How could we boost American employment and GDP? One philosophy is to try to do more of what’s already working.
In January 2012, there were 4.7 million fewer Americans working than in January 2007. But one sector that has bucked the trend is oil and gas production. A story in today’s Wall Street Journal notes that if you look at oil and gas extraction and its support activities, oil and gas pipeline construction, and oil drilling and machinery, you’ll find 158,500 more people working today compared to 5 years ago, or a 33% increase.
The article goes on to point out that employment benefits extend well beyond those working in the oil patch itself:
There is no oil and gas production in Idaho, but that doesn’t mean the U.S. energy boom has bypassed this bedroom community west of Boise. Fleetwood Homes of Idaho, a subsidiary of Cavco Industries Inc., has increased production by 25% since last fall at its Nampa factory, hiring 40 workers and adding hours for employees. It is building the extra-insulated “Dakota” model for shipment 1,000 miles east to the Bakken oil field in North Dakota.
And the cheaper natural gas brought on by new drilling methods offers a big competitive advantage to manufacturing firms locating near the energy source:
Last year, Nucor began construction on a new iron upgrader, just a few hundred feet away from the old facility in St. James Parish, La [closed in 2004]. It will cost $750 million to build and create 150 permanent jobs, which the company says will pay an average of $75,000 a year.
What changed? “Shale gas allows that natural gas to be more competitive, and more competitive natural gas enabled us to build this facility in Louisiana instead of building a second facility in Trinidad,” says John Ferriola, Nucor’s president.
I’ve been arguing that even in the midst of a deep recession, it still makes sense to be paying attention to the opportunities available to individual firms to create value added. The goal is not just to “create jobs” but rather to find a way to allow people to make something whose value is greater than the value they place on their own time. Looking at what the government could do to facilitate those opportunities should be on the list of options that the President considers for dealing with America’s ongoing economic challenges.