The Marcellus Shale gas boom in Pennsylvania: employment and wage trends
In terms of employment, the oil and natural gas industry is substantially larger than the coal mining industry. In 2012, the oil and natural gas industry had nearly six times the number of jobs the coal mining industry had. Furthermore, over the 2007–2012 period, the oil and natural gas industry added more jobs than did the coal mining industry. From 2007 to 2012, employment in the coal mining industry increased by 10,962 (13.0 percent), from 84,131 in 2007 to 95,093 in 2012. By comparison, over the same period, employment in the oil and natural gas industry grew by 135,084 (31.6 percent), from 427,706 in 2007 to 562,790 in 2012. (See table 1.)
Although employment in the oil and natural gas industry is larger, employment in the coal mining industry is more stable. (See figure 2.) Compared with the coal mining industry, the oil and natural gas industry experienced larger percent changes in employment in each year over the 2007−2012 period. The oil and natural gas industry also was more sensitive to the steep economic downturn of the Great Recession, seeing a sharp over-the-year decrease in employment growth, from 11.4 percent in 2008 to −11.4 percent in 2009. While the rate of employment growth in the coal mining industry did fall from 2008 to 2009, the percent change in employment was notably smaller, dropping from 6.0 percent in 2008 to 0.9 percent in 2009, and falling further, to −0.8 percent, in 2010. By 2011, both industries had recovered from recession lows, reaching rates of employment growth comparable to those in 2008.
Further, since 2007, average annual pay in the oil and natural gas industry has been consistently greater than the pay in the coal mining industry. In 2012, average annual pay in the oil and natural gas industry was $107,198, compared with $79,127 in the coal mining industry. Moreover, from 2007 to 2012, pay grew by a larger amount in the oil and natural gas industry than it did in the coal mining industry, although coal mining experienced a slightly larger percent increase over the 5-year period. While the average annual pay in the oil and natural gas industry gained $13,624 (14.6 percent), pay in coal mining gained $11,693 (17.3 percent).
State comparisons and Pennsylvania
Table 2 shows the top 10 states ranked by employment in the oil and natural gas industry. The ranking is presented (1) by employment level in 2007, (2) by employment level in 2012, and (3) by employment change from 2007 to 2012. Nine states that were in the top 10 in 2007 also were in the top 10 in 2012. Many of these states are traditionally oil- and gas-producing states, as indicated by their high employment levels and relatively small employment changes in the industry over the study period. North Dakota is the only new state ranked in the top 10 in 2012; however, its large employment increase can be attributed to the growth in shale oil production in the Bakken Shale and does not represent a substantial increase in natural gas employment.7
|Annual average employment|
|Average annual employment|
|Increase in annual average employment|
|State||Level||State||Level||State||Level change||Percent change|
(1) North Dakota's 2012 employment in the oil and natural gas industry is an incomplete sum. Data for the drilling oil and gas well industry (NAICS 213111) are not disclosable. The state's employment level and over-the-period increase in employment may be understated because they are calculated on the basis of an incomplete sum.
Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages program.
Most of Pennsylvania’s substantial employment gains in the oil and natural gas industry were due to the recent surge in shale gas production brought about by the drilling in the Marcellus Shale. The state’s employment growth in the industry is consistent with EIA data on gross withdrawals from shale gas wells. Pennsylvania had the second-highest increase in gross withdrawals (2.0 trillion cubic feet) from 2008 to 2012, trailing only Louisiana in this regard.8 As a result, Pennsylvania went from being the 10th-largest state by oil and natural gas employment in 2007 to being the 6th largest in 2012. The state also had the second-largest employment increase over the study period, positioning itself only after Texas, a major oil- and natural gas-producing state.
7 “North Dakota crude oil production continues to rise” (U.S. Energy Information Administration, August 2012), http://www.eia.gov/todayinenergy/detail.cfm?id=7550.
8 “Natural gas summary,” data series: gross withdrawals from shale gas wells (U.S. Energy Information Administration, January 2014), http://www.eia.gov/dnav/ng/ng_sum_lsum_a_EPG0_FGS_mmcf_a.htm. There were no 2007 data for gross withdrawals from shale gas wells for Pennsylvania. Data are available for 2008, when the shift to horizontal drilling began.