Moving on up in the oil patch

Are the West’s energy fields the last bastion of the American Dream?

  • A sign in Gallup, New Mexico, where upward mobility rates are among the lowest in the West.

    Leo Reynolds (CC via Flickr)
 

Imagine a child born in or near Gallup, N.M. "Jonny" is an average, healthy kid, but life's not easy. His single mom works at a mini-mart and makes about $16,000 per year, putting the family in the state's lowest income bracket. At school, Jonny's underpaid, overworked teachers tell him that in the United States even poor kids can prosper if they work hard. Upward mobility, the collective rags-to-riches momentum, distinguishes us from the rest of the caste-confined world. It is, they tell him, the American Dream.

Yet across the nation it's getting harder to climb the income ladder. And in the Gallup commuting area, which stretches into Arizona and spans much of the Navajo Nation, the American Dream is all but dead. Jonny and other poor kids here have about a 6 percent chance of ever making it into a household in the top income bracket (earning more than $90,000 per year), according to data recently released by the Equality of Opportunity Project. The Project, headed by four prominent Harvard and Berkeley economists, ties geography to income mobility. And the picture it paints of Western places like Gallup, Albuquerque, Tucson and Phoenix isn't pretty: For the most part, kids who are born poor in these areas stay poor.

There's some hope for Jonny, however. If his family can afford to move to Vernal, Utah, or Williston, N.D., or Gillette, Wyo., his chances of reaching the top of the ladder by the time he's in his 30s increases fivefold. These are among the areas that are not only the most upwardly mobile in the West, but in the nation. And the common thread connecting them is energy extraction: They are all hotspots for coal, oil or natural gas production.

In such geologically fortunate places, jobs on the oil and gas rigs or in the coal mines have taken the place, if imperfectly, of the factory jobs that once buoyed the middle class. Since 2007, private-sector employment in the U.S. has grown by a mere 1 percent, while in the oil and gas sector, jobs have jumped by 40 percent. The annual mean wage for oil and gas jobs is $92,000, twice that of other occupations. Petroleum engineers -- 270 in western North Dakota alone, according to the Bureau of Labor Statistics -- need only a bachelor's degree to make $161,000 on average. Meanwhile, derrick or rig operators make nearly $60,000. "I can't think of another industry where someone with just a high school degree can come in and make that kind of money," says Jeremy Weber, an economist with the U.S. Department of Agriculture Economic Research Service.

Before the early 1980s, even if you grew up in a poor household, you had a chance of getting a union factory job right out of high school and steadily working your way into the middle class. Relatively high, progressive federal income taxes kept the wealth from accumulating in the hands of Mad Men-era executives. But over the last three decades, manufacturing jobs have dwindled, thanks to outsourcing and technology, and working-class wages have generally declined. At the same time, executive pay has skyrocketed and the taxes on the top incomes have dropped by more than 40 percent. More and more of the wealth has gone to the top 1 percent, and the abyss between rich and poor is growing ever wider.

In the energy patch, however, high-paying jobs on the rigs are bridging the abyss. And Weber's research in the oil and gas fields shows that in energy-boom counties, wages and employment across the board -- not just in the industry -- increase. Poverty and income inequality tend to be far lower in those counties than national and even associated states' averages. That suggests that the so-called resource curse, or Dutch Disease, in which the positive impacts of a boom are limited to the extractive industry, and may even suffocate other industries, is being held at bay.

Local government coffers also get in on the action. The Equality of Opportunity Project found a mild correlation between areas with high upward mobility and those with the most progressive tax structure. That is, when lower income folks get more tax credits and the wealthy are taxed more, the chances of climbing the income ladder go up. This phenomenon extends to the energy fields as well, but with a twist: Rather than taxing the rich, the states tax energy production. Wyoming has long had a robust mineral severance tax, netting the state some $1 billion per year, or about $2,000 for every resident, and North Dakota is closing in on the $2 billion per year mark. And these figures don't include impact fees and property taxes on the energy industry, which can amount to millions for local government. In theory, at least, these funds can go toward safety nets that catch people before they fall into poverty. They can also encourage upward mobility: Wyoming spends more per pupil on public education than almost any state in the nation, and its teachers are paid well, too. Add to that the grants and scholarships energy companies often give to classrooms and students -- along with big funding to energy wings of colleges and universities -- and the educational system in the gas patch tends to be pretty strong.

There are trade-offs, to be sure. Any energy boom ravages the landscape to some degree. Energy-rich counties also tend to have higher rates of domestic violence, teenage births, juvenile arrest and youth death than other counties. Women in the oil patch make less than their male counterparts. And even a battalion of drill rigs or some gargantuan coal mines can't completely counter the drag that racial factors have on income mobility: It might be high in the energy fields, but it's still low where they intersect Indian Country.

But as the 1 percent continues to hoard more of the wealth, and the middle class dissolves, the energy fields may be the last bastion, however imperfect, of the American Dream.

Steve Snyder
Steve Snyder
Sep 03, 2013 01:59 PM
Even more jobs in the oil patch are becoming more high tech, though. Even roughnecking-type jobs now often require more computer knowledge than in the past. Some require robotics knowledge.
W John Faust &
W John Faust & Subscriber
Sep 03, 2013 07:45 PM
Of course those regions that treat this as a rise in sea level rather than a tsunami that will eventually recede will back themselves into an economic corner. When the gas, oil or coal are gone, they will be abandoned as well.
Skyler Selzler
Skyler Selzler
Sep 04, 2013 09:47 AM


Honestly in my opinion once all of the fossil fuels are gone such as oil for example people will go and try to find more resourceful and environmental safe fuels and by that time I believe it will be too late because for example our changing climate are our climates keeps changing I feel that more and more of our earth is slowly dying. I also feel that Scientists should start finding more environmental safe fuels before it is too and we lose our precious planet to pollution, and even then I feel like it is too late.
Phil Briggs
Phil Briggs
Sep 04, 2013 04:08 PM
Skyler and W., when all the oil and gas is 'gone', global climate change will be irrelevant, as most of humanity would die without oil... and, without humans around in vast numbers, the planet's climate will get a respite from all of the human caused warming. We live in the Age of Oil... very few facets of our lives aren't supported directly or indirectly by fossil fuels. Food, fuel, communication (internet/smart phones), transportation...

There are alternatives, but none of them are as 'compact' and energy rich as oil (unfortunately).
Heavy Starch
Heavy Starch
Sep 08, 2013 01:43 PM
Climate Change, Global Warming is all pretty much Bullshit scare tactics to get the world to submit to global governance under the International Corporations and their Siamese twins in all the National and International Governing bodies.

So many people believe that global warming is going to "destroy" the planet they fear rising sea levels and all kinds of bullshit.

Before mankind runs out of "fossil fuels" (still an unproven theory itself - there is also the possibility of abiogenic petroleum - another theory) we will have figured out how to subsist without the black juice.

Necessity is the mother of invention. Many humans see the dwindling resources and are working to find alternatives. The biggest source of energy, the sun, is still largely untapped at this point in human evolution. Once we have a way to truly capture more of that energy and convert it to electricity (or something else) we'll have our 4 billion year power source.

So many people bitch about the planet dying like it's something we can stop. IN 4-5 billion years our sun will die and consume our planet in the process. This planet was always destined for destruction. It will be consumed and reused by the Universe in some way billions of years from now.

Wasting our energy combating CO2 is pointless and futile. It will merely give control of the earth's resources to the most powerful entities on the planet - Governments and International Corporations (the first with the power of force/death/imprisonment and the other with the power of influence and money to manipulate the first).
David Gardner
David Gardner Subscriber
Oct 14, 2013 09:50 AM
The fundamental assumption behind this commentary seems to be that the "American Dream" is making a lot of money (regardless of the risks and destruction it takes to earn it). Give me a $20K/year job in a beautiful, pristine place that respects nature over $90K sitting behind a mile of big-rigs carrying toxic chemicals to pump into the ground and hoping they don't come back to bite us. Thompson writes, "there are trade-offs, to be sure." I think he soft-peddles this bargain with the devil. There's a reason the good folks at HCN live in Paonia, not Williston.

Dave Gardner
Director of the documentary
GrowthBusters: Hooked on Growth
Jonathan Thompson
Jonathan Thompson Subscriber
Oct 14, 2013 11:56 AM
Mr. Gardner: Thank you for your comment. You make a great point. I'm afraid you're mistaken, however, about the assumptions behind the article. I do not believe that the American Dream is "making a lot of money," or having a snazzy car and a snazzy house, tradeoffs be damned. Not at all. My belief -- and the fundamental assumption behind this commentary -- is simply that people who are born into poverty should have the ability to climb out of poverty unhindered in this country. That Dream, however, is clearly dead in many places and is near death in most of the nation, as is evidenced by the growing gap between rich and poor and the shrinking middle class. One of the few places that this sort of upward mobility is still possible is in the energy fields. Pointing that out is not an endorsement of energy development, nor is it a condoning of the side-effects of that development, it's an indictment of the rest of the economy. It's wonderful that people choose to live with less material goods, as you apparently do; the problem is that for more and more people it's not a choice, it's a life's sentence. As to your point about Paonia vs. Williston, it's a good one, but it misses an important fact: The biggest employers and economic engines in the North Fork Valley (where Paonia is located) are the giant coal mines just a few miles upriver from the HCN HQ.
Thanks for the discussion,
Jonathan Thompson
Kirk Hohenberger
Kirk Hohenberger Subscriber
Jan 17, 2014 09:09 AM
I agree with David.Our society seems to believe making it, is making more money. But should the dream be more about happiness and fulfillment and social connections.That does not seemed connected to the ninety thousand a year job.And a economic model based on this and sustainability. Whats the point, if what we are doing now, is not, tell me this ,how can our model, which is based on and needs unending growth, be a long term viable system?I lived in Alaska, off the grid, without running water, electricity, or plumbing, poverty by our standards, and was still happy,friends ,family and sense of belonging and community, should be the dream, not acquiring more and more stuff.