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Think Tank Throws Water on Marcellus Jobs Report

A think tank is questioning the importance of Marcellus Shale development in Pennsylvania's employment picture.

While the industries involved in shale development hired 48,000 people in Pennsylvania between late 2009 and early 2011, they added less than 10,000 actual jobs once firings, retirements and resignations are taken into account, according to a policy brief released Tuesday by the Keystone Research Center (KRC), a left-leaning but nonpartisan think tank.

"The number of new hires by itself tells half the story and is not a meaningful indicator of job creation," KRC Executive Director Stephen Herzenberg said. "You also have to look at the number of people who leave jobs."

The original employment data came from the Center for Workforce Information and Analysis (CWIA) at the Pennsylvania Department of Labor and Industry and received wide coverage across the state. The CWIA determined shale employment by looking at six "core" industries and 21 "ancillary" industries related to development (see Shale Daily, June 3).

The CWIA report found that in the northern tier, the prolific dry-gas counties along the New York border, companies drilled 762 wells in 2010 and added 1,109 jobs to core industries during the study period, a 1,275% bump. Activity in northeastern Pennsylvania during 2010 was led by Bradford County, where 830 permits were issued and 386 wells were drilled.

Central Pennsylvania, a region with only 162 wells in 2010, saw employment jump 661%. This region was led by Centre County, which saw 97 permits issued and 39 wells drilled last year.

In southwestern Pennsylvania, a growing wet-gas corridor, companies drilled 220 wells and added 540 jobs, an 81% increase. In Westmoreland and Fayette counties alone, two very active counties in that region, companies drilled 65 wells and added 525 jobs, a 122% increase.

Southwestern Pennsylvania was led by Washington County in 2010, where 249 permits were issued and 139 wells were drilled.

The KRC didn't challenge the CWIA data, only how media outlets and industry groups interpreted that data.

Between late 2007 and late 2010 the core Marcellus industries added 9,288 jobs while the ancillary industries lost 3,619 jobs, for a net gain of 5,669 jobs, the KRC pointed out. It also noted that Marcellus job growth accounted for less than 10% of the 111,400 new jobs created in Pennsylvania since February 2010 and that without shale development Pennsylvania would still rank third among all the states in terms of job growth, largely on the back of state investments, according to KRC analysis.

"The Marcellus boom has contributed to job growth, but the size of that contribution has been significantly overstated," Herzenberg said. "To explain Pennsylvania's relatively strong recent job growth requires looking at factors other than Marcellus Shale -- such as the state's investment in education, renewable energy, workforce skills and unemployment benefits."

The Marcellus Shale Coalition (MSC) quickly fired back, calling the briefing "yet another thinly veiled, politically timed attack" designed to influence lawmakers as they work to craft a budget for Pennsylvania by June 30. "But families across Pennsylvania are seeing firsthand the reality of Marcellus development: it is fueling economic growth, employment and investment in roads and infrastructure at rates not seen in decades," Executive Director Kathryn Klaber said.

While the MSC did not challenge the "new hires" versus "new jobs" distinction, it said the full economic impact of shale development could only be understood by considering a broad range of figures: counties with development have unemployment rates below the state average, shale industries wages are 30% higher on average than other industries in the state, and shale companies have paid more than $1 billion in taxes and invested "billions" in the the economy. The Marcellus industry spent more than $411 million over the past three years just repairing roads in Pennsylvania, according to a membership survey that the MSC released Monday. Of that spending, about 21% went to local roads and 79% went to state roads.

The KRC wants Pennsylvania to craft an "explicit Marcellus economic development policy" that includes a severance tax, a training program to funnel skilled but unemployed local workers into shale jobs, increased investments in the supply chain to boost employment in ancillary fields and to increase manufacturing operations, and a permanent fund for shale revenues.

The KRC, through its Pennsylvania Budget and Policy Center, previously challenged Pennsylvania Department of Revenue figures touting the tax benefits of Marcellus Shale development in Pennsylvania (see Shale Daily, May 5).

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