Carpe Diem

A report from the Bakken oil fields, where the jobless rate is 0.9% and Walmart is paying 2.4 times the minimum wage

walmart

I took this photo today at the Walmart in Williston, North Dakota, where the economy is booming thanks to the gusher of shale oil being pumped from the prolific Bakken oil fields. Daily oil production in the Bakken is approaching one million barrels per day, placing it in an elite group of only ten super-giant oil fields in the world that have ever produced that much oil at peak production. In total, nearly one billion barrels of oil have now been produced in the Bakken oil fields, and all of that oil production and related activities have brought the unemployment rate in the Williston area down to below 1% in most months over the last three years. For the most recent month – April – the jobless rate here was 0.9%.

The photo above of wages at the Williston Walmart highlights some important economic concepts:

1. Walmart pays wages that reflect the economic conditions in a local market based on the supply and demand realities of the local labor market. In other words, Walmart can’t really set wages independent of market forces and it’s really at the mercy of the market in every local community. If Walmart offered the minimum wage of $7.25 per hour in the Bakken area, it wouldn’t be able to staff its stores.

2. The fact that Walmart is paying almost 2.5 times the minimum wage in Williston, ND is evidence that a single, national minimum wage for every city, county, labor market in the country can’t possibly make sense. Even proponents of the minimum wage have to agree that a single national minimum can’t be optimal for every labor market in the country. In that case, they would logically have to support thousands of minimum wages tailored to thousands of local communities, or maybe even more logically agree that minimum wages are unworkable.

3. You probably won’t be hearing anybody calling for a $15 per hour “living wage” in North Dakota, since the entry level wages at Walmarts there are already above that.

4. The energy sector is the strongest sector of the US economy, and is bringing wealth, prosperity, and high-paying jobs to places like western North Dakota and south-central and western Texas.

5 (New). From Jon Murphy in the comments:

Of course, what we also have here is a huge hole blown in the “we need minimum wage because businesses won’t pay good wages” argument.

MP: Unfortunately, you’ll likely hear nothing about the fossil fuel milestones in America’s Economic Miracle State or $17.20 per hour jobs at the Walmart Williston when President Obama visits here this week. Instead of visiting the most prosperous part of the most prosperous state in the nation to recognize one of the most powerful engines of the US economy – the Bakken oil fields of western North Dakota – President Obama decided to visit the Standing Rock Sioux Indian Reservation about 250 miles from here in the southern part of the state, where the jobless rate is 86%. Go figure. When Obama lectures the Native Americans this Friday about jobs and economic development in their part of North Dakota, perhaps he should mention that there’s a labor shortage only a few hundred miles away, with hundreds, if not thousands of immediate openings for high-paying jobs in the oil patch.

176 thoughts on “A report from the Bakken oil fields, where the jobless rate is 0.9% and Walmart is paying 2.4 times the minimum wage

  1. If the daily amount of oil is just now approaching one million barrels a day, how is it possible that one billion barrels have already come out of Bakken? One million days ago is over 2700 years in the past. Where are you getting this data?

    • One billion is the accumulated oil production in the history of the Bakken, going back to the 1950s. The one billion barrel milestone has been reported here on Carpe Diem, and in the news by Bloomberg, etc., it’s a well-established fact.

          • There is nothing wrong with his English. In the UK, it is spoken as “maths”. In American English we say “math”. Either way is appropriate… Please refrain from spreading your ignorance in the future. Thank you.

          • How do you become an adult without knowing that people from England people refer to mathematics as “Maths?” I’m genuinely curious. Which rock do you live under?

          • Maths is the across-the-pond abbreviation for mathematicS. Technically correct, even if it does sound silly to American ears.

          • @Ron, apparently, it depends on what country you’re from as to whether you say math or maths.

          • Ron, actually you’re in the minority. Most English speaking countries use the term “maths”. Americans incorrectly use the singular form “math” even though they also use the plural “mathematics”.

          • The word “mathematics” is not plural. The “s” is not a marker of a plural in this case, just like the word “basis” is not a plural.

            “Math” appeared in 1890. “Maths” appeared in 1911.

            In this case, Americans are not only using the more correct form, they are using the earliest form.

            The British, however, are much more logical when it comes to the position of periods and commas relative to quotation marks, and I follow the British punctuation rules.

          • “Math” may be older, but it is still an incorrect Americanism. And mathematics is indeed the neuter plural, derived from -ikos used in adjectives.

          • I just wanted to say, who cares? You’re all off subject. But it could be my math and english are wrong.

        • Yeah I’ld like to know that too. Can you apply on line without making the huge drive just to find out that now that there has been publicity, all the jobs are gone.

    • um, 1 Billion is 1000 Billion, or roughly 1000 days or just about 3 years ago. Math, do some.

    • One billion is only 1000 million. 1000 days ago is less than three years ago.

    • A million barrels a day for 2700 years would be about a trillion, not a billion. At a million barrels a day, it would take less than 3 years to reach a billion.

      Where did you learn math?

    • mmm ok, fact is it would take 1000 days of 1 million barrels to reach 1 billion. not 1 million days. duh!!!

  2. To rent a room in a house is $1000/month, to buy a Big Mac meal it $16! The cost of living is inflated due only to greedy people/businesses taking from those that are up there working. Many that are working the fields live in other states and have gone to earn a better living for their families back home. But the locals have seen a way to cash in and force the oil field workers to share a large portion of their earnings with them.

    • Boss, your comments clearly display your complete lack of any economic understanding. Trying reading some books on economics before commenting on an economic blog.

      BTW, if the people/business who supply goods and services in Wiliston are greedy when they charge higher prices than are charged in other places, then why are the workers who go to Wiliston and charge higher prices for their labor not also greedy?

      • Really?
        givemefreedom comments: “Trying reading some books on economics before commenting on an economic blog.”

        “Trying reading some books” ….. really…. givemefreedom; your intelligent grasp of the English language lends huge credibility to the content of your comments. Try “Engrish”.

        Bottom line is this: when one sector of the economy gets healthy all other sectors prosper. Too bad you cannot see that simple fact in life.

        • Ceallaigh,

          Autocorrect causes some strange things sometimes. No edit function is also a problem.

          So instead of seeing the obvious and assuming a typo, you jump all over a meaningless error and attack me personally. Well done, that really helps your credibility.

          You continue to highlight your ignorance by making a comment that has nothing to do with my post or the post by Boss.

          Perhaps you have been trying to read a book on ecomonics and you are having a tough time of it. Maybe you should just refrain from posting here. Just keep reading until you have some basic understanding of what is being discussed.

          More likely, you are Boss and did not have the strength of character to defend your stupid comments and so you posted under a new name.

          Either way, GFY.

    • Boss

      The cost of living is inflated due only to greedy people/businesses taking from those that are up there working.

      People will try to get the highest price they can, based on what others are willing to pay. That’s called human nature, and we all do it. People who move to Williston to work are responding to the same desire to get a higher price for their labor.

      Known as the law of supply and demand, when something is in short supply, as almost everything is in Williston, the higher price signals suppliers to provide more of whatever, and consumers to demand less of whatever, until supply and demand approach equilibrium.

      The study of these human interactions and their interrelationships is called “economics”.

      Many that are working the fields live in other states and have gone to earn a better living for their families back home.

      Yes, they are seeking the highest price for their labor.

      But the locals have seen a way to cash in and force the oil field workers to share a large portion of their earnings with them.

      And you see something wrong with that? Can we assume that all the workers have come to Williston voluntarily?

      “Spread the wealth”, as they say. Would you prefer a government redistribution system?

        • I think we can all agree that there’s some pretty crappy economics being practiced in this thread, much of it by people who don’t claim to be experts.

          The original post that has started it all, written by an economics professor no less, claims that the hiring practices of one Wal-Mart in the middle of an oil boom is economic evidence of the need for a major change in U.S. policy that’s been in effect for 70–plus years.

          The minimum wage has been in effect in the U.S. since the 1930s, and during that time the U.S. became the world’s strongest economy. Is that because of the minimum wage? No, probably not. But the minimum wage hasn’t had nearly the negative effects that many conservative economists fear, either.

          There’s little evidence a pure free market free-for-all would work, except in the fantasies of some conservative economists.

      • so lets see… minimum wage is over $15.00 but a Big Mac meal should still be only $5.00??? the $5.00 Big Mac meal is based on paying wages closer to $7 per hour not twice that just for an UNSKILLED burger flipper.. and what all is included in the cost of the Big Mac Meal?.. the labor costs of the burger flipper, the cashier, the shift manager, the fry maker, the janitor, the store manager, the janitor, the the delivery truck,, the insurance, the heat source for the grill and fry vat and soda cooler, not to mention the cost of the perishables and the paper goods, the accountant, the payroll specialists, oh and of course something for the GREEDY OWNER .. did I forget to mention the TAXES that in most states are roughly equivalent to 35% of the employees paid wages…

    • Obviously you were not around when they were building the Alaska Pipeline then, Money was really good (when a dollar was closer to being worth a dollar) and prices were on par with what people were making ( try $10 for a loaf of bread) and this was in the ’70′s

    • Boss, you missed the whole point of the blog, you do realize that if they are paying someone $15.00 an hour to make you your Big Mac, you can’t expect to still pay $5.00 for it! When the wages go up to cost around you is going to go up! It’s not people being greedy, it’s people surviving! The locals are struggling trying to find a place for all these workers, trying to provide them with housing, groceries and clothing! Knowing in the end, WHEN THE BOOM IS OVER, they will be setting with all this housing, schools and businesses with no one to support it!

  3. “If Walmart offered the minimum wage of $7.25 per hour in the Bakken area, it wouldn’t be able to staff its stores.”

    The minimum wage is just that, the minimum. Market conditions and other factors will always play into wages. Setting a minimum wage has absolutely nothing to do with whether or not a business will be able to find workers, it instead sets it as a baseline from which they cannot pay less. If your business cannot pay its workers the minimum wage then you do not have a viable business. It would be no different than if your business could not afford to make a profit because the components are too expensive. Labor is just another component in the business model.

    “2. The fact that Walmart is paying almost 2.5 times the minimum wage in Williston, ND is evidence that a single, national minimum wage for every city, county, labor market in the country can’t possibly make sense. Even proponents of the minimum wage have to agree that a single national minimum can’t be optimal for every labor market in the country. In that case, they would logically have to support thousands of minimum wages tailored to thousands of local communities, or maybe even more logically agree that minimum wages are unworkable.”

    Your conclusion is again based off of flawed thinking. You are using a outlier in the data to try to give your argument weight. This is an extreme case. Yes Walmart might have to pay 2.5 times the normal starting wages for its stores in order to find workers, but doing so does not mean that nationally the minimum wage is impractical. Just because Walmart is not offering the minimum wage in this instance does not mean it is not having an effect. Minimum wages offer a insurance to the worker that he/she cannot be paid less than a set amount, regardless of job market fluctuations. Just because you can pay minimum wage does not mean you cannot pay more.

    “3. You probably won’t be hearing anybody calling for a $15 per hour “living wage” in North Dakota, since the entry level wages at Walmarts there are already above that.”

    All Walmarts in North Dakota are not paying wages starting above $15/hr, only the Walmarts in that local vicinity would pay near that. The rest of the state would be closer to the average pay at other Walmarts. Again you cannot use an outlier in data to make blanket assumptions.

    “The energy sector is the strongest sector of the US economy, and is bringing wealth, prosperity, and high-paying jobs to places like western North Dakota and south-central and western Texas.”

    This might be true, however the energy sector is also facing one of the greatest crisis in its entire existence. The oil supplies are running out and the viability of current supply keeping up with demands is going to force painful changes that will have strong ripple effects throughout all global economies. Once the “easy” energy is consumed then serious efforts with diminishing returns will have to be employed to maintain our current levels of consumption. When the oil and gas industries start having to cut production costs, the first place they will do it is labor.

    “President Obama decided to visit the Standing Rock Sioux Indian Reservation about 250 miles from here in the southern part of the state, where the jobless rate is 86%. Go figure.”

    Yes what a shame the president actually goes where the local people need his help ” Instead of visiting the most prosperous part of the most prosperous state in the nation to recognize one of the most powerful engines of the US economy”.

    “When Obama lectures the Native Americans this Friday about jobs and economic development in their part of North Dakota, perhaps he should mention that there’s a labor shortage only a few hundred miles away, with hundreds, if not thousands of immediate openings for high-paying jobs in the oil patch.”

    If he did this then you would see a mass migration of workers to that area, far above and beyond what that local market could support. This would drive down wages and normalize it with wages from the rest of the state. Then you would again see a need for the minimum wage in the area, otherwise wages would fall to below minimum wage.

    • “If your business cannot pay its workers the minimum wage then you do not have a viable business.”

      Well, not really, at least not in today’s world-market. There are very few jobs that cannot be outsourced at this point, and if you cannot pay the US minimum wage, you can still find people in Thailand or Romania who will gladly work for less than that, do just as good a job, and be very happy with the $2-3/hour that they receive in return. Suddenly, your business is viable again.

      All the minimum wage does is force American companies to price themselves out of the (world) market, which is one reason (maybe the main reason, although taxes play a strong role as well) why there has been such a business drain from the US in the past few years.

      Also,

      “This might be true, however the energy sector is also facing one of the greatest crisis in its entire existence. The oil supplies are running out and the viability of current supply keeping up with demands is going to force painful changes that will have strong ripple effects throughout all global economies. Once the “easy” energy is consumed then serious efforts with diminishing returns will have to be employed to maintain our current levels of consumption. When the oil and gas industries start having to cut production costs, the first place they will do it is labor.”

      This argument (“peak oil”) was made back in the 70s during the Energy Crisis, with people predicting that there wouldn’t be any gas left 20 years down the road. Yet here we are, 40 years later, and there’s more traffic than ever. What changed? Technology. Cars became more efficient, drilling techniques were improved, yada yada. No reason to think that this won’t happen again, and continue to happen for as long as there’s a need to make less stretch into more.

      Other than those two items, I liked your post. :-)

    • So. I don’t have the brain power this early in the morning to wrap my head around most of the topics here. I can however,speak to the one about the likely overflow of workers you mentioned if people from the nearby Res came over to work in the field.

      In a nutshell: They’d be a drop in the bucket. We have half of Idaho here (or very close). A good portion of Louisiana seems to have migrated on up. There are plates in the parking lots from every state in the union. Right now, MOST of the cashiers at Wal-Mart are from Africa. Not African-American. From Africa itself.
      There’s been an exchange program running off an on in this town for the past few years where a group of people from other countries come in and work for a few months in places like Wal-Mart, the fast food joints and grocery stories. If all those people are so willing to come so far for a job, don’t you think someone who’s only 250 miles away would have clued in by now?

        • “Africa is not a country, it is a continent.” And your point? The writer may know of cashiers from several countries in Africa. Their point was that most of the cashiers are not from the U.S.A.

  4. this is more than likely a part -time position meaning, Wal-Mart pays no medical, life or any other benefits. Also means that if you slash 17 in half as part-time, that is equivalent to 8.50 an hour as full-time, and thats assuming they allows one to work up to 39 hours as part time to even come close to a full-time check. Is wal-mart smart. Or are we just stupid..? This should have been a no brainer.

  5. “Daily oil production in the Bakken is approaching one million barrels per day.”
    No it’s not.

  6. I find author’s suggestions that Standing Rock Native Americans somehow maybe unaware of jobs in Williston really condescending…the issue here is not lack of jobs but proximity of housing the job….I know people who pay over 1000 dollars for bed in a crammed house and those are the lucky ones who were able to find housing. I think that better economic lesson to take away from the given data is that Walmart can infact make a huge profit even when it does not pay minimum wage.

  7. I’m wondering if the Walmart employees make that much are the prices at that Walmart higher as well? The reason I ask is even at those wages can you live off that income at the supposed inflated costs any better than a walmart employee anywhere else?

  8. Interesting blog. Why would the people on the reservations care? They are heavily subsidized to live there. Our government feeds their need for reparations not their human spirit to thrive. And so they sit in self loathing and depression. Much like a spoiled kid never asked to work for his car – inevitably he’ll crash it.

  9. To disagree with what everyone is saying about the minimum wage paid according to the economics of individual states.Walmart is paying upwards of 10.00 per hour in ND.I live in GA my wife works at Walmart she makes 10.40 per hour which is above minimum wage and relatively good pay for that line of work in GA.My argument would be with Walmart themselves and not the pay rate.No one other then managers are full time at walmart no one makes 40 hours per week so what does it matter if your making 17.00 per hour or 10.00 per hour according to each states economy and rate of pay if you cant get a full time status you cant make it on the part time pay.So walmart with thei poster of upward 17.00 per hour hiring pay is bs and they can blow that smoke up someone elses ass.My wife averages 16-32 hours per week you do the math on her pay after deductions of fed tax state tax social security and paying her own insurance.Why do you think there are marches on walmart ceo and walk outs in there stores its not because of the wages its the hours and treatment the employees get

    • Here in Colorado, the strikers are 99% union members, and a few paid protestors. Next time you see a group striking, go over and ask them how many actually work at Walmart. No one forces them to work there? On most days, there is not one actually Walmart employee in the group. Ask your wife!

  10. So for people to have a chance at getting above poverty level it’s ok to just inflate pricing and wages? The GOP wants trickle-down economics… So the oil well made the oil company rich, and so the solution is to raise wages and double prices of commodities? This is some kind of trickle down. (The oil company makes their billions, then watch the workers have to spend more to survive but the oil company is not going to budge).. This is like what the mexicans do at the borders. They cross the border to make a few dollars which means much more back in their country, then they take the money and go back to mexico. Meanwhile other people in this town who work at a normal job find themselves trying to cope with a cost increase that is so far out of proprotion they can’t afford to eat a mcdonalds cheeseburger.????? The government and big corporations win.. That’s the only thing this produces.

  11. There should be no minimum like there should be no maximum, I suppose. Forget economics I’ll give you a concept your parents should have instilled years ago, sharing. There is more than enough wealth to go around but no one wants to take a cut so others can prosper. One person from the to taking a pay cut they more than can afford could raise the wage of every low or entry level employee.

  12. Rather ridiculous to attack a guy regarding the fact he did not know “maths” was proper Brit English. I’ve travelled throughout Europe and some in the Middle East and studied 3 foreign languages but never heard “maths” before, albeit I did not spend much time in the UK. I hardly think I live under a rock though.

  13. What they mean to say is everyone in that area is making so much money that no one is going to come work for our shitty walmart wages but we have to have a walmart there because we are taking over so I guess we are forced to raise our wages. Damn I guess we will lose a few thousand off our trillion dollars we make every year

  14. In other words “You should be allowed to pay whatever you’re able to get away with paying”

    Here, unemployment is below 1% so we have to pay high wages HOWEVER, if unemployment is extremely high we should be able to throw whatever pittance we want at our workers! If people were willing to work for a dollar, we should be allowed to pay that as we keep billions.

    Seams reasonable to me!

  15. Point #2 is what sticks in my craw. “The fact that Walmart is paying almost 2.5 times the minimum wage in Williston, ND is evidence that a single, national minimum wage for every city, county, labor market in the country can’t possibly make sense.”

    Rightwing economists are always proving that things which have worked for decades can’t possibly work. We have had a Federal minimum wage since 1938. Just as a matter of simple, historical fact, it would seem clear that a Federal miminum wage has not destroyed or even noticeably slowed down the American economy.

    Corporations like Walmart, which combine the capital of tens of thousands of people, always have a negotiating advantage over individual workers. We could level the playing field by letting workers combine into unions to increase their negotiating power with corporations, but the rightwing always freaks out about combinations of labor rather than combinations of capital. So in the absence of unions, a minimum wage is a very sloppy and crude, but not useless, way of countering the negotiating advantage of capital over labor. Myself, I would prefer really high marginal tax rates, but if we can’t get that then hiking the minimum wage is the second-best solution.

    And before anyone jumps in to remind me of the high wages Walmart is paying in Williston, let’s just agree that Williston is an unusual case that shows us nothing about the rest of the economy. Outside of Williston, Walmart pays crap incomes that aren’t liveable without being supplemented by government assistance.

  16. People who advocate a minimum wage neither care about or understand basic economic principles. That is why they advocate a minimum wage. This article will be lost on them.

  17. The federal minimum wage was never intended to be “a single national minimum”. It is intended to be a national “minimum minimum”. Lots of states and even some cities have minimum wage laws that set a higher minimum wage than the federal minimum, because the cost of living in those areas is higher than the national average. The only thing that states can’t do is set a minimum wage *lower* than the federal minimum.

  18. Sorry but alot of yall are wrong. I work in the oilfield. Wages in williston are aame as they are here in texas. But it doesnt cost $80 for a sweatshirt. Walmart is NOT paying ppl $17/hr either. The simple fact is the people of williston HATE make no mistake, they HATE the oilfield boom there. Yet all the businesses are charging more. Except Applebee’s. Their meal prices on menu are same there as they are here. So before yall talk out your ass how bout u do a little research or ask someone that has been there.
    That is All