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Pennsylvania Marcellus shale job creation claims being overstated?

Despite the positive job gains related to Marcellus shale gas drilling industry, current job gains in Pennsylvania continue to slow according to Dr. Mark Price, a labor economist with the Harrisburg based non-profit policy research group, The Keystone Research Center. Dr. Price is coauthor of the Center’s latest Pennsylvania labor study released on Wednesday of this week tilted the, “State of Working PA 2013”. In an interview yesterday with Examiner.com, Dr. Price said state labor records show Pennsylvania has recently lost more than 45,000 public sector jobs while the state’s economy has only created as many jobs in the last two and half years as it did in the first year of the recent recovery.

Dr. Price stated, “There is no doubt our overall Pennsylvania economy is getting weaker, not stronger.”

“In the 32 months since 2010, ending July 2013, the state has experienced a gradual slowdown in job growth. From January 2010 to January 2011, the number of Pennsylvania jobs increased by 87,300. Over the next 12 months, job growth fell to 46,200, with a further decline to 35,000 in 2012. This year, through the month of July, Pennsylvania has created only 5,400 jobs.” stated Dr. Price. The Center’s report was co-authored by Price, who holds a PhD in economics from the University of Utah along with Dr. Stephen Herzenberg, who is the Keystone Research Center’s Executive Director and who holds a PhD in economics from MIT.
 
Dr. Price said job creation from shale gas drilling in the Pennsylvania Marcellus remains, for the most part, a bright spot in the state’s labor activity. However he expressed concerns that officials from the Corbett Administration are being overly optimistic in their assessment of shale gas industry job growth. Last week, Lieutenant Governor Tom Cawley wrote an Op Ed piece in the Scranton Times-Tribune in which he declared, “And people are working in family-sustaining, steady jobs as the economic growth ripples from the gas fields of Bradford County to the office parks of Philadelphia. To date, the gas industry has created more than 30,000 direct jobs with an average wage of $82,000 a year, along with another 214,000 people employed in ancillary and related industries.”
 
Dr. Price’s analysis estimates that since 2010, the state’s shale gas industry has created around 10,000 direct jobs such as drillers, riggers and roustabouts along with some level of other job related oilfield activities. He believes Lt. Gov. Cawley’s 30,000 jobs estimate appears to include workers already in the state’s oil and gas industry which has existed for decades in Pennsylvania long before the recent shale gas boom of 2010.
 
As for the Lieutenant Governor's claim of “214,000” Pennsylvanians employed in ancillary and related services, Dr. Price stated such figures come from the Corbett Administration’s “Marcellus Shale Fast Facts” which also counts job creation in such areas as trucking, metal fabrication, steel and mill workers, engineering services along with government workers. While these workers may have some work resulting from the overall shale gas industry, it’s not a given such jobs resulted from the shale gas industry alone. Such inclusion of indirect and induced job creation numbers in the state's reports tend to be, “Robust and aggressive statements about job creation which overstate dramatically the effects of one specific area of economic activity.” according to Dr. Price.
 
The amount of indirect shale gas industry jobs has always been a source of controversy within the state. In 2009, then Penn State professor Timothy Considine published economic development reports paid for by the shale gas industry in which he went so far as to estimate jobs being created as a result of payment of shale gas royalties to Pennsylvania landowners. Considine then claimed such landowners would immediately spend these monies within the state in the same year they were received and thereby creating numerous “induced” jobs. Such aggressive job creation estimating formulas are not accepted by the majority of labor economists.
 
Dr. Price said the key to understanding the current employment picture in Pennsylvania is to look at changes in employment in well defined economic sectors over one specific time period to the next and avoid simply using job creation numbers which total up over extended periods of time. He advises he does not use ancillary or related job creation figures because they are known to change rapidly based on the state’s overall economic activity.
 
As an example he pointed out how it’s unclear to know how many ancillary shale gas industry jobs were created then lost as a result of the industry’s dramatic overnight decrease in drilling in Pennsylvania as drillers such as Range Resources, Chesapeake Energy and others quickly and unexpectedly moved operations to nearby Ohio’s Utica wet gas formations starting in 2011 and continuing through 2012. Such recent history is a good example according to Dr. Price of the long time boom to bust economic cycles of the oil and gas industry.
 
“In fairness to the shale gas industry, while it is important source of job creation its total impact on the state’s labor market should not be overstated.” Dr. Price stated.
 
The Keystone Research Center’s reports are all available online. The Center is a 501C 3 non-profit and is not funded by any environmental or political agenda groups. Dr. Price has been the Center’s chief labor economist since 2003 and works with Dr. Herzenberg and Michael Wood who provide ongoing research into the state’s labor market and the government policy which impacts it.
 
To read the latest Keystone Research Center's State of Working PA report, go to: http://keystoneresearch.org//publications/research/state-working-pennsylvania-2013
To read the Lt. Gov. Cawley's recent Op-Ed piece, go to: http://thetimes-tribune.com/opinion/to-make-saudis-cry-say-marcellus-1.1541377
 
Disclosure statement: The writer holds no US securities in any of the companies listed in this article. He has no financial or consulting arrangements with any of the entities or individuals listed in this article. He is not being paid to write for any environmental or political organizations.
 
Drilling rig Wyoming via shutterstock. Reproduced at Resilience.org with permission.

 

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