More Fun With Shale Jobs Numbers

Last week, the Marcellus Shale Coalition trumpeted a new claim on the shale drilling industry's positive impact on Pennsylvania jobs:

Raymond James analysts crunched the numbers, and between 2005 and 2012 almost 90 percent of the job growth in Pennsylvania at that time came from oil and gas jobs ... That’s the highest percentage of any state, according to analysts Pavel Molchanov and J. Marshall Adkins, who based the math off data from the Bureau of Labor Statistics.

As meaningless statistics go, this is one of the more meaningless.

Here's why: Since 2005, many states, including Pennsylvania, have created few jobs overall. Pennsylvania averaged 5,704,000 jobs in the 12 months of 2005 versus 5,746,000 for the 12 months ending August 2013 — a 42,000 increase. Given this small increase in the overall number of jobs, it doesn't take a lot of shale jobs to account for a high percentage of this increase. In other words, 90% sounds like a lot (leaving aside whether the 90% claim is even accurate), but 90% of a small number is, well, a small number.

This leads to two other points. First, why didn't Raymond James pick 2006? In Pennsylvania, the 12-month job average in 2006 was 5,755,000 — MORE than the most recent 12-month average number of 5,746,000 jobs. Since 2006, Pennsylvania has had no positive job growth, which might lead one to say the Marcellus Shale created infinity percent of the total growth in jobs in Pennsylvania since that year. In fact, with no overall job growth, drilling would have created infinity percent of the total job growth even if it had created just one positive job.

These 2006 calculations help answer why Raymond James started its analysis in 2005: 2005 is far enough back for overall job growth in virtually every state to be positive but small. Starting in 2006 would make the shale shares of overall job growth nonsensical in many states, including Pennsylvania (since overall growth was negative). And going back to 2003 or 2004 would increase overall job growth relative to shale job growth, and begin to convey the reality that shale is a small part of the overall economy. Nice job of cherry picking the period of analysis to fuel a preconceived narrative, Raymond James.

The second point is that Pennsylvania's high ranking for share of jobs coming from shale since 2005 stems partly from the state's poor recent jobs performance. If Pennsylvania's job growth since 2010 had kept pace with national job growth over the same period, we would have roughly another 100,000 jobs today. A higher number for overall job growth since 2010 — and hence since 2005 — would make the modest number of Marcellus Shale jobs created since 2005 substantially lower than 90%.

So in a strange way the Raymond James/Marcellus Shale Coalition claim about shale job growth since 2005 is partly a celebration of Pennsylvania's disappointing overall job growth since 2010. Does the Marcellus Shale Coalition really mean to draw attention to this?

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