North Dakota Has 3.2 Percent Unemployment

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John_Browning
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04 Jul 2011, 1:01 am

Hmmm...California has good oil deposits and lots of farm land, why can't we pull this off? Oh yeah, we're neck deep in eco-nazis and we're a sanctuary state. :evil: :evil: :evil: :evil: :evil: :evil:

http://finance.yahoo.com/blogs/daniel-gross/north-dakota-spurred-energy-ag-boom-3-2-122815061.html

Bismarck, North Dakota — In recent weeks, North Dakota has been in the news because of the historic and damaging flooding of the Missouri and Souris Rivers. But as the waters subside, it's worth focusing on the state's economy. For at a time of stagnant wages and a high unemployment rate, this vast, lightly populated Peace Garden State is one of the few places in America where jobs are plentiful.

In May nonfarm payroll employment was up 4.3 percent from the year before, and the unassuming state sported a gaudy 3.2 percent unemployment rate. In several counties, the rate is below one percent. The state jobs office has 15,205 listings, up 64 percent from May 2010. North Dakota, which is one of the smallest states by population (about 670,000) and one of the largest geographically, has .7 unemployed persons for every job opening. In the U.S., the labor force participation rate is an anemic 64.2 percent. In North Dakota, it stands at 74 percent.

What accounts for this? A few factors.

There's a full-on oil boom in the western part of the state. The combination of new technologies — horizontal drilling, fracking — and high energy prices has led to a boom in drilling and oil production in the Bakken Shale, which lies underneath much of the western half off the state. "It's the largest construction project in the U.S.," says Ron Ness, president of the North Dakota Petroleum Council. A sharp rise in production, from 45.9 million barrels in 200 to 113 million in 2010, has made North Dakota the fourth-largest oil-producing state in the U.S. And there's more to come. Some 173 oil-drilling rigs are now at work in the state, about one-quarter of all those in the U.S., and Ness projects up to $5 billion on spending on oil- and gas-related infrastructure over the next three to five years.

The state's workforce directly employed in the oil industry has risen from 4,500 in 2005 to about 35,000 today. "On any given Monday, we've got 1,700 job openings directly related to the oil industry," Ness said. But since oil production requires a great deal of support, the boom has created demand for a range for workers: truckers, accountants, cooks, HR managers. In Williston, gas stations, convenience stores and McDonald's are offering $12.50 to $15.00 an hour for entry-level jobs.

The impact of oil is spilling over into the rest of the state. Bismarck is home to MDU Resources, a mini-conglomerate that until recently was the state's only member of the Fortune 500. The company's utility unit, which provides electricity to the western part of the state, has seen its business rise 5 percent in the past year. That's hypergrowth for a utility. "All our businesses are impacted — in construction, energy and the utility," said CEO Terry Hildested, sitting in a corner office of a with 50-mile views across Bismarck and the plains.

The Tesoro refinery in nearby Mandan is likewise benefiting from the boom in the west. The refinery, which can churn out 2.5 million gallons (60,000 barrels) of gasoline, diesel, and jet fuel per day, is experiencing an increase in demand for diesel fuel. "So far this year we've hired 25 people," said manager John Berger, a Bismarck native. Tesoro has announced a $35 million expansion that would enable the refinery to increase its capacity by 10,000 barrels per day by next year. That should lead to more construction and production jobs.

But it's not just about oil. North Dakota's prolific agricultural economy that is benefiting from global boom in commodities. Without bragging, state officials will let you know that the state is the largest single producer in the U.S. of fourteen crops, including barley, canola, durum wheat and navy beans. As more people around the world eat — and eat better — North Dakota's farmers are finding new markets and plowing funds into equipment and processing capabilities. "We've seen phenomenal growth in our export markets, triple digit growth in the last few years," said John Mittleider, manager of agriculture and energy development at the North Dakota Department of Commerce.

In addition, the eastern part of the state, which is home to cities such as Fargo and Grand Forks, is growing smartly. Officials note that 45 percent of the job openings in the state are in the eastern Red River Valley. Beyond energy — wind farms, coal mining, a new power plant under construction in Spiritwood — the state has a small technology sector and a larger health care one. Microsoft's campus in Fargo is the technology giant's second-largest one outside of its home base in Redmond, Washington.

It all adds up to growth. The state's economy has grown 7.1 percent in the past year. And that means demand for labor, which is a challenge in a sparsely populated state whose population has been aging. I visited a Cavendish Farms frozen french fry factory in Jamestown, a town of 15,000 about 100 miles east of Bismarck. (The smell of cooking oil wafts over the farmland. An impressive set of machines transforms 340 million pounds of potatoes into fries. Director of Operations Andrew MacLeod says the plant faces two major challenges to keep up with growing demand: a lack of raw potatoes (supply is down this year) and a lack of people. "Attracting employees is probably our biggest challenge today," he said. The plant is looking to add about 15 people to its 220-person staff. "It's mostly operating the line and testing the product," MacLeod said. "We're not getting a lot of applicants. If we want to grow and expand, we have to attract people here."

Of course, the challenge isn't simply a matter of demographics. Many of the positions open are jobs, not careers. And they're hard ones that, in many instances, don't pay all that well. The jobs Cavendish are trying to fill are shift work — three 12-hour days on, followed by two days off, paying anywhere from $12 to $17 per hour. Wages are substantially higher in the oil fields. The average wage in the North Dakota oil and gas extraction industry is more than $90,000. And even low-skilled jobs can command high wages: $1,500 per week for cooks or $1,000 per week for housekeepers.

In addition, there's a severe housing shortage in the western part of the state. Officials counsel people seeking jobs not simply to show up in North Dakota unless they have a place to live lined up. Some companies are dealing with the problem by building man camps. (And, no, these aren't places where you make lanyards, fish and watch sports on television; they're modular housing made by companies like Target Logistics).

North Dakota, which exports so much food and energy, is dealing with its labor shortage by importing people. In the oil fields, it's common for workers to come in a few weeks at a time, and foreign students are working fast-food jobs. And in the East, commuters from more densely-populated Minnesota are crossing the border to their jobs. Across the state, employers are casting their rods more deeply into the labor pool, as older and disabled workers are able to find opportunities in North Dakota that may be unavailable to them in other states.

North Dakota today is like a mirror image of the U.S. economy at large. The state's budget is balanced, housing prices are rising and the labor market is tight. A virtuous circle is in play. More economic activity leads to more investment, which leads to more employment, which in turn creates more demand for all sorts of goods and services. The state has natural resources in abundance, and is prospering by exporting them. But if North Dakota's boom is going to spread into a long period of prosperity, it's going to need to figure out a way to import more human resources.


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jojobean
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04 Jul 2011, 3:24 am

I was 4 when the oil boom went bust in Oklahoma. It busted, not because a lack of need for oil, but because the federal goverment shut down production when they started producing unleaded gasoline, because OK did not have the refineries to produce unleaded and all the other grades of Gas we have now. OK still floats on oil, but the state is so poor from poor planning during the boom, that it does not have the the money to rebuild for today's gas standards.
I hope north dakota learns from this...so they keep on thriving.


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