Comparing reports on the job effects in the Marcellus Shale
Recently, the Keystone Research Center (KRC) published a study to determine how many jobs have been created in Pennsylvania due to the natural gas industry. First, a little background: the KRC is an independent institute, which has the objective to perform research and encourage public discourse on economic and civic problems facing Pennsylvania. Further, the objectives are to offer policies to help solve these problems. The KRC’s funding comes from a variety of sources and more information can be found at the Center’s website: http://kestoneresearch.org/about-keystone-research....
The purpose of this post is to summarize some important findings of the report and to discuss the response of the industry.
The first important contribution of the published study is emphasizing definition of the language used by the industry. One of the biggest clarifications is that `new hire’ does NOT directly mean a new job. The use of the term `new hire’ is only an indication of hiring activity. This term includes bringing in workers to replace others who have been fired, or others who have quit their jobs. If one were to apply the complete definition of a `new hire’ cumulatively during the same period that ‘48,000 new hires’ were brought into Marcellus Shale companies, there were 2.8 million `new hires’ in all of the industries throughout Pennsylvania.
The Marcellus Shale Coalition (MSC) naturally responded to this report. However, the response did not directly address the main issue of job calculation methods. Instead, the press release by the MSC called the KRC report a `political attack’. Second, the MSC said that the unemployment rate in specific counties that engage natural gas drilling is less than the state average. First, this fact was not disputed by the KRC. The KRC report notes that within specific regions of the state, that the "employment picture for the Marcellus Industry is rosy". However, if one takes a minute to think about it, this response does not address the fact that to say `48,0000 new hires’ is not 48,000 new jobs. The MSC cannot address that the employment in the industry pales in comparison to the new employment positions people have found in Pennsylvania’s traditional industries.
The KRC continues the report by exploring the statewide effect of the industry on job creation. With citations noted from the Pennsylvania Department of Labor, the KRC notes that the statewide effects of the Marcellus Industry on actual job creation are very small. Since the state began adding jobs after the Great Recession, the number of jobs counted to the Marcellus Industry is only 8% of the total new jobs created. The KRC notes that Pennsylvania ranks third in creating new jobs since the Great Recession, and that this ranking would hold even without the Marcellus Industry. Further, the report indicates that the new jobs that are created by the industry currently go to out-of-state workers. This fact is not acknowledged by the MSC in the report. The MSC does not distinguish how they fail to hire qualified Pennsylvanians, but how they instead bring in workers from outside our state.
The report ends in a very thought-provoking point: on what can be done right going forward with respect to the Marcellus Industry and I encourage folks to take a look especially at the very last page of the report (page 8), if they do not have time to read all of it. Direct links to the respective documents are noted below.
