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Three ways boom states can prepare for re-training workers during inevitable bust years

  • Joanna
  • October 17, 2016

More than $16.3 million is on its way to support re-employment services for Texas oil and gas workers whose jobs have been lost in recent years. That’s good news in oil-dependent places like Brooks, Duval and Jim Wells counties, where unemployment is more than twice the national average — but it’s also a bit of a bandage on a long-festering wound.

It’s been more than two years since oil and gas prices entered this plummet, after all. That’s two years in which many laid-off workers were struggling to keep themselves and their families afloat.

That doesn’t necessarily mean the grant, provided by the U.S. Department of Labor through the Workforce Innovation and Opportunity Act, is altogether too little or too late. Federal short-term energy outlook projections are predicting very moderate oil price growth over the next year that would leave per-barrel values at about half of 2014 prices. That sort of growth won’t be nearly enough to put large numbers of oil workers back on rigs, especially given global oil market uncertainty. So yes, the grant will almost certainly have an impact.

But could Texas — where nearly 100,000 direct and indirect oil and gas jobs have been eliminated — have hedged its bets better to ensure a smoother transition when the energy market crashed?

Almost without a doubt.

Oil and gas are boom and bust industries, after all. And while it would have been hard to predict the global oil crash of 2014 (although some analysts did,) it’s not at all tough to look at the global trend charts of these markets and know that severe price fluctuations are part of the status quo.

Before 2008, the last time oil was trading at more than $114 a barrel (adjusted for inflation) was 1980. Between then and now, prices have fluctuated by as much as $100 in a single year. In that same time period, employment numbers went from as high as 267,000 to as low as 118,000, falling and rising along the way. (Right now about 172,000 are employed as oil and gas extractors in the United States.)

So what were states like Texas, Wyoming, New Mexico and North Dakota doing in recent years to prepare for the inevitably coming period of time in which thousands would find themselves out of work?

And what could these states have done?

Free high school programs for oil and gas workers

This might seem a bit counterintuitive, but it will make sense when you think about it: States where a lot of jobs are in boom-and-bust industries should offer free education and training to workers during boom years — especially employees without high school degrees or who haven’t been in any sort of educational setting for a long time. These workers generally find it hardest to pivot when boom turns to bust. A high school education makes it easier to find work, of course, and recent experience in any sort of classroom makes it easier to re-adjust to such settings when opportunities present themselves. Helping workers secure these sorts of credentials when times are good is a great insurance policy for when times are bad.  

Turn-key training with trigger funding

There are countless schools and programs that can help unemployed workers build the knowledge and skills they need to find a new job or career. The problem is that these programs are often under-used during good economic times and are overwhelmed in tougher years.

All but a handful of states maintain a rainy day fund. And the Mercatus Center at George Mason University has named 13 as states that are either “well prepared” or “flush with cash.” But why wait until a rainy day to buy an umbrella and boots?

Forward-looking states, especially those with historic boom-and-bust economies, should consider pre-selecting and pre-funding job training programs that can stand up to meet demands when triggered by specific economic measures. Programs that can demonstrate the ability to stand up services quickly in response to need could then be put on retainer by states where those services are likely to be necessary.

Re-education investment programs

In the most recent boom years, it was not usual to find workers without high school degrees pulling in close to six figures a year and even more. When the bust came, however, communities across the nation found that many people who had been making good money at one time hadn’t saved or invested much, if any, of it – let alone saved specifically for education and training.

To get more people to do so, you have to offer terms that under normal circumstances might otherwise seem too good to be true.

That’s what the U.S. military has learned over decades of experience with its GI Bill. Under most iterations of the bill, military members have been asked to invest a small amount of money, usually taken right out of their paychecks at the time of their initial enlistment, in order to secure tremendous tuition benefits down the road.

Similar programs should be considered in boom-and-bust states, where workers who invest a little boom money when times are good are rewarded with a generous tuition reimbursement package if and when they need to return to school. And if, as B.B. King used to sing, the good times keep on rollin’, the investment could be transferred to a worker’s children or grandchildren for post-secondary tuition.