Commentary: Shale Is No Economic Game Changer
Originally published in The Scranton Times-Tribune, by Sharon Ward, Frederick G. Floss, Wendy Patton, and Ted Boettner
Has natural gas drilling been the economic game changer that industry leaders promised? Not according to the most reliable analysis.
A recent study from the U.S. Bureau of Labor Statistics that looked at job growth in Pennsylvania's Marcellus Shale found it to be a very small slice of the overall economy. Industry studies have claimed job growth significantly higher.
The U.S. Chamber of Commerce gave us some insight in 2012 when its chief spokeswoman offered that the campaign goal was "to ensure no hindrance or regulatory barrier to shale development." Fracking proponents offer the promise of jobs in exchange for limited regulation and taxation.
How many people are coming to work in the shale industry? Will they bring families? How long will they stay? Reliable numbers allow communities to plan for the challenges ahead.
The Multi-State Shale Research Collaborative, uniting policy organizations in the Marcellus and Utica shales states to assess drilling's impacts, has taken a close look at the number of jobs created.
The collaborative's estimates are similar to those reported by state agencies and in the recent BLS report.
No such agreement exists on the broader jobs impact of drilling. In many cases, industry-funded studies and fracking proponents have exaggerated the benefits.
Between 2005 and 2012, 33,000 new jobs directly related to shale extraction were created within the six states. Pennsylvania has two-thirds of these jobs, but shale is a small share of an economy with 5.7 million jobs.
Education and health care are far more important to the region's economy, employing 4.5 million people. One in six jobs are in education or health care compared to one in 800 in shale extraction.
Extraction activity cushioned a handful of counties from the worst impacts of the recession. Even then, some non-drilling counties grew more quickly. Greene County was the only shale county among the top 10 for employment growth. New York, despite a moratorium on gas extraction, had the greatest job growth.
The industry has created some good-paying jobs in counties with intensive drilling activity, but the employment growth has had little impact on the six states' overall economies.
Shale development has created jobs at companies supplying drillers, and at businesses where employees and leaseholders spend their shale earnings. Looking at more than a dozen independent studies, we found total job gains at about twice the number of directly related shale jobs. Industry-funded studies have estimates as much as seven times higher.
Assumptions in industry-funded studies artificially inflate jobs at suppliers and local businesses.
Industry supporters also have misused government jobs data to echo inflated job claims. In Pennsylvania, shale boosters routinely count all jobs in a state report of 30 ancillary industries as "supported by" shale. But these are broad industries, such as trucking, construction, and industrial machinery wholesalers, for which shale drillers are a tiny fraction of the customer base. About 200,000 jobs existed in these industries before fracking began. About 200,000 exist now. Counting every UPS driver and the rest of the 200,000 jobs as "supported by shale" is pure nonsense.
The Pennsylvania Department of Labor and Industry should stop publishing data on "ancillary" jobs. A six-state commission should be formed to develop a method for tracking employment.
It is time to take factual questions on shale's jobs impact out of the political arena. Our citizens need information they can trust.
Sharon Ward is the director of the Pennsylvania Budget and Policy Center. Frederick G. Floss is the executive director of the Fiscal Policy Institute in New York. Wendy Patton is the senior project director for Policy Matters Ohio. Ted Boettner is the executive director of the West Virginia Center on Budget and Policy.