Jobs, Jobs, Who’s Got the Jobs?
Debates and discussions over the economic impacts of energy project development often seem confusing, conflicting and dominated by spin. In many cases, these discussions equate “economic impacts” with something called “job creation.” While employment is certainly high on everyone’s mind (and many large energy development projects happen in rural areas that have tended to have high unemployment), it is certainly not the only economic impact that energy projects can have.
Some economic impacts are certainly positive, such as lower energy costs. Others are certainly negative, including impacts on existing infrastructure (like roads, bridges and public utilities), crime and housing costs. But none of these have gotten the attention (or analysis) as has the issue of employment. Thomas Murphy, Director of the Marcellus Center for Outreach and Research, discusses the number of job and workforce development considerations for shale energy development in the video below.
Debates and discussions over the economic impacts of energy project development often seem confusing, conflicting and dominated by spin. In many cases, these discussions equate “economic impacts” with something called “job creation.” While employment is certainly high on everyone’s mind (and many large energy development projects happen in rural areas that have tended to have high unemployment), it is certainly not the only economic impact that energy projects can have. Some economic impacts are certainly positive, such as lower energy costs. Others are certainly negative, including impacts on existing infrastructure (like roads, bridges and public utilities), crime and housing costs. But none of these have gotten the attention (or analysis) as has the issue of employment. Thomas Murphy, Director of the Marcellus Center for Outreach and Research, discusses the number of job and workforce development considerations for shale energy development in the video below.
Thomas Murphy: Workforce Development (1:39)
David Yoxtheimer: What are some of the job and training opportunities that one might find in the shale industry?
Tom Murphy: So workforce development is one of the key considerations of shale energy development that we've seen in the U.S., certainly in the Appalachian basin, and then beyond that. And the models that have been put in place, the assessments to determine what workforce needs would be, and then the models to be put in place to actually develop those same programs either at an institutional level, or also at a political level, meaning that there is often funding that is needed to make those programs operate. So all those are key considerations. We have found that about 70% to 75% of the workforce is blue collar, meaning that technical skills are key, so community colleges are a very big part of the institutional capacity to train the workforce and will continue to be as we go forward. The remaining 25% is more of an academic type of process, so training the geologists, and the attornies and some of the environmental engineers and such are a key aspect of that as well. So it's ah...collectively, it's an initiative that's important to bring those multiple tiers of institutions together to develop the curriculum and also to make sure that they've done the proper assessments so that we're training the right number of workers in the right quantity with the right skill sets and bringing them into the marketplace as the market is asking for them.
It can be difficult to determine how many jobs are created by large-scale energy development, and shale production is no exception. As a case in point, read this article from the Washington Post (Will Keystone XL pipeline create 42,000 'new' jobs?) about the proposed Keystone XL pipeline project that would have transported oil from Canada to refineries along the U.S. Gulf Coast. One U.S. Senator supportive of the project cited a study claiming that Keystone XL would have created more than 40,000 new jobs. Another Senator opposed to the project, however, claimed that Keystone XL would have created ten times fewer jobs. The two numbers seem irreconcilable.
What is going on here? Companies in the U.S. have built hundreds of thousands of miles of pipelines – don’t we know by now how many people it takes to build a pipeline? The reason for the confusion comes down to just a few key facts about measuring (and reporting) the workforce implications for energy project development.
- The total size of the workforce needed to sustain a given level of energy development extends far beyond the people that actually drill wells, lay pipeline or erect wind farms. Part of the disagreement over the Keystone XL and other big energy projects comes down to using different definitions of what constitutes the ‘workforce’ and which jobs in which industries are counted.
- The number of people required to build a large energy project like a gas well or a pipeline is very different than the number of people required to run the project once it is complete. There thus may be very different short-term versus long-term workforce implications. Some jobs may be temporary contract employment while others are more like permanent positions.
- Creating a job is not the same thing as reducing unemployment, since workers may shift from one job to another. While we often talk casually about the number of jobs that a given energy project will create, it is more correct to refer to the size of the workforce needed to develop and sustain a given energy project.
The Washington Post article contains a nice summary of why it is so difficult to pin down the exact economic or workforce impacts and would be relevant for any large energy or infrastructure project, not just the Keystone XL pipeline. In the material that follows we’ll go into some more depth as to where the numbers for economic impacts come from, and understanding the advantages and shortcomings of the methods used to generate these numbers.