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.

High Country News Classifieds
  • DISTRICT MANAGER
    The San Juan Islands Conservation District is seeking applicants for the District Manager position. The position is open until filled and application plus cover letter...
  • EXECUTIVE DIRECTOR
    Mountain Time Arts, a Bozeman-based nonprofit, is seeking an Executive Director. MTA advocates for and produces public artworks that advance social & environmental justice in...
  • BEND AREA HOME WITH AMAZING CASCADE PEAKS VIEW
    Enjoy rural peacefulness and privacy with one of the most magnificent Cascade Mountain views in sunny Central Oregon! Convenient location only eight miles from Bend's...
  • MARKETING COMMUNICATIONS MANAGER
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks a Marketing Communications Manager to join our...
  • EDITOR-IN-CHIEF
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks an Editor-In-Chief to join our senior team...
  • RESEARCH FELLOW (SOUTHWESTERN U.S. ENERGY TRANSITION)
    The Institute for Energy Economics and Financial Analysis (IEEFA) in partnership with the Grand Canyon Trust is seeking a full-time Fellow to conduct topical research...
  • LENDER OWNED FIX & FLIP
    2 houses on 37+ acres. Gated subdivision, Penrose Colorado. $400k. Possible lender financing. Bob Kunkler Brokers Welcome.
  • ONCE OR TWICE
    A short historical novel set in central Oregon based on the the WWII Japanese high altitude ballon that exploded causing civilian casualties. A riveting look...
  • HISTORIC LODGE AND RESTAURANT - FULLY EQUIPPED
    Built in 1901, The Crazy Mountain Inn has 11 guest rooms in a town-center building on 7 city lots (.58 acres). The inn and restaurant...
  • HOUSE FOR SALE
    Rare mountain property, borders National Forest, stream nearby. Pumicecrete, solar net metering, radiant heat, fine cabinets, attic space to expand, patio, garden, wildlife, insulated garage,...
  • COMMUNITY ORGANIZER- NORTHERN PLAINS RESOURCE COUNCIL
    Want to organize people to protect Montana's water quality, family farms and ranches, & unique quality of life with Northern Plains Resource Council? Apply now-...
  • CONSERVATION MANAGER
    The Rio Grande Headwaters Land Trust (RiGHT) is hiring an energetic and motivated Conservation Manager to develop and complete new conservation projects and work within...
  • POLLINATOR OASIS
    Seeking an experienced, hardworking partner to help restore a desert watershed/wetland while also creating a pollinator oasis at the mouth of an upland canyon. Compensation:...
  • ELLIE SAYS IT'S SAFE! A GUIDE DOG'S JOURNEY THROUGH LIFE
    by Don Hagedorn. A story of how lives of the visually impaired are improved through the love and courage of guide dogs. Available on Amazon.
  • COMING TO TUCSON?
    Popular vacation house, furnished, 2 bed/1 bath, yard, dog-friendly. Lee at [email protected] or 520-791-9246.
  • NORTHEASTERN UNIVERSITY
    All positions available: Sales Representative, Accountant and Administrative Assistant. As part of our expansion program, our University is looking for part time work from home...
  • RUBY, ARIZONA CARETAKER
    S. Az ghost town seeking full-time caretaker. Contact [email protected] for details.
  • EXECUTIVE DIRECTOR
    Powder River Basin Resource Council, a progressive non-profit conservation organization based in Sheridan, Wyoming, seeks an Executive Director, preferably with grassroots organizing experience, excellent communication...
  • ADOBE HOME
    Passive solar adobe home in high desert of central New Mexico. Located on a 10,000 acre cattle ranch.
  • STEVE HARRIS, EXPERIENCED PUBLIC LANDS/ENVIRONMENTAL ATTORNEY
    Comment Letters - Admin Appeals - Federal & State Litigation - FOIA -