A Marcellus Shale Experiment

So experiment is not quite the right word.   Let’s call this a public exercise.

A little while ago a kerfuffle erupted over some economic stats related to the job creation of Marcellus Shale related industries in Pennsylvania.   The state came out with a report that mentioned there were 72 thousand ’new hires’ related to Marcellus activity.

Folks at the Keystone Research Center came out with a report that said wait a minute, the numbers don’t quite add up that way .. ‘new hires’ is not the metric anyone uses for measuring job creation or economic impact.  At the very least you need to add in the routine job destruction to come up with the commonly used metric of net job creation. Otherwise you are just measuring the scale of churn in the labor market.

Then the Marcellus Shale Coalition responded with a press release that I guess has something to do with the topic at hand, though it’s a bit hard to connect the dots.

So what is the real answer? This may not deal with the technical dispute over measurement of job creation, but still people need to think a lot harder than they have been about what the scale of economic impact has been of all this drilling going on across the state and causality more broadly.

So below is a graphic of annual ‘new hires’ in Pennsylvania, so state-wide data, in the industries sectors that should capture the direct impact of Marcellus Shale activity.  Yes, Marcellus like most other industries has indirect and induced effects as well… but it all starts with these direct jobs.

It is not a mistake; it is a bit Rawlsian and I have intentionally  left off the labels for the years on the horizontal axis.  Look at this picture and ponder 1) was there a qualitative change in trend, 2) if so, when does this chart suggest the new ‘jolt’ (as the state described it in the first link above) started up and 3) how big a change happened?  Was it big?  Really big?  Biggest thing ever? or maybe just some random noise? and 4) is any change in trend accelerating, decelerating or something else?

I’m going to leave that there for the moment.  I’m going to let that percolate for a few days and then come back with a slightly different graphic with some labels. I’d be curious if anyone has any comments before then.  I’ll back to it next week.

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