Employment Picture: Permian Basin
Who is gaining ground and who is losing ground?
By Bill Price, Ph.D.
Editor’s Note: With this article we introduce our newest columnist, Dr. Bill Price, whose credentials in human resources are cited in the article’s tagline. Besides his training in HR, Dr. Price had a career in the United States Air Force, where he piloted B-1 Bombers and B-52 bombers.
The Permian Basin is one of the most successful areas in the nation for job placement. However, in the past 5 years, there has been much discussion in the energy industry about shortages of skilled workers. Therefore, it seems worthwhile to look closer at various job categories in terms of growth and compensation. While there is a reported large unemployment pool nationwide, this has not been the situation in the Permian Basin.
In fact, Midland had the lowest unemployment rate in the United States last summer at 3.5 percent (Odessa was 4.2 percent). At the same time, the U.S. unemployment rate was hovering around 7 percent and Texas was at 6.4 percent. Overall employment in Midland from March to August grew by 3,400 workers to reach a workforce of 96,300 workers. At the same time Odessa grew to 87,400 workers. The largest increases were of course in mining (petroleum) and construction building trades that grew at an astounding 10.4 percent annualized rate. On the other hand, the largest increases in percent of overall employment in Texas were in Harris and Dallas County, which represent some of the largest metropolitan areas of the state.
The Texas Workforce Commission regularly tracks employee earnings in the state for 28 geographic areas. Median wages for experienced workers in common occupations in the Permian Basin area are shown in the accompanying Chart A (data is from the Texas Workforce Commission). These figures represent groups of jobs within these categories; not all are specifically in the oil and gas industry.
Production managers go by various job titles in a variety of supervisory positions that plan and direct work activity in everything from heavy manufacturing to petroleum extraction to mid-stream activities. Median wage for this position is listed as $123,846, but that figure would not include any bonuses, overtime, or profit sharing. While it is well known that engineers of all types are well compensated (petroleum engineers average $138,170), I found it particularly interesting that human resource managers were compensated at a higher level than engineers on average. Perhaps this is because of the critical need to obtain and retain skilled workers. Entry level positions in the oil and gas industry average $33,072 and also would not include overtime, which could be substantial in some instances. A quick look at the food service and preparation line of work will suggest why the lines are so long at local restaurants. My understanding is that part of the teacher shortage as well as food service employee shortage can be traced to offers for higher wages in the energy industry in this region. In many instances, a truck driver earns more than a public school teacher.
Wage increases for the United States as a whole during the past year were only 0.6 percent. Texas as a whole has fared better largely because of the robust energy industry.
Wages paid for many positions in the Permian Basin were considerably higher than those paid elsewhere in much of the United States, largely because of the shortage of skilled labor. The accompanying Chart B, with the same occupational categories, denotes the differences in wages compared to wages in the rest of Texas. Keep in mind there are some inaccuracies, as wages and total compensation are not the same thing. Nonetheless, a much higher rate of compensation does suggest a greater demand for occupations in this region compared to the rest of Texas. Huge differences are seen in petroleum-related areas: production managers, technicians, and entry level. It is interesting to note the lower rate of compensation indicated for lawyers; I am sure you can have some fun with that bit of data.
In the Permian Basin area, oil and gas entry level workers and technicians earn about 10 percent more than similar workers elsewhere in the state. Truck drivers also earn 10 percent more, while the mechanics that work on vehicles earn 12 percent more. Apparently there is an acute shortage in the building construction labor force, as these workers earn 13 percent more than workers in the rest of the state. Those employed in the computer and MIS field report earnings way below the rest of the state. Then again, Midland-Odessa is not a center for this type of activity, which is more likely to be found in Houston or Dallas areas. “Engineering” refers to six types of engineers. Also interesting is the earnings of medical physicians and other medical related workers, which are considerably higher than the state average.
The greatest number of openings for new workers is found in the categories of retail sales and restaurants. This is followed by a demand for tractor trailer drivers, with 5,545 openings. Certainly truck company operators are quite aware of this need.
Note that, for the most part, the categories of workers in the bottom half of the wage structure tends to show higher wage differentials compared to workers in the rest of Texas. Hopefully this will shed light on where and why we have shortages in some employment occupations in this region.
Dr. Bill Price is the Associate Dean and a Professor of Management at The University of Texas of the Permian Basin. He has previously held several positions in human resource management and other leadership roles. He has taught various courses in human resources and has published a number of articles in the areas of human resource management and strategy. He can be reached at price_w@utpb.edu.