Shale Country Dangles 100% Pay Raises as Labor Market Runs Dry

Shale Country Dangles 100% Pay Raises as Labor Market Runs Dry
The mayor of Midland, Texas is being whipsawed by the latest Permian boom.

(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-conscious than 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.


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Gunner  |  June 13, 2018
I promise you that age is NOT a factor in every position and / or company... it's hot down here... the work is hard and the hours are longer than most people could even imagine... BUT if you can handle it and you have over 2 years of recent CDL A experience with NO DUI EVER and you speak English then age is no concern... you will be working as soon as your drug test comes back clean...
Mark Kellner  |  June 09, 2018
I’m 58 in the same boat. I went down to midland last year because Rigzone had posted some decent jobs. I figured better to show my face and talk straight up to them. Guess what I’m to old, I did not talk to anyone my age or older except one guy and he was going belly up.
Lyle Summerfield  |  June 08, 2018
Bob, If you are over 55 years old, the young punk H.R. will not hire you. When I was 59 yo and out of work , with 29+ years in the warehouseing and having a CDL-B, no one wants to hire you because you are worth more than younger personal, plus, they know that they can pay them less. When I was looking for work, here in Michigan, the unemployment wanted to know why was not working,well, I went down to the office showed them the letter, they checked my records, I did all that they wanted done. So, I told the agent that I'm too old, that's why I'm not employed. And she said," I hear that alot" So I know how you feel !
Piping Designer  |  June 07, 2018
Maybe because there is no place to live!!!!!!!!!!! Room rates are to high!!!!!!!!!!!!! Why come there no housing!
bob  |  June 06, 2018
"The oil industry has such a ferocious appetite for workers that it’ll hire just about anyone with the most basic skills" If the oil field is looking for workers then why is it so difficult for me to get hired? With 38 years experience and all the drilling going on and nobody is hiring? Reality isn't matching up with the article!