatives, suggests that “when existing mines and those being built are fully operating, the industry will employ about 2,780 people – a sizable number, given the state’s overall lackluster job picture.”[2]

Since the industry is so new, it is important to recognize that no official job numbers exist.[3] Moreover, the mining sector has a tendency to overemphasize employment growth and inflate jobs numbers, part of the smokescreen they stir up in order to manufacture community consent for their operations.[4]

Let’s just assume, however, that the sand mine industry will eventually employ 2,780 people statewide. How will this impact the state’s “lackluster job picture”?

According to the U.S. Department of Labor, 2,843,717 people were employed in Wisconsin in July 2012 – that’s nearly three million people.[5] Add to that number the “sizable number” of 2,780 frac sand jobs, and sand mining employment will represent less than 0.001% of total employment.

In other words, the industry will increase Wisconsin employment by less than zero and one thousandths of one percent. Seen in the big scheme of things, that’s not very significant. And it raises the question:  at what cost?

The Cost of Frac Sand

What are we willing to sacrifice for less than 0.001% of job growth?

Much of western Wisconsin hosts a natural landscape that serves as a source of valuable environmental services, such as forests, clean water, picturesque hills and bluffs, and other amenities that make it an attractive place to live, work, and do business. As one economist writes, “the quality of the social and natural environments have profound economic implications.”[6]

The natural environment has economic value, and not just as a warehouse from which mining corporations extract commodities to make a fortune in profit. Destroying this natural landscape has negative economic consequences for you and your neighbors, the people who live here.

The expansion of frac-sand mines could undermine other economic sectors such as tourism and residential development. We know, for example, that property values decline near sand mines and related infrastructure.[7] As many concerned citizens ask, “who wants to live near an open pit sand mine?” And we don’t yet know exactly how open pit mining and increased truck traffic will impact local tourism, especially in unique corridors such as the Great River Road along the Mississippi river.

Industrial-scale sand mines also introduce new risks related to air and water quality, traffic, noise pollution, and wear and tear on roads, bridges and other infrastructure, all of which diminish public health and safety. In other words, we face significant trade-offs for that 0.001% in job growth.

While some note that sand mines will strengthen local tax bases, they usually don’t figure in the new costs to provide extra public services to accommodate this industry, costs which may cancel out any new tax revenues. We also need to assess whether or not the “increase” in property tax base from a given mine is offset by the drop in surrounding property values.

Does Job Creation Equal Economic Wellbeing for a Community?

Perhaps most disturbing, while many people point out that sand mines create well-paying jobs in the short term, they ignore the substantial body of evidence that shows that mining is at best an unstable basis for long-term economic development, a ride on what one sociologist calls “the resource roller coaster.”[8]

A lot of factors are at play here, but overall, the more rural, remote, and dependent a community is on mining, the more vulnerable it becomes economically. Yes, during “boom” periods such as the current “sand-rush,” mines create jobs with good salaries. But mining is notoriously susceptible to boom-and-bust cycles that characterize national and global economies and the potential “flickering” of commodity prices. If demand for hydrofracking or natural gas drops, sand mining will slow down.

Not only is mining inherently unstable as an industry, but each sand mine will inevitably close down when all the sand has been extracted. According to UW-Madison economists, mining-dependent communities “tend to experience greater negative impacts after the mines close than positive impacts while the mines are in operation.”[9] Seen from a wider perspective, long term costs may outweigh short term benefits.

As an example of economic benefits, many people point out that small businesses such as a local restaurant or grocery store may see an uptick in customers as a result of sand mine activity, such as workers stopping by a local eatery after their shift. While this is undoubtedly true in specific cases, it’s difficult to generalize about broader economic impacts from such anecdotal accounts.

In fact, from an economic development perspective, mining actually generates very few “spin off” economic activities.[10] For instance, we often hear that sand mine companies invest tens of millions of dollars to build processing plants or rail spurs, and this is described as an “economic plus” for the local community. Few small towns in rural Wisconsin, however, produce and sell the basic inputs of an industrial frac sand operation. Much of those millions, therefore, are spent elsewhere, and the specialized equipment is imported to the area.

Money spent by frac sand companies also escapes from local economies in many other ways. If a worker does not reside and shop in the community where the sand mine, processing plant, or rail spur are located, then when they go home after a day’s work, their pay check goes with them. That money “leaks” out of the local community that hosts the mine, but the host community is stuck with the various indirect costs of the mine: loss of landscape, noise pollution, increased truck traffic, fugitive silica dust, concerns about water quality, depressed property values, and so on.  

Erosion of Local Democracy and Community Cohesion

Other costs exist which cannot be put into monetary terms. One social cost is the increasing animosity and distrust between small town neighbors, stoked by the activities of frac sand corporations seeking a foothold in our communities.

As sand corporations and speculators have scrambled to cash in on the frac sand rush, they have purchased and leased land for inflated prices. They have bought off some local residents with cash payments in exchange for signing “cooperation agreements” that contain non-disclosure clauses. This stifles freedom of speech and a community's ability to debate the pros and cons of this rapidly growing industry in a public, open manner. 

Many small-town governments and local officials are unprepared to deal with wealthy sand mine corporations and the parade of lawyers and technical experts that follow them. Well-meaning town officials are easily blinded by the "flashbulb" effect of a new mine proposal: the dazzle of large sums of money, the inflated claims about job creation, and the empty assurances that everything is well-regulated and under control. In some cases they appear to accommodate sand mine interests with little regard for public well-being. This situation erodes public confidence in local democratic institutions.

Time for Serious Discussion

The simplistic rhetoric of “sand = jobs” is a public relations ploy carried out by self-interested corporations seeking to extract a valuable natural resource from western Wisconsin. The rhetoric is misleading and insulting to the people who live and work in this region.

Unemployment and poverty are real social problems that must be addressed, but we should address these problems without sacrificing alternative, more sustainable forms of economic development. Frac sand mines may or may not be compatible with long-term, sustainable development, but the discussion needs to go deeper than the misleading rhetoric of “sand = jobs.”



[1] “Moratoria Madness: A Look at Wisconsin’s Regulatory Climate,” presentation given by Weld, Riley, Prenn, and Ricci at the Proppants Summit: Overcoming the Shortage from Mine to Well, July 23-25, 2012. Accessed August 23, 2012, http://www.wrpr.com/Documents/Sand-Mining-Moratoriums.pdf

[2] Prengaman, Kate. “Sand boom creates jobs.” Dunn County News, August 22, 2012, pages A1 and A8; see WisconsinWatch.org for the full article, accessed August 23, http://www.wisconsinwatch.org/2012/08/19/sand-boom-creates-jobs/

[3] Davies, Phil. 2012. “Sand Surge.” Fedgazette, July, pages 10-14. The Federal Reserve Bank of Minneapolis. Page 12.  Accessed August 23, http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4921

[4] Deller, Steven C. and Andrew Schreiber. 2012. Frac Sand Mining and Community Economic Development. Staff Paper No. 565. University of Wisconsin-Madison, Department of Agriculture and Applied Economics. Accessed August 23, http://www.aae.wisc.edu/pubs/sps/pdf/stpap565.pdf

[5] Bureau of Labor Statistics, United States Department of Labor, accessed August 23, 2012, http://www.bls.gov

[6] Power, Thomas Michael. 2007. The Economic Role of Metal Mining in Minnesota: Past, Present, and Future. Report prepared for Minnesota Center for Environmental Advocacy and the Sierra Club, page 27.

[7] “What Does the Research Suggest?” The Economics of Frac Sand Mining. University of Wisconsin-Extension, Cooperative Extension.

[8] Deller and Schreiber, “Frac Sand Mining and Community Economic Development”; see also Freudenburg, William R. and Lisa J. Wilson. 2002. Mining the Data: Analyzing the Economic Implications of Mining for Nonmetropolitan Regions. Sociological Inquiry 72(4):549-575; and Wilson, Lisa J. 2004. Riding the Resource Roller Coaster: Understanding Socioeconomic Differences between Mining Communities. Rural Sociology 69(2):261-281.

[9] Dellar and Schreiber, “Frac Sand Mining and Community Economic Development.”

[10] Dellar and Schreiber, “Frac Sand Mining and Community Economic Development.”


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