Oil & Gas Employment in Ohio

According to representatives, the oil and gas industry in Ohio is on track to create just over 200,000 jobs by 2015 (1).  2015 is when the “ramp up‘ should be complete in terms of job creation.  Yep, 200,000 jobs mostly in eastern Ohio.  There are presently 32 counties in the Ohio Utica and Marcellus Shale Region – add at least Cuyahoga, Lorain, Summit and Franklin counties in the job creation area.

From this point on, assumptions are going to be made.  There are estimates for the job creation multiplier effect, about family size and percentages of school age children.  None of these number are set in stone, though there is probably an argument that there is some degree of accuracy.  In other states (Oklahoma, Texas, Kansas(2) and North Dakota), for each job created in this industry there is a multiplier impact of about 3 jobs created in the economy for each one of the oil and gas jobs created(3). In other words, the overall employment impact in Ohio could reach about 350,000 jobs as a result of the oil and gas industry.  That is a pretty wild number (I’ve seen numbers ranging from a multiplier effect of 2.5 to 3.2 jobs created for each new oil and gas extraction job created).

To be conservative, let’s drop that multiplier to 1.5 – meaning 175,000 new jobs.  In the March 8, 2013 press release, the Ohio Department of Jobs and Family services reported that the “… number of workers unemployed in Ohio in January was “399,000…”(4)    It is  doubtful that we will see zero unemployment in Ohio.  Employers are reporting that up to 1/3 of job applicants can’t pass a drug/alcohol test.  This also implies that a good portion of job creation will come from individuals from outside of Ohio.

According to industry estimates, the peak job numbers, as aforementioned, will occur in roughly 2 years.  If they cannot find qualified workers in Ohio, they will “import” these employees from other states.  From here the equation gets muddled.  Certainly, not all of these jobs will come from inside Ohio’s borders.  Drive through southeastern Ohio and check out the license plates from the south and west.

To be fair, some of the jobs created will not necessarily be permanent, but rather temporary.  In this case, temporary means a few weeks to a few years – so, it makes these numbers far more subjective.

If we make an assumption that maybe 1/2 of the revised multiplier effect created jobs will come from outside of Ohio, (83,000), we can make an assumption about the potential population impact. The average family population in this area ranges from 2.6 to 2.9 people per family.  So let’s round down just to be ultra conservative.  Let’s make it 2.3 people per family.  This makes 190,000 people into Ohio, most of the population locating in about 42 counties.  Let’s take it one step further and assume that maybe 17% of these family members moving to Ohio will be school aged children (5); that’s 32,000 new school aged children, or an estimated 1,o00 per county.

Maybe these numbers are far-fetched.  Maybe they aren’t.  But, considering that the numbers are  “toned” down from the numbers experienced in other states, public officials in the Utica/Marcellus Shale counties need to take stock of their present facilities, capacities and ability to deliver services.

1 Kleinhenz & Associates, Ohio Natural Gas and Crude Exploration and Production Industry and the Emerging Utica Gas Formation: Economic Impact Study, September 2011

2 http://www.cedbr.org/content/2012/OilGasMultipliers.pdf

3 forbes.com/sites/robertbradley/2011/12/12/oil-gas-the-gifts-that-keep-on-giving/

4 http://jfs.ohio.gov/RELEASES/unemp/201301/index.stm

5 http://quickfacts.census.gov/qfd/states/39000.html    http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

 

 

© 2013 Economic Development Data Services, Inc.

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