Midland ranks first in state for job creation

Joe Pfeil, an engineer with Devon Energy, on an active pumping rig located on Highway 385 south of Odessa, photographed Tuesday, Sept. 24, 2014. James Durbin/Reporter-Telegram Joe Pfeil, an engineer with Devon Energy, on an active pumping rig located on Highway 385 south of Odessa, photographed Tuesday, Sept. 24, 2014. James Durbin/Reporter-Telegram Photo: James Durbin Photo: James Durbin Image 1 of / 1 Caption Close Midland ranks first in state for job creation 1 / 1 Back to Gallery

Midland ranks No. 1 in Texas for the lowest unemployment rate and highest employment growth rate, according to a new report by the Real Estate Center at Texas A&M.

The Tall City showed a 2.5 percent unemployment rate, while Odessa came in second statewide at 3 percent. But Midland’'s employment growth rate of 7.2 percent is the most impressive, as it is almost 3 percent higher than second-place Longview. The numbers continue to affirm Midland’s place as the center of the Permian Basin’s oil boom even as prices for West Texas Intermediate crude have fallen.

The energy market has had some jitters because of a sharp fall in oil prices after the Organization of Petroleum Exporting Countries announced that it would maintain production levels. Many have said that Saudi Arabia, which leads the oil group, forced other members to maintain production so as to punish the shale oil drillers in the U.S. and Canada.

But drillers and producers in Texas remained defiant. Pioneer Natural Resources CEO Scott Sheffield -- speaking at the unveiling of the company’s new regional headquarters in November -- said that the Permian Basin “will work at $60” a barrel. Some say that the job market, which has been in a hiring frenzy for the last few years, will begin to slow down, but not cut back.

“If an oil company takes a wait-and-see attitude for a while until they get a little more clarity, what’s likely to happen is that they’re not going to necessarily lay off people; they’re just not going to hire anymore,” said Mark Dotzour, chief economist at the Real Estate Center at Texas A&M. “So if that happens, then the growth rate of employment in the energy sector drops closer to zero in the short term.”

Dotzour said that many employers would be hesitant to start letting workers go, opting instead to reduce their hours so that they retain a capable work force that can pick up speed if and when oil prices increase.

“It’s a big problem to find qualified workers, so if you let them go and somebody else picks them up, it’s going to be even harder for you if you need to scale back up again,” Dotzour said.

The economist predicted that, in the coming months, highly leveraged companies that took out short-term bonds will file for bankruptcy because their revenue stream will shrink. He said that while these “headline risks” will look bad, the companies that fold will be those that did not balance their books well enough to survive a hiccup in the economy.

“In a capitalistic system, there are ups and downs. That’s just part of it,” Dotzour said. “It’s not something to be afraid of; it’s just a fact. It does that and … you just have to be careful that even in the strongest of economies you have to be a little careful not to put too much debt on your business, whatever it might be, so that when you get these temporary downturns it doesn’t take your company down in the process.”