As onshore oil and natural gas development grew, so did several U.S. metropolitan areas, with the Permian Basin and Bakken Shale reaping the biggest benefits for wage earners from 2000 to 2015, a Pew Research Center analysis has found.
Metropolitan areas of the United States that directly benefited from the boom in U.S. oil and natural gas growth since 2000 enjoyed some of the biggest gains in their buying power, while smaller manufacturing-oriented cities saw their buying power shrink over the same period, according to a review of Bureau of Labor Statistics (BLS) data. Pew based its comparisons using third quarter data because wage patterns in most places "are strongly seasonal."
Midland, TX (48%), and nearby Odessa (46.7%), in the heart of West Texas, had the largest increases in average third quarter weekly wages between 2000 and 2015, adjusted for local inflation. For example, average weekly wages in Midland were $581 in 3Q2000, but had more than doubled to $1,170 in 3Q2015. The Permian oil boomtown from 2000-2014 was found to have had the largest increase in the share of adults living in upper income households in the United States.
"In 2014, 36.8% of metro Midland's adults lived in households with more than double the national median size-adjusted income, up from 18.5% in 2000," researchers said. There is a caveat, "given the steep drop in oil prices since 2014...the prosperity of such energy-dependent communities may not last. Indeed, the real average weekly wage in Midland fell 6.2% between the third quarter of 2014 and last year's third quarter."
The crude oil price decline has had a sharp impact on oil and gas employment, with hundreds of thousands of people laid off by exploration and production companies and by oilfield service operators since 2014. The impact likely is to be seen more clearly in 3Q3016 data.
In the Bakken Shale's metropolitan center, Bismarck, ND, wages increased by 41% from 2000-2015, while Casper, WY's wages rose by almost 39%. In Houma, LA, home to several offshore energy businesses, wages climbed by more than 32% in the decade and a half. Double-digit gains also were seen in weekly wages in Morgantown, WV, rising 30%.
Billings, MT, saw its wages jump 29% over the 15-year period, while Fargo, ND's climbed more than 28%. Cheyenne, WY and Grand Forks, ND, each benefiting from Bakken growth, both were up 27%-plus.
"For the nation as a whole, average weekly wages rose by 7.4% in real terms between 2000 and 2015," Pew reported. "Most of that gain came after the 2007-09 Great Recession ended: In the third quarter of last year, the average weekly wage was $974, up an inflation-adjusted 6.6% from the same period in 2008."
All in, real wages increased by more than the national average in about 200 metro areas, and not all of them were tied to the energy sector. Several of the fastest growing metro areas were university towns including Charlottesville, VA (the University of Virginia); Bellingham, WA (Western Washington University) and Morgantown, WV (West Virginia University).
BLS data was from the Quarterly Census of Employment and Wages, a program that gathers data from unemployment-insurance tax forms filed by more than nine million employers. Average weekly wages were calculated by dividing quarterly total wages by average total employment for the quarter, then dividing the result by 13. About three dozen metro areas were excluded because they were either newly designated, combined with a neighboring metro area, or reclassified as a "micropolitan" area during the period.