If you haven’t discovered it yet, NPR’s On Point program had a fascinating discussion last week with Joel Kotkin and others about the Great Plains’ booming economy. The show came after Kotkin wrote an article for Newsweek in which he juxtaposed the recent economic growth of Fargo and other Great Plains cities to most of the rest of country, which has stagnant or floundering regional economies.
Throughout the good times and, more important, the bad of this new millennium, the cities of the plains—from Dallas in the south through Omaha, Des Moines, and north to Fargo—have enjoyed strong job growth and in-migration from the rest of the country. North Dakota boasts the nation’s lowest unemployment rate—3.6 percent in May, compared with the national average of 9.7—with South Dakota and Nebraska right behind it.
The trend has been particularly strong in urban areas. Based on employment growth over the last decade, the North Dakota cities of Bismarck and Fargo rank in the top 10 of nearly 400 metropolitan areas, according to data analyzed by economist Michael Shires for Forbes and NewGeography.com. Much of that growth has come in high-wage jobs. In Bismarck, the number of high-paying energy jobs has increased by 23 percent since 2003, while jobs in professional and business services have shot up 40 percent.
Kotkin mentioned energy and professional/business services, but what else is driving the Great Plain’s boom? We zeroed on North Dakota, the state with arguably the strongest economy in the US right now, to see the real industry drivers.
The following table shows the broadest level of industry data from Analyst from 2006, before the recession began, to 2009.
|Industry||2006 Jobs||2009 Jobs||Change||% Change||National % Change||Current Earnings Per Worker (for N. Dakota)|
|Agriculture, Forestry, Fishing and Hunting||5,269||6,175||906||17%||-3%||$42,365|
|Mining, Quarrying, and Oil and Gas Extraction||4,668||7,131||2,463||53%||9%||$72,644|
|Transportation and Warehousing||13,170||14,250||1,080||8%||-3%||$45,174|
|Finance and Insurance||15,355||16,315||960||6%||-5%||$45,287|
|Real Estate and Rental and Leasing||3,352||3,456||104||3%||-7%||$31,087|
|Professional, Scientific, and Technical Services||11,809||12,618||809||7%||3%||$45,942|
|Management of Companies and Enterprises||3,764||4,294||530||14%||5%||$58,714|
|Administrative and Support and Waste Management and Remediation Services||12,750||12,466||-284||-2%||-12%||$22,928|
|Health Care and Social Assistance||46,520||49,129||2,609||6%||8%||$37,656|
|Arts, Entertainment, and Recreation||3,470||3,677||207||6%||2%||$13,445|
|Accommodation and Food Services||28,103||30,225||2,122||8%||0%||$11,877|
|Other Services (except Public Administration)||11,154||11,321||167||1%||1%||$22,716|
The two columns of interest are the percent growth of industries in North Dakota compared to percentage loss of jobs nationally. Notice, for example, construction spiked 12% from ’06-09 in North Dakota and fell off a whopping 18% in the US.
North Dakota’s real growth, however, came in mining, quarrying, and oil and gas extraction (NAICS 21), which grew 53%. The majority of new jobs in this sector came in support activities for mining, a more detailed industry grouping that added 2,147 jobs from 2006-2009.
The bottom line: North Dakota industries grew 4% during this period; the US lost 3% of jobs.
Next, here are the location quotients for those same two-digit industries. This shows the relative concentration of the North Dakota’s industries as compared to the nation, and how much more or less concentrated they’ve become since 2006. (Note that an LQ of 1.0 is the national average.)
|Industry||2006 Jobs||2006 LQ||2009 LQ|
|Mining, Quarrying, and Oil and Gas Extraction||4,668||2.89||3.81|
|Agriculture, Forestry, Fishing and Hunting||5,269||1.74||1.97|
|Health Care and Social Assistance||46,520||1.21||1.11|
|Finance and Insurance||15,355||0.98||1.03|
|Other Services (except Public Administration)||11,154||0.98||0.92|
|Accommodation and Food Services||28,103||0.97||0.97|
|Transportation and Warehousing||13,170||0.96||1.01|
|Management of Companies and Enterprises||3,764||0.81||0.82|
|Arts, Entertainment, and Recreation||3,470||0.7||0.68|
|Professional, Scientific, and Technical Services||11,809||0.61||0.6|
|Real Estate and Rental and Leasing||3,352||0.59||0.62|
|Administrative and Support and Waste Management and Remediation Services||12,750||0.58||0.61|
This information is helpful in trying to pinpoint future drivers of the economy. If an industry has yet to reach an LQ of 1.0 but is growing — like management of companies and administrative services — that means it has solid investment and development potential.
Unemployment by Industry
The last thing we’ll look at is unemployment by industry. The job figures in the following table are from 2010 and the unemployment rates are from May. The disparity between North Dakota and the nation is striking — particularly for construction; administrative and support and wast management services; and mining, quarrying, and oil and gas extraction.
|Industry||2010 Jobs||May Unemp||% Total Jobs||National %|
|Accommodation and Food Services||30,398||990||3.3%||11.9%|
|Professional, Scientific, and Technical Services||12,993||735||5.7%||8.5%|
|Health Care and Social Assistance||50,199||731||1.5%||6.4%|
|Administrative and Support and Waste Management and Remediation Services||12,652||484||3.8%||13.1%|
|Transportation and Warehousing||14,185||424||3.0%||8.9%|
|Finance and Insurance||16,439||396||2.4%||8.1%|
|Mining, Quarrying, and Oil and Gas Extraction||7,477||382||5.1%||13.2%|
|Other Services (except Public Administration)||11,356||346||3.0%||12.3%|
|Real Estate and Rental and Leasing||3,428||114||3.3%||11.0%|
|Agriculture, Forestry, Fishing and Hunting||6,147||113||1.8%||16.3%|
|Arts, Entertainment, and Recreation||3,483||88||2.5%||13.8%|
For more on North Dakota, see this article from the Federal Reserve Bank of Minneapolis.