When It Comes to Job Creation, The Facts Speak for Themselves
Organization committed to stopping hydraulic fracturing suggests real jobs created by real economic activity do not exist.
It’s one thing for groups opposed to the development of American energy resources from shale to suggest that the massive economic stimulus currently being made possible as a result of these activities is overstated – notwithstanding the fact that their own jobs as professional activists depend on these activities continuing. But it’s a completely different thing to suggest that these jobs simply do not exist. Given all we continue to see in communities across the country where responsible shale development is taking place, it’s a statement that would make even Jean-Paul Sartre blush.
Unfortunately, that’s exactly what Food & Water Watch — which is a non-profit organization that accepts tax-deductible donations — has suggested with its latest report, which takes aim in particular at a recent study projecting massive economic growth for the state of New York if shale development is allowed to move forward. The broader implication, though, is that all economic models are all fundamentally flawed, so any projection of economic gain from energy development activity is, according to FWW, “dubious.”
Before we get to the many problems in FWW’s report, we thought it would be important to point out from the get-go the irony of Food & Water Watch accusing others of inflating data. This is the same organization, as you might remember, that inflated its own participation rates for an anti-hydraulic fracturing call-to-action, apparently in an effort to make its fundraising emails more appealing.
As to the report, our job here at EID is to read through the document so you don’t have to. What follows is a sampling of the questionable claims made by FWW, accompanied by a healthy dose of reality.
Food & Water Watch: “Local, state and federal policymakers should look to actual employment data, not dubious economic forecasts.” (p. 2 )
EID: As it turns out, the oil and gas industry – particularly those companies active in shale – has a very strong record when it comes to creating jobs, and an equally strong standing with respect to “actual employment data.” For example, a Financial Times article that was published the same day FWW released its analysis has the headline: “Oil shale boom boosts US jobs market.” Perhaps that was published too late to make it into the qualifying footnotes of FWW’s report.
But that’s far from the whole story. A study from IHS Global Insight found that in 2010, America’s independent oil and gas producers supported nearly 400,000 direct jobs nationwide, all while generating around $263 billion in gross economic output.
At the state level, the jobs numbers are also significant. In Louisiana, the oil and gas industry supports more than 310,000 jobs in the state, driven not only by offshore production by also the Haynesville Shale, the nation’s largest producing shale gas field. Production in the Barnett Shale in north Texas has created more than 119,000 jobs throughout the state. According to the Pennsylvania Department of Labor & Industry, the Marcellus Shale supports 214,000 jobs across the Commonwealth. In fact, the unemployment rates for Tioga (7.6 percent), Bradford (6.4 percent), and Susquehanna (8.1 percent) counties — three of the most significant areas in terms of Marcellus production — are all lower than the statewide unemployment rate for Pennsylvania. It’s also worth pointing out that the average salary for workers in the industry is roughly 64% higher than the statewide average for Pennsylvania. Even those working in ancillary industries make about 35% more than the Pennsylvania average income.
As for the job creation potential in New York, the state’s Department of Environmental Conservation (DEC) has estimated that as many as 53,000 new jobs could be created from the development of the state’s portion of the Marcellus Shale.
Food & Water Watch: Alleges that “fracking fluid migration underground” are among the “environmental and public health risks” of hydraulic fracturing and shale development. (p. 3 )
EID: This is contradicted directly by state regulators from across the country – including the head of the New York DEC – and President Obama’s own EPA Administrator Lisa Jackson has confirmed that the process has not contaminated ground water. The reality is that hydraulic fracturing has been used more than 1.2 million times over the past 60 years, not just for oil and natural gas, but for water wells, geothermal wells, and even by EPA as a clean-up tool at Superfund sites. It should be noted, though, that FWW’s source for this claim is none other than the New York Times series attacking the industry, a series that has been almost universally panned, not only by two notable Democratic governors but also by the Times’ own public editor.
Food & Water Watch: “[D]irect jobs are not created when royalty and lease payments are made.” (p. 5 ) FWW uses this baseless claim to conclude that “$2.02 billion of the $2.95 billion in in-state spending consisted of landowner payments and taxes. This leaves $930 million in in-state spending toward direct job creation.” (p. 6 )
EID: The billions of dollars injected into the economy each year in the form of royalty and lease payments associated with oil and natural gas development don’t play a role in creating jobs? That would probably come as news to the thousands of folks, many in unrelated industries, whose jobs can be directly tied back to royalty payments in Texas, as detailed in this study commissioned by the Fort Worth Chamber of Commerce last summer. But beyond that, there’s also an interesting sleight of hand here. FWW asserts that royalties and lease payments don’t create jobs, but then claims that “landowner payments and taxes” don’t create jobs either. But taxes are not lease payments; taxes are collected by the government. Without notice, FWW seamlessly broadens its interpretation of what constitutes royalties and lease payments to include taxes, then uses that dubious definition to undermine the economic impacts of shale development. But doesn’t tax collection require staff (i.e. jobs) too, ranging from tax attorneys and paralegals to auditors and other administrative staff? Is FWW suggesting these jobs don’t exist either?
Food & Water Watch: “Food & Water Watch conservatively assumed that at least half of the gas industry jobs would be filled by out-of-state workers if New York is opened up to shale gas development.” (p. 8 )
EID: FWW believes that if a company is not headquartered in a particular state, then most of the workers will also come from out of state. This is completely unsupported by the data. Of the thousands of new hires made by the industry in neighboring Pennsylvania, an overwhelming majority of the workers (71%) are from Pennsylvania. The industry has also spent more than $411 million over just the past three years to fund the repaving and improvement of local roads, as well as to enhance the state’s transportation infrastructure. This activity also requires workers, which means jobs in Pennsylvania for Pennsylvanians. Replicating this success in New York would bring similar benefits to the Empire State, particularly to areas that have experienced economic malaise for decades.
Food & Water Watch: “[A]n employment multiplier of 1.92 better estimates the potential total jobs across industries created by shale gas development in New York in 2015.” In the very next paragraph, FWW says the number of jobs created with that multiplier is “less than 1 percent of projected private sector employment in 2018 in the state of New York, which is projected to be 8,6975,730.” (p. 2)
EID: It’s ironic that FWW would criticize others for not understanding how to use a multiplier and then turn around and, in the very next paragraph, misuse a multiplier. As FWW says, the 1.92 multiplier is an assessment of the overall economic impact in 2015, yet the group suggests that the multiplier can easily be applied to 2018 as well, regardless of constantly changing economic realities. FWW takes an abstract employment figure (materialized without the use of “dubious” economic models), multiplies it by a number that they do not understand, and then divides the result by a broader employment figure for a completely different year.
Food & Water Watch: “[T]he oil and gas extraction industry has one of the largest employment multipliers of any industry”. (p. 9)
EID: We agree, and this is why there are thousands upon thousands of people across the country who have jobs, thanks to the responsible development of shale oil and gas resources. Look no further than North Dakota – which boasts the lowest unemployment rate in the nation (3.5%) and a budget surplus that could allow the state to eliminate its property tax – to see just how powerful an economic engine the oil and gas industry can be.
Food & Water Watch: “[J]ob creation in health and human services, presumably due to shale gas industry accidents, is included.” (p. 4)
EID: For a subtle jab, this gets a “nice try.” But as it turns out, everyone needs dentists, physicians and optometrists, even those who are in peak physical condition. Moreover, FWW may want to examine the available data. According to the Bureau of Labor Statistics, the incidence rate for injuries and illnesses among all industries is 3.8 per 100 workers. The oil and gas industry is less than a third of that, with a rate of only 1.2 per 100 workers.
- EID Blog: “Desperation through Exaggeration”
- IHS Global Insight: The Economic Contribution of the Onshore Oil and Natural Gas Producers to the U.S. Economy
- NBC News: “Jobs Boom Brings Thousands to Small North Dakota Town”
- Fort Worth Chamber of Commerce: The Impact of the Barnett Shale on Business Activity in the Surrounding Region and Texas