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North Dakota: The state the recession forgot

posted on November 10, 2011


Despite posting modest improvement over the past year, the U.S. labor market still has a long ways to travel on the road to recovery.

Beginning in February of 2008, the economy lost jobs for 25 consecutive months -- nearly 8.8 million positions in all.  So far, only 2.3 million of the positions have been recovered and the U.S. unemployment rate has hovered around 9 percent for more than two years. 

With more than 13 percent of its workforce on the sidelines, Nevada owns the dubious honor of being the state with the highest unemployment.  

And then there's North Dakota, where a vibrant agricultural sector, pro-business policies and a good old-fashioned oil boom are fueling an economic renaissance.  Paul Yeager explains.  

A recent study examining the U.S. economy state-by-state revealed a troubling development: Conditions are worse today than they were at the end of2008 inevery state in America, except one:  North Dakota.

Citing robust job creation and increased incomes,Bloomberg’sEconomic Evaluation of States Indexranked North Dakota number 1. 

From the Red River Valley in the east where the unemployment rate approaches 4 percent, to the oil-rich Bakken Shale formation in the west where less than 1 percent of residents are without work, North Dakota is the state the recession forgot… 

Andy Peterson: Executive Director, North Dakota Chamber of Commerce: “All of these areas are growing and that is exciting for ND and it goes back to the basic decision to have a tax regulatory and legal environment where businesses can thrive. It is exciting for us. We actually reduced income tax by 20% last year in North Dakota for every North Dakota individual and corporate income tax by 20%. So we are doing well.”

While virtually every other state in America is mired in budget deficits, North Dakota enjoys a surplus of more than $1 billion.   At just over 3 percent, unemployment is about one-third of the national jobless rate.  In the past 10 years, the state has added 50,000 new jobs.  

Wages in many industries are well above the national average.  Some companies are offering signing bonuses.  And the state recently hosted a workforce summit aimed at helping employers fill more than 16,000 job openings. 

Alan Anderson: North Dakota Commerce Commissioner: “We are looking for people to come to North Dakota and - part of that is we - we partner very well with the education system.  However we have to - to be involved to try and bring the right workforce in and the right skill set in and so we are looking for to really enhance our workforce development and improve our training for the future. Everybody is fighting the baby boomer group and we're - looking for the future on how we can skill up people in the right areas to be very successful.”

Agriculture is king of the North Dakota economy, accounting for nearly one-third of the state’s total economic activity.  And the state’s farmers and ranchers lead the nation in the production of more than a dozen commodities including spring wheat, sunflowers and  flaxseed.

While an oil boom in the west garners much of the headlines these days, officials say oil is responsible for just 1 in 3 new jobs.  And they say decisions made a decade ago have helped the state avoid a single-sector dependence that spelled economic disaster for North Dakota -- and many of its neighbors -- during the Farm Crisis of the 1980s.

Gov. Jack Dalrymple, R- North Dakota: “I mean this is different folks. It really is. It wasn't always this way and it is fun to explain to him that is not just oil and gas.  That is what we are getting the publicity for a lot of days but really it is all about our comprehensive approach, working on our targeted industries where job creation really takes place, technology, advanced manufacturing, agriculture, energy, tourism, those are the areas that we identified ten years ago as where our great job growth would occur ”

Policies nurturing diverse economic development, ultimately, results in the nation’s lowest unemployment rate. Finding qualified workers to fill thousands of job openings, however, is proving to be a challenge in some sectors.

Andy Peterson: “There is a company up by Devil's Lake called Summers Manufacturing and they have indicated to us that they want to expand their - their production facilities.  They produce farm implements and they export them all over the world.  Right now to theUkraineand different parts.  So they are greatest fear is that they can't expand in North Dakota because they can't find qualified workers. That is a great problem to have and it - it is really ironic in many ways that a lot of places need to find jobs.  We need to find workers.  So we know in the long haul thought that we need to develop our workforce and if we don't develop our workforce when the national economy turns around and it will.  It may take awhile but it will turn around eventually that we will then compete for workers from all over.”

Much of the demand for workers in North Dakota is due to an oil boom rivaling those from days gone by in Texas and Oklahoma.

A relatively new – an in some circles: controversial – drilling method has unlocked heretofore inaccessible oil reserves, or fracking as it is commonly known, also is releasing an economic gusher.

But the prosperity is not without its own set of pitfalls. Next week, we’ll travel to Williston, where the influx of thousands of workers lured North by the call of the crude is stretching local infrastructure to the breaking point.

For Market to Market, I’m Paul Yeager.


Tags: agriculture economy education environment government manufacturing news policy recession recovery SBA technology