North Dakota oil boom puts strain on renters, employers

November 16, 2011

By Dan Haugen

A survey released this month by the Federal Reserve Bank of Minneapolis highlights some of the economic growing pains being felt in North Dakota from the state’s recent oil boom.

While the use of new drilling technology to tap the state’s oil shale fields has created thousands of new jobs and made it the nation’s fastest growing economy, the hiring surge has put a strain on certain segments of the economy, including low-income renters and non-oil-industry employers.

The quarterly semi-annual Community Insight Report (written and shared with me by a friend and former classmate) is based on responses from 335 community development and service organizations across the Upper Midwest. The results reenforce some of the trends that have been reported by several other media in recent months.

For example, low- to moderate-income renters in Montana and western North Dakota “have been particularly challenged by the influx of oil field workers who are willing to pay a much higher price for existing rental units,” the report says.

Seventy-two percent of the North Dakota organizations that responded to the survey said the ability to find affordable rental housing has decreased from a year ago. In Montana, where the shale oil interest is starting to spill across the border from North Dakota, 59 percent said it has become more difficult.

The survey showed a similar decrease in home-buying opportunities for low- to moderate-income people in North Dakota.

And even as more and more job-seekers move to North Dakota, the ability to recruit and retain workers with the “right” skills has become a bigger challenge for non-oil-field employers, the Fed survey suggests. “According to respondents’ comments, the inability to compete with oil-field wages has created a challenge for professional and service industry businesses alike,” it says. Sixty-three percent of North Dakota survey respondents said business owners in low- to moderate-income areas had a decreased ability to recruit and retain workers compared to a year ago.

Last month, CNN reported that some fast food restaurants are offering wages as high as $15 an hour.

The reports are meant to give bank officials better insight about the economic health of low- to moderate-income communities in the region. The latest was published Nov. 1.

It isn’t all bad news for North Dakota. The state’s survey respondents were most likely to report an increase in job opportunities for disadvantaged or dislocated workers. They were also most likely — by a two-to-one margin — to report increased business openings in low- to moderate-income communities.

Comments are closed.