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Independent report finds jobs up since ACES

Claim that oil tax cost state jobs not supported in Senate's study

Posted: January 25, 2012 - 12:03am

Despite claims of jobs lost on the North Slope since the passage of the state’s ACES oil tax law, jobs in the industry are at an all-time high, the Senate Labor & Commerce Committee was told Tuesday.

“On a monthly average basis, North Slope oil industry employment climbed to an all-time high in 2011,” said Jim Calvin, managing principal of the Juneau-based McDowell Group economic consulting firm.

One of the report’s more dramatic findings was that oil industry jobs in the state had more than doubled since 2004, a rate of growth Calvin called “remarkable.”

A claim of lost jobs following the adoption of ACES in 2008 was one of the frequent arguments made last year when the House of Representatives passed House Bill 110, an oil tax reduction sought by Gov. Sean Parnell.

When the bill moved over to the Senate, however, skeptical senators, including Sen. Dennis Egan, D-Juneau, disputed those claims.

During hearings in Egan’s Labor and Commerce Committee last spring, state Labor Department officials acknowledged their data didn’t show such a loss.

Between legislative sessions the Senate Finance Committee hired McDowell, which analyzed Department of Labor & Workforce Development data and worked directly with firms in the oil industry to determine what was really going on.

Calvin told the committee reports of a decline in industry employment in 2009 were accurate, but those losses had since been recovered.

“In the most recent data, through November and December (of 2011), North Slope employment is at an all-time high with over 9,000 jobs on the North Slope,” Calvin said.

Total oil industry jobs in the state are more than 13,000, he said, and that doesn’t include jobs such as on the trans-Alaska oil pipeline, North Slope construction jobs and refinery jobs.

There are 2,000 construction jobs on the North Slope that aren’t counted as part of the oil and gas industry by the state, but are there because of the industry, Calvin said.

“Literally every single one of those jobs is due to the oil industry,” he said.

Those related jobs have been following the same trend as other oil industry jobs, and have recently had a significant uptick, he said.

Committee member Sen. Cathy Giessel, who last year had said she heard from people in the industry that jobs were going away, questioned how good the state’s jobs data was.

Calvin said it was likely there were some errors in the state’s jobs data, but it was by far the best available and was what McDowell had to base its study on.

“Is it 100 percent perfect? No,” he said, “We’ve found a few businesses active on the North Slope but reporting in Anchorage.”

Overall, he said, the jobs data shows something of a “rollercoaster” of gains and losses, with losses often coming at the same time oil prices were low.”

Calvin declined to let members of the committee draw him into conclusions beyond his 80-page report.

He acknowledged the price of oil peaked at more than $140 a barrel, before falling to under $40 a barrel in 2009, but declined to say there was cause and effect there.

“Certainly those events are happening in parallel,” he said.

Sen. Joe Paskvan, D-Fairbanks, asked if there was any evidence of the ACES tax affecting jobs, but Calvin said they didn’t analyze taxation issues at all.

The study also looked at resident and non-resident hiring by the oil industry, but found little change over the years.

One of the graphs Calvin presented to the committee shows non-resident employment at about 35-37 percent for the last several years.

Calling the graph “singularly uninteresting,” Calvin said it showed a fairly steady rate of non-resident hire over the years.

In one quarter last year, North Slope hiring of non-resident workers did jump to 56 percent, but he said that appeared to be an anomaly that decreased the following quarter.

There was significant variation among occupations, however, with managers and first-line supervisors being 46 percent non-residents.

There were much lower numbers of non-residents among structural iron and steel workers, truck drivers and office clerks, the report said.

Egan said the report cost $175,000, and was funded by the Senate Finance Committee.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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