Gallup: Oil Boom Fuels North Dakota to Highest Payroll-to-Population Rate in U.S.

Jon Street | February 8, 2013 | 3:53pm EST
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Oil fracking near Williston, N.D. (AP photo)

( – North Dakota had the highest payroll-to-population rate (P2P) and the lowest underemployment rate in 2012, thanks mostly to the state’s booming oil & gas industry.

According to Gallup’s “State of the States” analysis released today, North Dakota ranked number one among the lower 48 states, with a payroll to population rate of 53.6 percent.

Gallup said it measured each state’s P2P rate by the percentage of the adult population aged 18 and older employed full-time by an employer for at least 30 hours per week.

The analysis noted that the numbers are not seasonably adjusted and variations across states reflect a number of factors, including the overall employment situation for each state as well as the demographic composition of that state’s population. P2P rates in Alaska, Hawaii, and the District of Columbia were not considered in the analysis.

Factoring in the most recent unemployment data is key to the Gallup analysis. North Dakota reported just a 3.2 percent unemployment rate, well below the national average unemployment rate of 7.9 percent, according to the U.S. Bureau of Labor Statistics.

The number one ranking should not come as much of a surprise given the Peace Garden state’s rise in oil and gas production and the subsequent rise in jobs over the past few years.

According to North Dakota Jobs Service data from 2011, the most recent available, the number of oil and gas jobs in North Dakota has risen 57.5 percent since 2010 – going from 10,660 jobs in 2010 to 16,786 jobs in 2011, with the oil and gas payroll nearly doubling -- going from $852 million in 2010 up to $1.5 billion in 2011.

North Dakota now produces more oil than any other state, including Alaska, which ranked number one in 2011, according to the U.S. Energy Information Administration.

Hydraulic fracturing, or “fracking” which uses high-pressure water, sand, and chemicals to force oil from underground rock formations, has largely contributed to the recent boom in North Dakota’s fossil fuel industry.

Coming in just behind North Dakota, Washington, D.C.’s neighboring state of Maryland had the second highest P2P rate. Gallup’s analysis suggests this could be due to the “relatively large number of jobs available in the public sector.”

The ten states with the best (highest) payroll to population rates from Jan. 1- Dec. 31, 2012 are as follows (in percentages):

1. North Dakota –53.6

2. Maryland –50.7

3. Nebraska –50.4

4. Kansas –50.4

5. Iowa –49.8

6. Minnesota –49.0

7. South Dakota –48.6

8. Wyoming –48.5

9. Utah –48.3

10. New Hampshire –47.7

At the other end of the spectrum, Mississippi had the lowest payroll-to-population rate in 2012, at just 38.5 percent with an 8.6 percent unemployment rate in Dec. 2012.

In comparison, South Carolina came in with a slightly higher P2P rate at 38.7 percent, ranking it as the state with the second lowest P2P rate.

The nation’s third lowest, Florida, ranked as the third lowest with a rate of 39.4 percent. However, Gallup suggests that the Sunshine state’s larger proportion of older individuals who are retired or working part-time contributes to its lower ranking on the index.

The 10 states with the worst (lowest) P2P rates (from Jan. 1 to Dec. 31, 2012_ are: Mississippi –38.5; South Carolina –38.7; Florida –39.4; West Virginia –39.6; Montana –40.4; Alabama –40.6; Idaho –40.7; Kentucky –40.8; Michigan –41.0 and Rhode Island –41.2.

While Gallup notes that most states had no significant changes in P2P rates from 2011 from 2012, the analysis points out that six of the states with the highest P2P rates -- North Dakota, South Dakota, Kansas, Nebraska, Minnesota, Iowa, and Utah -- also had the lowest underemployment rates during the same time period- Jan. 1-Dec. 31, 2012.

Gallup said it determines a state’s underemployment rate by combining the percentage of adults in the workforce who unemployed with the percentage of those working part-time but looking for full-time work. Thus, while the P2P reflects the relative size of the population that is working full time for an employer, the underemployment rate reflects the relative size of the workforce that is not working at capacity, but would like to be.

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