- Talent Management
It seemed like only yesterday that anyone could land a high-paying job in the energy sector. Indeed, between 2010 and 2013 as fracking increased, some communities in oil-rich regions even started to see rising high school drop out rates as young men abandoned their studies to obtain entry-level positions with attractive $50,000 to $75,000 salaries or higher. A 2015 study by Elizabeth U. Cascio and Ayushi Narayan reported that “as fracking has increased high school dropout rates of male teens, both overall and relative to females [have too].” Back in 2013, the major news story in relation to the oil industry was how to train–often in just a few weeks or even just a few days–enough workers to fill the industry’s thousands of available jobs. In mid 2016, however, concerns about young men dropping out to obtain high-paying energy sector jobs and concerns about how to quickly and effectively train thousands of oil industry workers is already a distant memory. Today, many communities are facing a different dilemma–how to retrain the thousands of energy sector workers who are now sitting idle.
The oil industry, which has long ridden a boom and bust cycle, is now experiencing major layoffs across North America. From Alberta to Oklahoma and North Dakota to Texas, oil industry workers, especially those hired to work on the ground in low-skilled positions that often only required a few weeks of training, continue to face lay offs as inexpensive oil from other nations floods the market. To put the layoffs into perspective, consider the numbers.
A recent report suggests that in Texas, more than 84,000 energy sector jobs have been lost in the past 16 months.
Similar job losses proportional to state populations have been reported in North Dakota, Oklahoma and other states where fracking operations have been active over the past decade. The question is what’s next for these workers?
There are several somewhat unique challenges that arise when considering how to retrain former oil industry workers. First, many of the industry’s displaced workers are young, have a limited skill set and never finished high school or only hold a high school diploma. However, these seemingly unemployable workers are also accustomed to making salaries well above the national average. The challenge, then, is how to retrain them for jobs that will in fact meet their salary and lifestyle expectations?
Option 1: Focus on Skill Transfer
First, one may assume that the most effective way to retrain unemployed oil industry workers is to place them in allied industries where some degree of skill transfer will be possible. Unfortunately, since the oil industry also drives other industries from car manufacturing to construction and transportation, opportunities for skill transfer are limited, especially for workers committed to staying in those regions impacted most by the oil boom.
Option 2: Retrain Oil Industry Workers for Occupations Experiencing Shortages
As it happens, many states impacted by the fracking economy are in the Southwest and these states are also currently suffering from shortages in other areas, including education. While not all dismissed oil industry workers are good candidates for teaching, at least some may be great candidates, albeit with additional training. The problem in this case is financial.
The average unemployed oil industry worker is accustomed to making approximately two to three times the annual salary of a new teacher.
After all, in states where fracking operations have been most active, including Texas and Oklahoma, the average of starting salary of a teacher is only about $30,000 compared to the often six-figure salaries reported by many entry-level oil industry workers. To put it simply, persuading a former oil industry worker that teaching may be a good career option is going to be extremely challenging.
Throughout the fracking explosion, there were vocal opponents attacking the industry. Most of the industry’s critics where first and foremost concerned about the industry’s impact on the environment, but as the fracking industry collapses, there is no question that it also represented an example of poorly managed human resources.
After years of luring young men into high-paying yet generally low-skilled and often dangerous jobs, the oil industry is pulling out of communities and leaving thousands of young workers, often still in their 20s, with high salary expectations yet severely limited skill sets and low levels of education.
What can we learn from the oil industry’s current situation? While there is no reason to conclude that the industry itself is responsible for training workers to work outside the industry, in this case, there is at the very least reason to take seriously the value of cross-training, which is something the industry generally ignored. Cross-training workers in the fracking sector would not necessarily mean fewer layoffs now but it would mean that in those communities impacted by the current layoffs, there would be a much greater potential for former oil industry workers to meaningfully contribute to other sectors and not simply in other entry-level, on-the-ground positions.
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