North Dakota, The Economic Miracle State
The fact that North Dakota has roaring economy, driven by oil production in the state, isn’t news. Especially not to those of us actually living in North Dakota who are living with the oil boom, and know that it’s a complex issue that’s not always 100% positive.
But it’s still fun to marvel at some of the statistics, and Mark Perry has a round-up of some of the latest:
1. In 2012, North Dakota’s Gross Regional Product was $39.3 billion, an enormous figure for a state with only 690,000 residents and an increase of $6.4 billion from 2010.
2. For real per capita GDP in 2011, North Dakota ranked No. 7 in the country at $50,096.
3. Since the beginning of the state’s oil boom in 2005, North Dakota’s oil and gas industries have grown by an incredible 396.5%, compared to the nation’s otherwise impressive growth of 32.5%.
4. While North Dakota’s oil and gas industry is growing by leaps and bounds, it still only directly employs about 22,000 workers. North Dakota’s economy is booming because of the remarkable effect that energy production has on other industries. Since the beginning of the oil boom in 2005, the average growth across 4-digit-level NAICS industries with at least 500 hundred jobs in the state is a whopping 20%. Many industries are expanding at astronomical speed, for example:
a. Jobs in “support industries for mining” have increase by almost eight times, from 2,307 in 2005 to 18,191 in 2012, at an average annual salary of more than $106,000.
b. Jobs in “architectural and engineering services” have more than doubled since 2005, and the average annual salary for North Dakota architects and engineers at $91,500 is above the national average of $89,500.
c. Trucking jobs in North Dakota have tripled in the last seven years, and drivers there earn almost $81,000 per year on average, which is a premium of almost 50% above the national average of $54,000 for truck drivers.
d. Employment for the ”Industrial and equipment rental” industry has increased almost six-fold since 2005, and the average annual pay of $106,000 in North Dakota is 36% above the national average for that industry of less than $78,000.
Overall, employees in the 24 fastest growing industries in North Dakota earn an average annual salary of more than $80,000, which is a wage premium of more than 29% above the national average salaries for those industries as a group.
5. EMSI research finds that job multipliers in North Dakota range from 1.76 for oil and gas pipeline construction to 5.37 for petroleum refineries. Therefore, for every direct job that energy production creates in the state adds an additional 1 to 4 jobs elsewhere in the North Dakota economy.
6. North Dakota’s labor force participation rate (LFPR) has held steady at between 71 to 74% since 2007. In contrast, the national LFPR has been falling since 2000, is currently at 63.5% and has never been higher than about 67%.
The impact of the oil boom has been profound, and the positives far outweigh the negatives.
What worries me is that our state’s leaders aren’t taking advantage. We aren’t leveraging these once-in-a-generation circumstances to set North Dakota up for the future. The state has been slow to enact real tax relief, choosing instead to keep these windfalls locked up in a government that is growing at a rate faster than the federal government’s.
I worry that, long-term, this is something we may regret.