The Rear View Mirror Says: ‘Counting Fracking Industry Jobs is Elusive’

How many jobs has Marcellus Shale drilling really created?

From an Article by Candy Woodall, PennLive.com, January 22, 2016

The shale boom hit as the country was reeling from the worst financial crisis since the Great Depression.

Lawmakers and regional chambers of commerce were eager to tout Pennsylvania’s growing oil and gas industry as the solution to rising unemployment numbers. Former Gov. Tom Corbett and trade groups were known to quote 250,000 as the number of state residents working in the industry.

The state Department of Labor & Industry published a monthly report – the Marcellus Shale Fast Facts – full of numbers to support those claims. Among the job count were six core industries and 29 supporting industries.

To reach 250,000 workers, Corbett’s labor department counted the regulators overseeing the industry as gas jobs, truck drivers, and those working in highway construction, steel mills, coal-fired power plants, sewage treatment plants, and others. Not all of the jobs in those industries were involved in Marcellus Shale development, which led to an overestimation of actual employment numbers, according to the new guard at the Department of Labor & Industry.

Gov. Tom Wolf’s labor department has significantly decreased previous estimates and is no longer counting gas jobs as those who work for the U.S. Environmental Protection Agency, Department of Environmental Protection, Department of Conservation and Natural Resources, and the Fish and Boat Commission. Those regulators are now counted as state workers.

The new number is 28,926. That’s 0.5 percent of the nearly 6 million workers employed in Pennsylvania as of the second quarter of 2015, according to the most recent data from the state labor department.

By comparison, during that same time frame, nearly 1 million state residents were working in healthcare, about 490,000 jobs were in education and more than 134,000 were in state government. Of those state jobs, more than 4,000 are liquor store employees. Those sectors have all been a big part of budget negotiations.

The nearly 29,000 workers in the oil and gas industry include those involved in drilling, extraction, support operations, and pipeline construction and transportation. That figure grows to about 80,000 if you factor in suppliers and service providers, such as architects, engineers, restaurants and physicians who care for workers.

Even if you count the numbers like the current administration, shale drilling added 20,000 jobs in eight years, up from 9,000 in the second quarter of 2007.

The Marcellus Shale Coalition, the industry’s largest trade group, says the number is 243,000, citing 2014 data from the previous administration. The coalition doesn’t have a breakdown of the numbers, a spokeswoman said. Another way to gauge true employment figures is to look at a county breakdown, but those numbers aren’t available for Marcellus Shale jobs.

The Quarterly Census of Employment and Wages is a U.S. Bureau of Labor Statistics program, which is bound by confidentiality regulations that ensure individual employers’ data can’t be identified, Goulet said. “The confidentiality covers all data produced, not just specific industries,” she said.

Data is suppressed if there are less than three employers in a specific industry or area, or if one employer makes up more than 80 percent of the employment in that industry or area, due to the likelihood that a specific employer’s data could be derived, Goulet said.

The disclosure of that protected data is a felony punishable with up to five years in prison and a $250,000 fine, according to the Bureau of Labor Statistics. But the bureau does track county unemployment rates, which can give certain clues, according to state analysts.

While the state labor department numbers count people working in Pennsylvania, regardless of where they live, the county unemployment rates track Pennsylvania workers who live in those counties.

An analysis of the federal data shows counties where the most wells were drilled, such as Washington and Bradford, had slightly lower unemployment rates than counties without drilling during the recovery period after the recession. For example, Dauphin County had a 7.5 percent unemployment rate in November 2010, compared to 7.3 percent in Washington County.

But state labor analyst Jeff Newman said many things can affect those numbers, and if the industry is a little more than 20,000 workers statewide, it wouldn’t be enough to create huge swings in employment numbers. Also, those thousands of workers weren’t added all at once. It happened over time.

According to newly calculated state data, 2012 was the peak time of employment for the industry when more than 31,000 people were working in the industry.

Now that the industry is shedding jobs amid the biggest oil bust since the 1980s, unemployment should increase in certain counties with high well counts. As of the most recent data available from the Bureau of Labor Statistics, that proved true.

The Washington County unemployment rate was 5 percent in November, up from 4.8 percent the same month a year earlier. And the Bradford County unemployment rate increased to 5.1 percent in November, up from 4.4 percent a year earlier.

Other counties with high well counts, such as Susquehanna, Greene, Lycoming and Tioga, also had unemployment rates at about 5 percent or higher. During the same time frame, counties without drilling had unemployment rates at about 4 percent or lower. Lancaster County, for example, had a 3.8 percent rate in November, and Cumberland County was at 3.7 percent.

The unemployment rates in well towns could grow higher this year, as rig counts and oil and gas prices reach new lows. Analysts say many drillers will be facing bankruptcy this year after cutting spending and jobs.

Most recently Southwestern Energy on Thursday said it is cutting 1,100 jobs. Of those, 200 are in northeastern and southwestern shale corners of Pennsylvania. Will 200 jobs throughout the state have a big impact on unemployment rates? Probably not, according to analysts.

So what does this all mean? “It’s an industry that has created thousands of  jobs, but it’s not one of the biggest in the state,” Newman said.

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NOTE: The WV Legislature passed the “Natural Gas Horizontal Well Control Act” on December 14, 2011.  This Act requires the WV Workforce Investment Council to report each November 1st thru 2016 on the jobs created in WV by “horizontal well” activities, i.e. the drilling and fracking of Marcellus shale for natural gas production.  However, this has not been done so far I can determine, because of the difficulty of collecting the data and lack of dedication to the tasks involved.  See the Comment(s) below.   DGN

Tagged as: drilling, employment, fracking, jobs, marcellus shale, natural gas, Pennsylvania Governor, regional economics