Wednesday, June 22, 2011

thumping the ground

Here is the big debate of the day. The Keystone Research Center is out with a report that concludes the net job creation from Marcellus Shale activity is a bit less than you might read elsewhere. They key issue in this spat is whether or not the count of 'new hires' reflects net new job creation which is what we usually use as a metric in evaluating economic growth and change.

If you have any doubt on which way to interpret the numbers, realize that in the Pittsburgh region last year there were probably 500 thousand 'new hires'.  Would be quite a boom time if it was true and that net job creation was that high.  Workforce flows are always much larger than net change.

Unsurprisingly and in record time the Marcellus Shale Coalition has a detailed response to the KRC report. Can't say they are not getting their money's worth from their PR consultants on retainer.  Here is the thing.  Read the MSC's response, and they reference as counterexamples a lot of media reports as if they are primary source material.  It clearly is something written by media people for media people. The KRC report has some real employment numbers that are worth talking about at the very least.  The MSC response does not seem to address any of the specific points in the KRC report, but does throw up enough chaff to confuse the issue.  Probably exactly what the PR handbook says to do.

The meta news issue is who is even reporting on any of the different numbers out there.  One of the few stories I've seen of anyone reporting on folks who dare question the huge economic impact numbers was over a year ago. (a recent lecture discussing some of these economic impact reports is online here).  What you really see in the news are generally folks echoing the same stats repeatedly to the point where it sounds like there is wide agreement, when in fact they are point sources.  So go and read the data compiled by the Keystone Research Center and you will see that there is a big gap between all the jobs numbers that we can add up and the 100-200K job creation range that is what is so often quoted.

7 Comments:

Anonymous n'at said...

Our out-of-towners want 12 hour shifts 7 days a week to weld, lay pipe, move earth and deliver material. Many locals break fast under those conditions, which only provides fodder to those who wish to hire nomads and wildcats.

These unprofessional, ignorant folks deserve all the scrutiny and acrimony they receive.

Wednesday, June 22, 2011 7:27:00 AM  
Blogger C. Briem said...

I don't get the 2nd paragraph... but my understanding from a lot of folks is those workers like the intense shifting for a period of weeks or more so they can then go home for an equally long period. It's like we are a big North Sea oil rig.

Wednesday, June 22, 2011 7:32:00 AM  
Anonymous BrianTH said...

Obviously we should use the right numbers, but to me the right numbers still seem pretty impressive. Of course I am coming from the perspective of someone who doesn't want PA to turn into Saudia Arabia--my ambition for Marcellus is that it become a useful diversifier, contributing to state and regional growth and development without dominating it. And that vision is consistent with--indeed, arguably requires--adopting a reasonable extraction tax, which I suppose is why I am content with uninflated numbers.

Incidentally, I don't want to muddy the waters (pun not intended), but I still think we may ultimately see more jobs created in more distant support roles and downstream industries than in the industries currently being identified as Marcellus industries. But I don't want to overemphasize that notion while we are in the midst of trying to properly regulate and tax the industry.

Wednesday, June 22, 2011 9:10:00 AM  
Blogger David Passmore said...

Chris,

You and your blog readers might be interested in a pre-publication draft our brief article, "Pennsylvania '1099' Employment in Marcellus Shale Core Industries" that is posted at http://pbcbriefing.blogsome.com/2011/06/21/p47/ . Also, I posted for you and your readers an Excel file, "Covered and Complete Employment in Marcellus Shale Core Industries in Pennsylvania, 2001-2011," at http://irtd.ed.psu.edu:5000/pdfnew/mshale_emp_2001_2011.xlsx . Has some core industry employment numbers. PA Center for Workforce Information & Analysis adds in workers in supply and value chains. No comment.

Wednesday, June 22, 2011 12:34:00 PM  
Anonymous Anonymous said...

Please help out us overburdened blog readers. Does Passmore's article show more, or less, MS job growth compared to the KRC paper?

Wednesday, June 22, 2011 2:33:00 PM  
Blogger David Passmore said...

Anonymous,

Different.

My data shows the number employed. The data about which KFR and MSC are jabbering is data on new hires.

New hires data counts people hired due to growth in Marcellus Shale core industries as well as people hired to replace workers who die, retire, or otherwise leave work in the industry. Just reporting new hires data ignores the other side of the equation: people separate from the industry.

Employment at any time is the result of the net effect of new hires AND separations. To look just at new hires will give you an improper view of net job creation.

I won't even get into the "Ancillary Industries" counts that the Center for Workforce Information & Analysis has made, but those numbers are artificially puffed, too, if they are meant to show job impacts of Marcellus Shale activity.

No one denies that Marcellus Shale activity has been a boost to employment. I wonder why people want to puff the numbers? Someone needs to kick ass a bit here on the use of data in these arguments and of the use of the "chaff," as Chris describes it, in these arguments.

Wednesday, June 22, 2011 10:16:00 PM  
Anonymous Anonymous said...

Thanks very much David.

Thursday, June 23, 2011 8:47:00 AM  

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