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Jobs report: the energy connection to growth

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Gregory Bull/AP/File

(Read caption) Ben Shaw hangs from an oil derrick outside of Williston, N.D. Friday's jobs report shows signs of a recovering economy. Part of the job growth is driven by the unconventional oil boom taking place in North Dakota and other parts of the country.

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Friday's jobs report bore good news. The US economy added 236,000 jobs in February and employment dropped to 7.7 percent.

While no one sector can take credit for the promising jobs report, America can thank the energy sector for part of the boost.

The contribution comes from many areas: oil and gas extraction employment is up 10,000 jobs over the past year; utilities, up 6,000 jobs; coal employment, by contrast, down 5,000. Renewables are also growing slowly. But the jobs impact from the energy sector, especially the boom in unconventional oil and natural gas extraction, is much greater than that, driving a need for construction workers, engineers, truck drivers, and a host of related occupations.

 

The biggest spurt has come in the past five years. As of 2012, unconventional energy employed 360,000 people directly, 537,000 workers indirectly as suppliers, and another 850,000 people providing services and goods to the first two groups – more than 1.7 million jobs in all, according to IHS Inc., a Colorado-based energy consulting firm. The next fastest phase of growth should come in the next few years. By 2015, the number of overall jobs supported by unconventional energy should expand by nearly 50 percent to 2.5 million; and, by 2020, another 20 percent to 3 million jobs.

"We have new opportunities for producing both oil and natural gas that are backing out imports and making a substantial contribution to the improved health of the economy," said W. David Montgomery, senior vice president of New York-based NERA Economic Consulting, in a telephone interview.

 

The sudden growth can come at a cost. The mixed economic, cultural, and environmental impacts of the shale boom have been the subject of no less than three major magazine cover stories in the past few months. Some residents of North Dakota complain of the heavy traffic, loud noises, and pollution associated with a rapid increase in drilling.

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Renewables also show job growth, but on a significantly smaller scale. The US solar industry currently employs 119,016 Americans, according to The Solar Foundation, a Washington-based solar advocacy nonprofit. The industry added 13,872 jobs last year, representing a growth of 13.2 percent.

"Going forward, we expect a record year for new solar projects and corresponding job growth in 2013," Rhone Resch, president and CEO of the Solar Energy Industries Association, said in a statement when the numbers were released last November. "This should serve as a signal to policymakers that clean energy policies are doing what they were intended to do – grow our economy.” 

There are 75,000 workers in the wind power industry, according to the American Wind Energy Association, a Washington-based trade organization. With the extension of the wind energy tax credit earlier this year, the group says wind energy could support 500,000 jobs in the US, with an annual average of more than 150,000 workers directly employed by the wind industry, by 2030. 

Some have criticized those tax credits as being a burden on taxpayers and counterproductive to job growth.

"The way we get higher incomes is by workers producing more per hour," Mr. Montgomery of NERA said. "Pushing for forms of energy where you get less energy per hour of work means negative productivity." 

 

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