The weather may be brutally cold, but the job market and lure of big money are blazing hot. In today’s economy, where doom and gloom abounds, and stories of impending city and state bankruptcies garner bold headlines and magazine covers, we have found an alternate universe, the State of North Dakota.
I would be remiss if I didn’t begin with a real life “Jed Clampett” story. The Bakken Formation is an oil-rich subterranean rock formation stretching 200,000 square miles. It encompasses twelve counties in the state of North Dakota, and parts of Montana and Canada. The formation was actually discovered while exploring for oil on Henry Bakken’s land. Mr. Bakken was a North Dakota homesteader and farmer.
Though discovered back in 1951, past efforts to produce the oil had faced technical difficulties. But through horizontal drilling using new hydraulic fracturing techniques, or fracking, which emerged in 2008, new oil reserves are being extracted, and western North Dakota has become the new ground zero for the booming oil industry. Today a record amount of oil is flowing out of North Dakota, and an unheard-of amount of tax money is flowing in. The state has become the second largest producer of crude oil behind Texas.
In a display of virtually unheard-of fiscal responsibility, the state is setting aside 30% of collected oil and gas taxes in a fund that will remain untouched until 2017. This fund is expected to accrue $3 billion to $4 billion over the next four years. North Dakota already begins 2013 with a budget surplus of $800 million and growing! And with the highest growth rate in the US, its income per person is also well above the US average. While the national unemployment rate stands at 7.9%, North Dakota’s statewide unemployment rate is at 3.2%, the lowest in the country.
The state’s biggest challenge right now is building the infrastructure to support the growth. In the oil-producing part of the state, most employees and professionals live and work out of trailers and motor homes due to lack of housing. Not all of the job opportunities are on the rigs, either. Nearly every business segment has a serious need for workers, including residential and commercial contractors, carpenters, plumbers and restaurant workers.
Recruiting tactics are fierce, and here are only two examples:
1. McDonalds is offering a $300 sign-on bonus for new employees. According to Minnesota Public Radio, they are paying $10, $12, and even $15 per hour in some areas.
2. Menard’s is actually training qualified candidates at its headquarters in Eau Claire, WI. They then transport them by company aircraft back and forth to spend the week working in Minot, ND. This is because the workers at their Minot stores left for the oil fields further west. While working in Minot, these workers receive free double-occupancy lodging and stipends for meals!
Today most states in the US are scrambling, trying to find ways to bridge expanding revenue gaps in order to cover their entitlement programs and long-term obligations. States like California, New York and New Jersey find themselves in even worse shape, bleeding more revenues as over-taxed residents pick up their families, wealth, and companies and move them to lower tax states like Texas, Tennessee or Florida. Between 1995 and 2010, nearly $2 trillion has moved between the states.
I have only touched upon the surface of this story, but unlike the plight of so many other states, and in an economy where success stories are so few and far between, much like the Clampetts, North Dakota’s is a truly amazing one.