Another Reality Check on PA Marcellus Shale Employment

For quite some time now, we have been putting out jobs data explaining that drilling in the Marcellus Shale has produced far fewer new jobs than the industry and its supporters claim. Well, now you don't have to listen to us; a team of economists from the U.S. Bureau of Labor Statistics (BLS) is out with a study confirming what we have been saying all along.

The BLS report finds that the oil and natural gas industry added a total of 15,114 jobs in Pennsylvania between 2007 and 2012 — a far cry from the hundreds of thousands of jobs often attributed to the industry by its supporters.

The report, which examines employment and wage trends in Pennsylvania's Marcellus Shale, is consistent with the findings of a November report on shale jobs from the Multi-State Shale Research Collaborative, a project that includes both the Keystone Research Center and Pennsylvania Budget and Policy Center. That report put the number of jobs resulting from Marcellus Shale development between 2005 and 2012 at 22,441.

So why do our numbers come in just a bit higher than the BLS estimates? Well, we looked at a longer period of time and cast a slightly broader net. Specifically:

  1. We used all employment in Support Activities for Mining, while the BLS economists, Jennifer Cruz, Peter Smith, and Sara Stanley, used just the oil and gas related subsectors within Support Activities for Mining (NAICS 213111 and NAICS 213112, to be precise), and
  2. We included employment in Oil & Gas Pipeline & Related Structures Construction (NAICS 237120) whereas Cruz, Smith, and Stanley chose not to include this sector.

Despite these differences, both ours and BLS' estimates are very close to one another.

The BLS report also highlights the top 10 states ranked by employment in the oil and natural gas industry and finds that Pennsylvania ranked second in terms of the increase in employment between 2007 and 2012. Texas came in first and following Pennsylvania are North Dakota, Oklahoma, Colorado, California, Louisiana, New Mexico, Alaska, and Arkansas.

The chart below presents in that same order the December 2013 unemployment rate in those 10 states. You will notice that Texas had an unemployment rate of 6% and Pennsylvania 6.9% compared to just 2.6% in North Dakota. Both the Texas and Pennsylvania economies are large with 5.7 million and 11.2 million jobs, respectively, whereas North Dakota has fewer than half a million workers.

The takeaway: in a small state like North Dakota, tens of thousands of oil and gas jobs are enough to bring down the overall unemployment rate, while in large states like Texas and Pennsylvania, this sector just doesn't produce enough employment to move the dial.

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