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Shale Country Is Out of Workers and Dangling 100% Pay Hikes

Bloomberg

Jerry Morales, the mayor of Midland, Texas, and a local restaurateur, is being whipsawed by the latest Permian Basin shale-oil boom.

It’s fueling the region and starving it at the same time. Sales-tax revenue is hitting a record high, allowing the city to get around to fixing busted roads. But the crazy-low 2.1 percent unemployment rate is a bear. As the proprietor of Mulberry Cafe and Gerardo’s Casita, Morales is working hard to retain cooks. As a Republican first elected in 2014, he oversees a government payroll 200 employees short of what it needs to fully function.  

“This economy is on fire,” he said from a back table at the cafe the other day, watching as the lunchtime crowd lined up for the Asian Zing Salad and Big Mo’s Toaster hamburger.

Fire, of course, can be dangerous. In the country’s busiest oil patch, where the rig count has climbed by nearly one third in the past year, drillers, service providers and trucking companies have been poaching in all corners, recruiting everyone from police officers to grocery clerks. So many bus drivers with the Ector County Independent School District in nearby Odessa quit for the shale fields that kids were sometimes late to class. The George W. Bush Childhood Home, a museum in Midland dedicated to the 43rd U.S. president, is smarting from a volunteer shortage.

The oil industry has such a ferocious appetite for workers that it’ll hire just about anyone with the most basic skills. “It is crazy,” said Jazmin Jimenez, 24, who zipped through a two-week training program at New Mexico Junior College in Hobbs, about 100 miles north of Midland, and was hired by Chevron Corp. as a well-pump checker. “Honestly I never thought I’d see myself at an oilfield company. But now that I’m here — I think this is it.”

That’s understandable, considering the $28-a-hour she makes is double what she was earning until December as a guard at the Lea County Correctional Facility in Hobbs. When the boom goes bust, as history suggests they all do, shale-extraction businesses won’t be able to out-pay most employers anymore. Jimenez said she’ll take the money as long as it lasts.

And this one could go on for a while. Companies are more cost-consciousthan ever, and the evolution of oilfield technology continues to make finding and producing oil quicker and cheaper in the pancaked layers of rock in the Permian. It now accounts for about 30 percent of all U.S. output.

There’s no question the economic upside is big in the basin, which covers more than 75,000 square miles in west Texas and southeastern New Mexico. Midland saw year-over-year increases of at least 34 percent in sales-tax collections in each of the last four months. Morales said coffers are full enough that he may ask for raises for city workers — so they don’t bolt for the oil fields.

The labor shortage is inflamed by the real-estate market: The supply of homes for sale is the lowest on record, according to the Texas A&M Real Estate Center. The $325,440 average price in Midland is the highest since June 2014, the last time the world saw oil above $100 a barrel. Apartment rents in Midland and Odessa are up by more than a third from a year ago, with the average 863-square-foot unit commanding $1,272 a month.

That’s one reason the Ector County Independent School District has more than 100 teaching positions open, said spokesman Mike Adkins. People who move for jobs are stunned by the cost of living. Armin Rashvand’s apartment is smaller and costs more than the one he rented in Cleveland before moving last August to run the energy-technology program at Odessa College.

“That really surprised me,” he said, because Texas’s reputation is that it’s affordable. “In Texas, yes — except here.”

Another surprise: Some of his students, with two-year associate degrees, can make more than he does, with his master’s in science, electrical and electronic engineering. At Midland College’s oil and gas program, which trains for positions like petroleum-energy technician, enrollment is down about 20 percent from last year. But schools that teach how to pass the test for a CDL — commercial drivers license — are packed.

“A CDL is a golden ticket around here,” said Steve Sauceda, who runs the workforce training program at New Mexico Junior College. “You are employable just about anywhere.”

And you can make a whole lot more money than waiting tables at Gerardo’s Casita. Jeremiah Fleming, 30, is on track to pull down $140,000 driving flatbed trucks for Aveda Transportation & Energy Services Inc., hauling rigs.

“This will be my best year yet,” said Fleming, who used to work in the once-bustling shale play in North Dakota. “I wouldn’t want to go anywhere else.”

Morales, a native Midlander and second-generation restaurateur, has seen it happen so many times before. Oil prices go up, and energy companies dangle such incredible salaries that restaurants, grocery stores, hotels and other businesses can’t compete. People complain about poor service and long lines at McDonald’s and the Walmart and their favorite Tex-Mex joints. Rents soar.

“This is my home town. I don’t want that reputation,” he said. He’s not yet quite sure what to do about it as mayor of a city that has been on the oil-industry rollercoaster for nearly 100 years.

He has, though, come up with strategies for his restaurants. For example, he now issues paychecks weekly, instead of twice monthly, and offers more opportunities for over-time hours. He also makes common-sense bids to employees tempted by the Permian’s siren call.

His pitch: “If you’ll stay with me, I can give you three quarters of what the oil will give you but you don’t have to get dirty or worry about getting hurt.” And just maybe, when crude crashes, they’ll still be employed.

https://www.bloomberg.com/news/articles/2018-06-06/shale-country-dangles-100-pay-raises-as-labor-market-runs-dry

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10 Responses to Shale Country Is Out of Workers and Dangling 100% Pay Hikes

  1. Jolly Roger says:

    Ah, yes… the boom times are back, and Bloomberg is here to tell us more about the labor shortage that doesn’t include unemployed and/or homeless Americans.

    Big money to be made moving the last of our oil out of the country, and then you can all eat dirt.

  2. Mark Schumacher in LV says:

    Trucking rates are going to skyrocket, fuel is insane, I hope American Nationals have a good sense of humor because soon were not going to be able to afford every day life .

    Hell, we cant afford it now.

  3. Enemy of the State says:

    Soooo many people have left the work force
    I forget the numbers but it’s a big one
    Another reason why we have nearly half the population on some kind of “government assistance”,starving out those of us still slaving away to pay the next bill collector and pay for these government support taxes etc to pay for the nearly 50% that are just not out there producing a god dam thing but a major drain on every working man and women’s paychecks in this country
    Until that major lopsided debacle is righted
    This type of crap will be rampant across this country

    • Jolly Roger says:

      “….I forget the numbers but it’s a big one….”

      Last I heard it was 102 million. That’s almost a third of the population, and probably MOST of America’s working aged males.

      But, there just aren’t enough workers so we need more wetbacks here.

      • Curt says:

        I’m pretty sure there are enough jobs in shale for 102+ million people.

        Right?

        People.

        Ya know, I hated it when Obama lied about the state of the economy, and I hate it when Trump lies about the state of the economy. I thought the Trump-ites would know better, but then, it’s THEIR guy. Their “God Emperor”.

        Let’s see. Some non-MSM headlines:

        15 Signs That The Middle Class In The United States Is Being Systematically Destroyed

        The Truth About The Employment Numbers – Nearly 102 Million Working Age Americans Do Not Have A Job Right Now

        Why America Is Heading Straight Toward The Worst Debt Crisis In History

        Federal Reserve: More Than 4 Out Of 10 Americans Do Not Even Have Enough Money To Cover An Unexpected $400 Expense

        77 Million Square Feet Of Retail Space And Counting – America’s Retail Apocalypse Is Spiraling Out Of Control In 2018

        Nearly 51 Million Households In The United States ‘Can’t Afford Basics Like Rent And Food’

        The Problem With Phony Prosperity Is That It’s Phony

        Anyhow, then you hear about how Trump’s Trade War is working. When the trade deficit with China is to the tune of 119B+.

        And while the national debt is climbing faster than you can count at the tune of 21.1 Trillion dollars, the combined nation debt of government and private citizen debt is 70.3 Trillion. people had to dig into their savings, and then use credit cards, just to stay afloat during the “last” depression, and many still do.

        Anyone look at the purchasing power of the USA Bigly all-mighty Note between 1913 and now? And that does reflect on wages. $1 = 2 Cents. When my father ETS’d out of the AF and went into the workforce, it was $1 = 35 Cents.

        And whose idea was it to give away our industrial base? Right… Nixon should have stayed home.

        And then their are the BILLIONS in foreign aid every year, and the TRILLIONS in America’s globocopping for DUMBOCRACY to make the world the degenerates that America has become.

        If Americans had any balls, it would destroy Washington D.C., the FRB’s, the globalists, and return America back into a self-efficient-sustaining country.

        Meh. But, but, but… we have Trump the “God Emperor” and his 20,000D Leagues Under The Sea Chess!

        LMAO. Trump isn’t playing N. Korea. China and N.K. are playing USA Bigly. Not that we have any business with N.K. Or Syria, or etc. ad nauseam.

        • Henry Shivley says:

          Great comment, straight to the bone. Only thing I’d add is the $21 trillion that is just, well, missing and nobody knows where it went.
          Let’s see, $21 trillion, hell that is the national debt. And don’t forget that national debt is owed to we the people as it was borrowed from us.
          It stops when we stop it.

  4. DL. says:

    I could spend all day telling folks here about the mirage that is the Permian Basin “oil-shale-fracking-whatever” “boom,” from boom-to-bust before you know it, to the destruction of Balmorhea’s fresh-water cold springs swimming pool fish and critter life due to fracking, to broken marriages where loss of job means loss of wife and children sometimes even living in vehicles because rents are too expensive, to kidnapping children by satanic cults on the outskirts of these “boom” towns, to husbands spending months away from families living only 50 miles away (plus the sex infidelity that goes with that), but I think I summed it up pretty good… But if you’re a single male you should do okay as long as the job lasts (about a year or so…this isn’t the 70s and 80s anymore.)

    • DL. says:

      As for “affordable housing”…there’s always Monahans, Kermit, Wink, No Trees, Gardendale, Goldsmith, Stanton, Crane, Imperial, Grand Falls, Royalty, Pyote…and, if you can’t stand tiny towns…Pecos, where satanic cults thrive, and teachers make nearly 100K a year… 😉

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