The Responsible Drilling Alliance in Williamsport, Pa., calls on the Pennsylvania Department of Labor and Industry to cease issuing its deceptive Marcellus shale employment reports.  

Pandering to the Marcellus Shale Industry 

                                                                  By JON BOGLE,  

                                                                       RDA Founding Member

When Marcellus Shale drilling arrived in Pennsylvania in 2006-2007, they sold themselves as an economic game changer, "The Goose that Lays the Golden Egg," according to then Governor Rendell. They commissioned a wildly exaggerated report on their economic potential, which was disseminated as independent research by the Pennsylvania State University.

The Pennsylvania Department of Labor and Industry (L&I) soon began to cooperate with the industry to track this new phenomena. The result is the monthly "Marcellus Shale Fast Facts": an extensive  20-page report designed to inflate the importance of the gas industry. In its Marcellus reports, L&I created a new statistical category, "ancillary industries." The 204,000 workers in the 30 ancillary industries are all counted as gas industry-induced jobs even though only a small fraction have any involvement with the gas industry.  

John Augustine, community outreach manager for the Marcellus Shale Coalition, announced in a recent public presentation that the gas industry employs 232,000 people with an average salary of $83,000 per year. Augustine's claim of 232,000 jobs includes the 204,000 in the ancillary industries. The $83,000 compensation is only claimed in the core industries and even that is considerably greater than wage assessments for those occupations elsewhere in state reports.  

The Marcellus industry is a kernel within the economic occupational category "Mining and Logging," which includes mining, quarrying, logging, and oil and gas drilling.  The entire category of Mining and Logging employs 35,000, or only six-tenth of one percent of the state's labor force, with the Marcellus gas industry being four-tenth of one percent. The invention of "ancillary industries" has given cover to a very small industry.

Before the Marcellus unconventional drilling started in Pennsylvania, tens of thousands of conventional vertical gas wells had already been drilled by a native industry. In the rollover from the Rendell to the Corbett administration, L&I's "Fast Facts" suddenly added 7,000 new jobs to the core Marcellus industry. The existing native gas industry had apparently been quietly incorporated into the Marcellus numbers, adding to the Marcellus industry's economic weight and giving an appearance of growth. If these workers are subtracted, the remaining Marcellus jobs number about 21,000, or only 10,000 new jobs since 2009. Along the way, L&I also shifted the statistical base year from 2008 to 2009, the low point of the great recession, thus making all the industry statistics that followed the base year look better.

The usefulness of ancillary industries is evident in this statement on the Marcellus Shale Coalition's website: "Overall, nearly 75% of all new hires into Marcellus-related jobs call Pennsylvania home." This statement needs to be read carefully, along with some background information. Unlike the impression is gives, "new hires" are not new jobs but overwhelmingly replacement workers. Under fire for bringing workers in from out of state, the gas industry cites new hires in the ancillary industries (Marcellus-related jobs) to give the appearance that they are hiring Pennsylvanians.  

So how does L&I handle their "Fast Facts" for other industries? No other single industry in the state has one. Mining and logging is by far the smallest industrial category, with construction eight times larger, leisure and hospitality 15 times larger, and education and health 34 times larger. None of these have a "Fast Facts" report. Only manufacturing, with over a half million workers, has a quarterly "Fast Facts." There are state and regional "Fast Facts" reports, but no mention of ancillary industries outside the Marcellus report.  

Coming into Pennsylvania, the Marcellus industry used a standard petroleum industry strategy which is to greatly overstate their economic importance, often by a factor of 10, and then use respected state organizations to drive public acceptance of those exaggerations. They are then able to con and bully legislators and regulators into giving concessions.  Pennsylvania's Department of Labor and Industry has been deeply complicit in this deceptive process.  

L&I's complicity has had serious consequences for state and local public policy and for developers, colleges, and universities that have committed scarce resources to this promised economic expansion. L&I, by putting its thumb on the scale, has obscured what otherwise would have been obvious, "The Goose that Lays the Golden Egg" is barely a sparrow.   

This graphic from the report, "Exaggerating the Employment Impacts of Shale Drilling: How and Why" (see Additional Resources below) illustrates the small sliver that shale-related employment represents in Pennsylvania. Graphic courtesy of the Multi-State Shale Research Collaborative. All images in this article by Ann Pinca.