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Private sector employment is still below its January 2007 level, while oil and gas industry jobs are up by almost 51%

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While the overall economy struggles to add jobs during an extended jobless recovery, there’s one industry that’s booming and consistently creating hundreds of shovel-ready jobs every day — the oil and gas sector. The chart above shows the percentage change in employment since January 2007 for: a) total private sector employment and b) oil and gas extraction and supports jobs, and the contrast is striking.

1. In January 2007, there were about 115 million private sector jobs in the US, and that number increased slightly to an all-time high of 115.7 million jobs in January 2008. By February 2010, the devastating effects of the Great Recession on the job market resulted in a loss of almost 9 million private sector jobs from the January 2008 peak, representing more than a 7% loss in employment to 106.8 million jobs. Since the cyclical low in early 2010, more than 7 million employees have been added to private payrolls, but the overall number of private sector jobs is still more than one million jobs — and 0.9% — below the employment level in January 2007 (see chart above).

2. In contrast, employment in the oil and gas sector for extraction and support jobs reached an all-time high in June, and the employment level is more than 50% above the January 2007 level (see chart). Over the last two years, US oil and gas companies have hired an average of 155 new employees every business day for extraction operations (oil and gas exploration and all production work up to the point of shipment) and support activities (excavation, well surveying, casing work, and well construction), which is about one new job every three minutes.

In a related release today that inspired the chart above, the Department of Energy is reporting that:

Both the support and drilling industries were heavily affected by the recession, but these industries have recovered quickly, suffering only minor effects from the temporary moratorium on offshore drilling as a result of the Deepwater Horizon spill in 2010. Between January 2007 and December 2012, monthly crude oil production increased by 39%, and monthly natural gas production increased by 25%. Employment in the oil and gas drilling, extraction, and support industries continues to contribute to overall private sector employment as the U.S. economy recovers from the 2007-09 recession.

Beyond within-sector employment, oil and gas industry activity also directly supports output and employment in other domestic sectors, such as suppliers of pipe, drilling equipment, and other drilling materials. In addition, as with other forms of economic activity, there are indirect employment effects stemming from purchases made by industry and employees spending of their incomes. Because employee expenditures are closely tied to their incomes, higher paying jobs, such as those in the oil and gas sector, tend to have larger indirect effects on output and employment than lower paying ones.

MP: The analysis and chart above are only accounting for the within-sector, direct jobs in the oil and gas industry, and the Department of Energy points out that there are many indirect jobs and industries supported throughout the long supply chain for the oil and gas industry. Here are some recent examples of how the oil and gas boom in North Dakota is spreading jobs and prosperity to other industries and other states:

1. North Dakota oil boom is a boon for neighboring Minnesota businesses, too.

2. Bakken boom builds businesses in Grand Forks region.

3. The North Dakota Bakken oil boom creates a booming business for a Fargo-based accounting software company.

Bottom Line: Put it all together, and the booming oil and gas industry is creating thousands of shovel-ready jobs, both directly in drilling and exploration activities, and indirectly throughout many other sectors in the economy and in every state in America. Thanks to America’s shale revolution, the booming oil and gas industry continues to be the strongest job-creating sector in the economy and provides one of the strongest reasons to be optimistic about the US economy and America’s future.

8 thoughts on “Private sector employment is still below its January 2007 level, while oil and gas industry jobs are up by almost 51%

    • The US oil and natural gas industry’s total employment impact to the national economy in 2011, combining the operational and capital investment impacts, amounted to 9.8 million full-time and part-time jobs and accounted for 5.6 percent of total US employment.

      Source.

    • An example of the indirect employment impact of shale oil would be the growth of Lufkin Industries. Lufkin employees design and manufacture beam pumping units, oilfield meters and controls, well packing equipment, and many other devices required for the development and production of oil fields. Lufkin is only one of a number of U.S. companies which provide such equipment. Over the past 5 years, the company has increased its workforce from 2,700 to 4,400.

      Of course, the added Lufkin Industries employees are only a portion of the employment increase which resulted from Lufkin’s added oilfield business. No doubt Lufkin, like most companies, outsources many of the jobs related to its increased shale oil contracts. Those would be jobs as diverse as truck drivers and computer programmers.

      The increase in direct and indirect employment resulting from Lufkin’s role in the U.S. energy boom will not show up in statistics about oil and gas industry or mining jobs. After all, Lufkin Industries is a manufacturer. But these are exactly the type jobs included in the economic impact study Professor Perry quoted. Without Eagle Shale and Bakken and the other shale developments, these jobs would not exist.

  1. The 2012 EIA data derived from the BLS for NAICs codes (drilling-213111, extraction-211, support-213112) is 569,000 jobs. The 2011 PWC data for the same codes in Table 4 is 1,150,000. Those would be the direct jobs.

    Why the 100%+ discrepancy?

  2. The next article that you might want to write would be entitled “Fracking Poverty”. If you list the poorest 100 zip codes in the US, you will notice that they line up fairly nicely with shale oil formations. The great economic boom of the last 30 years has been mostly a “coastal” boom. Shale oil may change this dynamic and improve the living standards of the “fly-over” states. The Utica Shale formation has the possibility of being a real game-changer for Rochester and Buffalo.

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