Posted on 05/26/2018 5:16:03 PM PDT by 2ndDivisionVet
State losing millions in state tax revenues with unfilled positions
The jobs bubble in North Dakota has grown much larger than has been reported, but no one is certain how much bigger it’s getting to be. Nor has the state done any particular studies on how much revenue it’s losing from the thousands and thousands of positions that are going unfilled, and the activity that isn’t occurring as a result.
Jobs in North Dakota tend to trend up and down with oil prices, of course. They can get quite large — like a price bubble — which means they can also suddenly disappear, when oil prices suffer a big downturn.
North Dakota Job Services has estimated that the state’s current jobs bubble is 14,000 statewide — a brand new Jamestown, if all of the positions were filled.
But Gov. Doug Burgum, while he was visiting Williston, said many employers have told him that their job postings only represent a fraction of their actual job openings. Companies are listing one or two positions with Job Services, but hiring 10, 20 or even 100 people from that.
“There could be 20, 25,000 job openings in our state,” Burgum suggested, based on that.
The North Dakota Office of the State Tax Commissioner says the average liability per tax return is around $637, and each person in the state spends an average of $933 in sales taxes. For 14,000 jobs, that’s an estimated $13 million in state tax revenue left on the table. For 25,000 jobs, it would be more like $39.3 million in direct tax revenue lost due to unfilled positions.
The jobs bubble might be even larger, however, than the Governor’s guesstimation. A significant number of companies and agencies do not use Job Services to list their positions at all. The North Dakota Petroleum Council has encouraged oilfield companies to use the service, so that the number of job openings can be tracked, but many do not do so.
Dan Eberhart, CEO of Canary Crane, is among those not using the state’s free service to list job openings. The wellhead company is headquartered nationally in Denver, but has its largest location in Watford City. It also has two locations in Williston and another in Sidney. The Bakken represents about 40 percent of the company’s business.
“I would hire another 100 employees today,” Eberhart said. “I wouldn’t need to even think about it. That is literally based on getting rid of my overtime. I had 8,400 hours of overtime in my last report. I just don’t have enough people.”
Employees only want overtime to a point, Eberhart said. In his experience, it’s seen as beneficial from 60 to 75 hours. After that, the employees are missing the football game, as well as time with family, and they are tired.
“They want some overtime, but they don’t want to only be at work,” he said. “So we are focused on recruiting.”
Eberhart has recently purchased 15 new pickup trucks, which he’s hoping can serve as an incentive to recruit experienced people to his team.
“It works,” Eberhart said. “It’s the same pay, but you get a brand new pickup truck. It’s like a signing bonus.”
He’s careful, however, how the new truck incentive gets used. Senior employees, he noted, already have new trucks. And none of the recently purchased trucks will be offered to entry-level positions.
“It’s important not to be disrespectful to the existing team,” Eberhart said.
Other things he’s tried include using a temp service based in Bismarck, through which he gives people a guaranteed number of hours to come out to the Williston, Watford City and Sidney areas. But he’s still short a lot of people.
That doesn’t only mean lost income tax revenue. It’s business he could be doing that isn’t happening as well, some of which could involve sales tax or other state revenue sources.
“I’m turning down two out of three calls,” Eberhart said, “because I don’t have enough people. So that’s my instant math. I’d take 100 in the Bakken without even thinking about it. I can get more equipment easily, and truthfully, I’d give up work I have in other places, because the pricing is better here in the Bakken. But it is about the people.”
Main Street initiative part of solution
Lt. Gov. Brent Sanford called it an alarming, but also amazing, problem to have. If the jobs bubble is just three times bigger than has been reported, that’s around 40,000 jobs, he acknowledged. It’s also an estimated $62.64 million in state tax revenue not being collected, as a direct result of unfilled positions.
“We know those numbers can climb that high,” he said. “It happened in the last boom, and we know all the oil companies don’t post their jobs with job service. It’s not a perfect science, but we do know everywhere we go that there’s a workforce shortage. And that’s been true no matter what the size of the community, so it is definitely holding us back as a state.”
The unfilled openings represent fewer wells being drilled or fracked, Sanford acknowledged, which plays into another source of state revenue — oil and gas taxes.
“It’s less activity, and a slower construction process for new homes, public buildings and new gas plants to take off flared gas,” Sanford said. “All of that is hampered and slowed down because of lack of workforce. Maybe, in some ways, it’s an artificial leveling mechanism, so things don’t boom up too high and come slamming back down again.”
Easing the crunch, however, is a focal point for state efforts, and part of what the Main Street initiative is all about, Sanford said.
“We need people to settle in all parts of the state,” he said. “We cannot be focused on just one community in the state. People need to find more open and inviting communities to settle in.”
Among things the state has already been doing is focusing on its pockets of underemployed people. These could include people with disabilities or people who are undertrained, and getting them some training to take higher-paying jobs.
Out-of-state recruitment, in conjunction with state tourism efforts, has also encouraged visitors to consider staying more than just a week.
“Come see what it’s like and maybe you will stay, because once people get here, they love it,” Sanford said.
Healthy, vibrant downtowns in communities like Watford City, Dickinson, and Williston are crucial to that type of marketing, Sanford suggested.
“That makes the area more attractive to people coming in from outside the area,” he said. “And we are going to try to dial that in a bit more. These efforts are spread out. We want to dial more into the workforce development side, and we will be bringing out more initiatives later as we go along.”
A “you’ve probably already seen this” ping.
No description of the jobs available. Grapes of Wrath reminder.
Basically, it amounts to having a huge skills gap. Millenials don’t know how to drive cranes or forklifts.
Had several friends that went out there to work. Never made anymore than if they had stayed at home and worked around there.
OH they made bundles of money alright, but the cost of living sucked it all up.
“Millenials don’t know how to drive cranes or forklifts.”
And they get muddy and greasy too. Yuck!
35 years working oilfield ..
Production hoists and drilling rigs..
Retired Real proud of that fact
‘Bout the time they finally get the personnel in place, the AWL bubble will bust.
Actually it is just difficult for a state of 3/4s of a million people to adapt to changing conditions.
Getting power, pipelines, even decent roads completed in the patch is an ongoing battle.
One thing for sure, the “conservatives” in the state capitol surely didn’t have any trouble burning through oil revenue during the last go-round.
They’re going to have to get new bumper stickers: Dear Lord please give me another oil boom...I won’t p-— it away like I did the last two!
p.s. Thanks.
You have seen the boom towns. I remember going through Gillette, WY in ‘73 and then going back up in ‘78 to build two new schools. A spot to hook up your trailer and connect to sewer was $650 plus utility charges. Renting a house or apartment was impossible.
In 2011, I bid some B-52 hangers up in ND and tried to price in housing for field management and others. Impossible, there was none to be had except double the price. A 1959 house was the price of a new home 50% larger in Dallas. Apartments were clapboard. People were going up there and finding out you couldn’t live on the fringe with the winters that they have in North Dakota.
Oh yeah. Heard that bumper sticker made the rounds in Houston also.
Interesting...
The only problem with living and working in North Dakota is that you have to live and work in North Dakota.
“.. Millenials don’t know how to drive cranes or forklifts”
Agree. IMO,there has been such an emphasis on a college degrees in the previous administrations that good paying vocational trades went un-noticed.
My junior year in high school I worked summers on a roust about crew for my uncle. Went into the Army in in 69 got out in 72 and went to work for the Sheriff’s Department but took a side job as a pumper on a friend of mines place. Did that for 5 1/2 years and went full time in the patch. When Conoco offered to sell us the wells on the ranch we bought them. I operated 22 stripper wells until we had the money to drill our own. We now have 72 wells on the ranch and 16 more on some other leases we picked up over the years. I’ll be 68 in November and have no intention of retiring. When we survived the oil crash of 98 I knew I could handle anything from that point on. I’ve reentered 4 of those old stripper wells that still had good casing and took them down another 1500 ft and tapped into the Cline, they’re making more now than they ever did. Origional production when we started was just under 1000 barrels a month and almost no sell able gas. Last month we did a total of 26,320 barrels and running an average 133,920 MCF a month. Not bad for starting life as a lowly roustabout worm. I’m in it until I die!!
They believe a job is to steal more taxes.
That is their problem.
And foreign immigrant imports are too lazy to do those harsh jobs, they would rather take welfare in a warmer climate.
What wonderful story....do you use a Jimmypole to pull your wells and lay rods and tubing on ground. Do you pipe some gas into your home and use it....what do you do with the production water. Man so interesting so many questions to ask
....
Our wells are over 8500 ft deep I don’t think a little Jimmy Pole could handle it. The service rigs need to be able to handle over 10,500 ft of 2 7/8 tubing. The ranch (Built in 1905) house is now all electric but I do have a poly line running cleaned casing head gas to a generator for emergency back up. Everything from the well goes to the battery where it’s separated. First it goes through a separator where the gas is removed from the fluid and then the fluid goes through a heater treater which separates the water from the oil. The oil goes into 500 barrel steel tanks and the water into 500 barrel fiberglass tanks. When either gets a load (175 to 180 barrels) a truck will pickup. The water is taken to a disposal well and the oil is taken to a holding area where it’s pumped into a pipeline headed to the refinery. The gas goes directly into a pipeline that crosses the ranch.
On a train going home hard to text..thank you for reply..couple days got a few more question ...worked for a very large oil company
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