Economics 101: The $200,000-a-Year Mine Worker

How would you like to earn $200,000 a year to extract gold and other minerals from the ground?

Three important concepts in economics 101: supply, demand and price.  With all else being equal, these three functions all work together in equilibrium.  If the price of something gets too high, the demand goes down.  If there is an excess of a good or commodity, then the price will go down.  Whether you’ve formally studied economics or not, our everyday experiences have codified these working relationships in our minds. It’s intuitive to us.

I’ve found no clearer example of this than a Wall Street Journal headline I stumbled across earlier today.  It read: “The $200,000-a-Year Mine Worker”.  Can this be true?  As it turns out, it is.  The article, which you can read in its entirety here, describes James Dinnison, a 25 year-old high school dropout in Australia.  He makes $200,000 a year running drills in underground mines to extract gold and other minerals.

He’s been mining for seven years now.  In that time period he’s doubled his salary.  He is in himself a precious commodity.  In Western Australia, mining companies are investing heavily to develop and expand iron-ore mines. Demand is significant for those willing to work 12-hour days in sometimes dangerous conditions, while living for weeks in dusty small towns. 

According to Sigurd Mareels, director of the global mining for research firm McKinsey & Co, the worldwide mining industry expects a shortfall of 60,000 to 90,000 workers by 2017. Peru alone must find 40,000 new miners by the end of the decade.

I suppose this is one of the effects of the “flattening of the world”.  See this for an explanation. When countries like China, India and Brazil – once thought of as “emerging” markets – are the drivers of a significant portion of global economic grown, there is a huge demand for infrastructure and resource-driven industries.   We should also keep in mind that the costs of these economic expansions are not without concern.  Many of the Earth’s resources are finite and most estimates show that if countries like those listed above want to “live like Americans” in terms of energy and resource use, we are headed down an unsustainable path. 

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The Takeaway:  As emerging markets continue to grow there will be a great demand for specific industries, like infrastructure-building and mining.  Though bad for the Earth, they do provide access to high-dollar jobs for those who previously did not have it.