Illustration by Mark Beauchamp.
From Appalachia to Alaska, the growth is eye-popping. Thousands of new jobs have sprouted up, most well-paying and all boons to their regions. There’s no denying oil and gas extraction jobs are on the rise, and not just in Texas and Oklahoma.
North Dakota is drilling oil at a blistering pace. Pennsylvania and West Virginia, along with parts of New York and Ohio, are seeing a natural gas boom with their Marcellus Shale reserves. And Colorado, Wyoming, Alaska, and other Western states are adding extraction jobs in droves.
The six fastest-growing jobs for 2010-11, according to EMSI’s latest quarterly employment data, are related to oil and gas extraction. This includes service unit operators, derrick operators, rotary drill operators, and roustabouts. Each is expected to grow anywhere from 9% to 11% through this year, in an otherwise mostly stagnant economy.
Occupation2010 Jobs2011 JobsChange% ChangeService unit operators, oil, gas, and mining42,11046,7664,65611%Derrick operators, oil and gas23,32325,7472,42410%Rotary drill operators, oil and gas28,11630,9812,86510%Roustabouts, oil and gas75,63682,6787,0429%Helpers, extraction workers44,30347,2472,9447%Petroleum engineers29,06330,9171,8546%Biomedical engineers16,06517,0619966%Wellhead pumpers24,18625,6161,4306%Extraction workers, all other23,42324,7841,3616%Geological and petroleum technicians35,30437,2051,9015%
But that’s not all. A mixed bag of other extraction and petroleum-related jobs — wellhead pumpers, “all other” extraction workers, geological and petroleum technicians — are also expected to see healthy gains. In total, nine of the top 11 fast-growing jobs in the nation are tied in one way or another to oil and gas extraction.
What’s driving this employment spike? A push for increased domestic oil production is certainly a factor, as are technology breakthroughs in collecting massive shale gas deposits. But more subtle shifts are also happening, including how federal and state agencies track the oil and gas extraction workforce.
The Rise of Contract Oil and Gas Workers
In last month’s GOVERNING Magazine, William Fulton wrote about the “1099 economy”—the shift by employers to hire temporary workers who file a 1099 form with the IRS rather than a W-2 and don’t receive benefits. No other industry has seen this move to 1099 workers more dramatically than mining, quarrying, and oil and gas extraction.
A recent EMSI analysis revealed that the share of 1099 workers in this sector increased from 33% in 2005 to 53% in 2010, the biggest percentage jump among the 20 broadest-level sectors. Mining, quarrying, and oil, and gas extraction now has the third-highest share of contract workers, behind real estate (74%) and agriculture, forestry, fishing and hunting (68%).
At least part of this influx could be attributed to land owners cashing in on royalties after leasing their property for drilling. Through the quirks of how the Census’ Bureau of Economic Analysis* tracks the the oil and gas extraction industry — and how the industry data is tied to occupations — some of these jobs could be counts of landowners who are claiming additional income from oil and gas royalties. If that’s the case, they would be better placed in the real estate and leasing industry.
Please note: For these reasons, EMSI “noncovered” data (i.e., data on 1099 workers plus more traditional state data, etc.) for oil and gas jobs should be treated with caution. Also, the jobs numbers for 2010 are estimates at this point, so it will take more time to see how these trends play out. We’ll touch on this more below.
*The Bureau of Labor Statistics measures only workers covered by unemployment insurance and who thereby file a W-2. EMSI’s “complete” dataset adds proprietors and other “noncovered” workers by combining BLS and state data with various Census datasets.
A Prime Example
For a case study on the skyrocketing employment picture on the shale front, just look at Pennsylvania. Without a tax on natural gas extraction and perfectly located to take advantage of the Marcellus Shale formation, parts of the commonwealth have become a hotbed for drilling. More than 3,000 wells have been drilled in the last three years, and much more is expected in coming years.
Since 2008, Pennsylvania has added more than 15,000 jobs in the mining, quarrying, and oil and gas extraction industry, a 41% jump. Only Texas and Oklahoma have added more of these jobs in the last three years. Meanwhile, North Dakota has seen an 80% jump in employment in this sector, second only to Delaware since 2008.
More Than a One-Year Trend
Mining, quarrying, and oil and gas extraction is expected to grow 6% in the US from 2010-2011. That’s the fastest projected growth among the 20 broadest-level industries — twice the rate, in fact, as the next fastest-growing industry (administrative and support and waste management and remediation services,).
This is hardly a one-year bump, though. Over the last five years, the explosion in the sector has been than staggering — even with a minor employment dip from 2009-2010. The industry added more than 345,000 jobs nationally from 2007 to 2009, and is expected add another 85,000 this year, which equals 11% growth.
It’s also helpful to break out mining and oil and gas extraction from the broad sector to more specific industries locate the real driver of the growth. In this case, it’s easy to see: Of the 506,401 new jobs in the sector since 2006, more than 431,000 have been in the crude petroleum and natural gas extraction industry (NAICS 211111). This sub-sector has grown by a whopping 113% nationally in the last six years while mining (except oil and gas) remains at its ’06 employment level.
Every state except for Maine has added jobs in crude petroleum and natural gas extraction since 2006, with Texas, Oklahoma, California, and Kansas leading the way.
One Last Thing
Earlier we mentioned approaching the noncovered oil and gas jobs data with caution. But what if we took out the 1099 workers and looked strictly at those covered by unemployment insurance and tracked by the BLS and state LMI offices?
We did this with EMSI’s “covered” dataset, which is roughly equivalent to state LMI. It shows a vastly different state-by-state picture for mining, quarrying, and oil and gas extraction sector. Texas ranks No. 1 in 2008-11 job growth in EMSI’s complete dataset … and last among all states — with a loss of more than 8,000 jobs — when we take out 1099 workers.
Pennsylanvia and North Dakota still were big gainers in the covered dataset. Yet they were two of only seven states that added workers in this sector, and the only two that added any jobs of consequence. This points to just how many contract jobs are flooding into the sector, particularly in states like Texas and Oklahoma.
The chart below shows the top 10 states for growth in the complete dataset against their numbers in the covered dataset. The full list of states is included in the table (figures in parentheses are negative).
State2008-11 Growth (EMSI Complete)2008-11 Growth (EMSI Covered)Texas (TX)81,188(8,176)Oklahoma (OK)22,107(7,380)Pennsylvania (PA)15,0856,347California (CA)12,303(1,554)Kansas (KS)10,901(1,209)Illinois (IL)7,892(225)Florida (FL)7,264(890)Ohio (OH)7,052(394)North Dakota (ND)6,8805,205Colorado (CO)6,336(3,783)West Virginia (WV)6,113(66)Michigan (MI)5,972(610)Louisiana (LA)3,776(2,521)Arkansas (AR)3,667408New York (NY)3,046(897)Mississippi (MS)2,682(613)Kentucky (KY)2,098(1,173)Virginia (VA)1,990(593)Indiana (IN)1,94515Minnesota (MN)1,925(85)Nevada (NV)1,488112North Carolina (NC)1,409(593)New Mexico (NM)1,385(2,365)Alabama (AL)1,344(153)Maryland (MD)1,320(138)Tennessee (TN)1,267(312)Montana (MT)1,116(501)Connecticut (CT)1,101(160)Georgia (GA)952(1,193)Oregon (OR)815(296)Washington (WA)806(617)Nebraska (NE)710(91)Missouri (MO)709(936)Iowa (IA)689(50)New Jersey (NJ)679(222)South Carolina (SC)640(222)Wisconsin (WI)518(382)Alaska (AK)471222Delaware (DE)373--Massachusetts (MA)320(251)Idaho (ID)278(382)Hawaii (HI)2457District of Columbia (DC)1980New Hampshire (NH)170(86)South Dakota (SD)154(195)Rhode Island (RI)146(36)Maine (ME)(1)55Vermont (VT)(32)(142)Arizona (AZ)(165)(2,995)Utah (UT)(779)(1,928)Wyoming (WY)(1,609)(3,587)