Oil-and-gas workers are in short supply.
Brandon Bell/Getty Images
The labor report released Friday shows that fewer Americans are unemployed than any time in the past five decades. The unemployment rate fell to 3.4%, as the economy added 517,000 jobs.
But in some industries the rate is much lower. In the category defined as “mining, quarrying, and oil and gas extraction,” for instance, the unemployment rate is now just 0.3%, versus 8.4% a year ago. Only 2,000 people were looking for work in the industry in January, versus 46,000 last year.
It’s a testament to the rebound in those industries since the depths of the pandemic, but also to a growing labor shortage. A lack of workers is one reason that U.S. oil production is unlikely to grow much faster than it did last year, despite high prices and strong demand for fossil fuels. Companies have been boosting compensation as competition for workers ramps up.
Exxon Mobil
(XOM) raised salaries by an average of 9% last year, with extra bumps for promotions, amounting to a 15-year high.
Mining companies have also said labor shortages might affect their production over the next year.
“We could have in 2022 produced more if we were fully staffed,” said Kathleen Quirk, president of copper producer
Freeport-McMoRan
(FCX), on the company’s latest earnings call. “And I believe that is the case again this year.”
Quirk said Freeport-McMoRan has been training more people, including some that had never worked in mining before. But she isn’t sure that the labor force will keep up with demand.
“I think it does have some implications to the ability to develop a mine in the U.S.,” she said.
Copper will be a key element for the energy transition, and a lack of mining workers could slow the shift to clean energy.
Wages may have to rise to attract more people to the industry. Mining workers made $35 per hour on average as of December, modestly above the average private sector wage of $32.93.
In some similar professions, workers can make more.
On average, oil and gas workers made $49.24 per hour as of December, or about 50% more than the average private-sector worker, according to the Bureau of Labor Statistics.
Those wages were up from $47.92 in October and may need to rise further to lure additional people to the industry. Oil and gas extraction might be a lucrative profession, but it’s a boom-and-bust one too: Workers can make fat paychecks for a few years and then get laid off when prices fall.
Write to Avi Salzman at avi.salzman@barrons.com
Credit: marketwatch.com