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Spotlight on Economics: Supporting a Nonresident Workforce

Supporting the oil and gas industry workforce with a different mix of goods and services can be challenging.

By Nancy Hodur, Research Assistant Professor

NDSU Agribusiness and Applied Economics Department

Rapid and unprecedented growth in the oil and gas industry has brought tremendous change to western North Dakota. More than 57,000 jobs have been added in the oil and gas industry in North Dakota since 2005. Job growth and the associated increase in population have strained infrastructure and presented the state and local communities with challenges never seen before in North Dakota.

A key question that has been hotly debated has to do with workers’ intentions and potential constraints to move to North Dakota and become residents.

It is known that the current oil and gas industry workforce is different in many respects from the historic workforce. Many workers commute long distances to work in North Dakota but maintain their permanent residence elsewhere. They often use various types of temporary housing, such as crew camps, recreational vehicles (RVs) or skid shacks, while working in North Dakota.

State and local leaders began to address the type and quantity of housing needed to face the rapid population growth and the development of quality-of-life amenities, such as retail, entertainment and recreational options. However, it became apparent that little was known about this new oil and gas industry workforce.

To better understand the characteristics, intentions and perceptions of the oil and gas industry workforce, I took the lead, with support from my colleagues, to survey workers in the oil and gas industry in 2014 and 2015. The research effort was sponsored by the Oil and Gas Research Council and the North Dakota Industrial Commission.

The study has resulted in a better understanding of the characteristics and intentions of non-resident workers. Survey results indicated that 80 percent of the non-resident oil and gas industry workforce does not want to move to North Dakota. Personal considerations, such as not wanting to move away from friends and family, and housing costs most frequently influenced their decisions to not move to North Dakota. The weather or perceptions that North Dakota lacks good schools or lacks adequate quality-of-life amenities, such as retail, entertainment or recreational options, were much less of an influence on their decision to not move to North Dakota.

Alternately, 20 percent of nonresident respondents indicated they would like to move to North Dakota. Nearly 80 percent of nonresident respondents who would like to move to North Dakota indicated housing costs totally influence their ability to move to North Dakota.

Concerns that housing values may fall in the future also were reported to have considerable influence in their ability to move to North Dakota. Perceptions that the climate is too cold, North Dakota is not a good place to raise a family, or that the state lacks good public schools and essential child-care services had little to no influence on nonresidents who would like to move to North Dakota.

The findings suggest that there are two distinct workforces in the oil and gas industry with different characteristics. A majority of the nonresident workforce who has no intention of moving to North Dakota very likely will demand a different mix of public and private goods and services.

Alternately, there is a portion of the oil and gas industry workforce who would like to move to North Dakota. Inaccurate perceptions and intangibles such as the weather were not key considerations influencing the ability to move to North Dakota; however, housing costs and price risk associated with the potential for falling housing prices had considerable influence in their ability to move to North Dakota.

What is the significance of these insights into the characteristics, intentions and perceptions of nonresident oil and gas industry workforce? Recognizing that not all nonresident workers have the same characteristics and motivations is important as state and local leaders and policymakers plan for current and future delivery of public and private services.

Nonresident workers who do not want to live in North Dakota may demand a different type of housing and may not have similar demands for quality-of life-amenities as resident workers. There may be continued demand for some level of temporary housing such as crew camps, RVs or worksite lodging. State and local leaders also may want to create programs or policies that help overcome challenges associated with housing costs to help those who want to move to North Dakota.

Even in light of the recent downturn in oil and gas industry development activities, North Dakota has a much larger oil and gas industry workforce than it did five years ago. A portion of the workforce does not live in North Dakota, and the state is likely to continue to see the presence of a commuting workforce.

Understanding the intentions of that nonresident workforce could help communities and the state provide the appropriate mix of housing and services now, during a period of reduced industry activity, and in the future when industry activity increases and the state could again see a surge in nonresident oil and gas industry workers.


NDSU Agriculture Communication - March 16, 2016

Source:Nancy Hodur, (701) 231-7357, nancy.hodur@ndsu.edu
Editor:Kelli Armbruster, (701) 231-6136, kelli.armbruster@ndsu.edu
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