AD Main Menu

Alaska hire down in oil patch as industry lobbies for tax cut

Pat Forgey

Oil companies and their subcontractors pitching a cut in oil taxes as a way to boost jobs in Alaska are hiring most of their new employees from outside Alaska, according to new information from the Alaska Department of Labor & Workforce Development.

"The number of resident workers decreased and nonresident workers increased in the oil industry" in 2011, according to the department's 2011 Residency of Alaska Workers report.

The conclusion about non-resident workers was one of the report's highlights. During the year, the number of resident workers actually decreased by 0.9 percent statewide in the oil industry while the non-resident workforce increased 1.5 percent.

The oil and gas industry now gets 31.1 percent of its 17,000 Alaska workers from outside the state.

"We've seen studies showing that 50-54 percent of their new hires are non-Alaskans,” said Sen. Bill Wielechowski, D-Anchorage. "That's shameful."

Alaska hire in the oil patch is an issue that crosses party and political lines in the Legislature, and has been part of the debate over Gov. Sean Parnell's proposal to cut oil industry taxes in an effort to spur production. Republicans and Democrats seem to agree that more Alaskans should be hired.

"As a mom of two boys, I'd like to see them go work rather than someone flying in from some other country or some other state,” said Sen. Anna Fairclough, R-Anchorage. “They should at least be first in the opportunity line to get that job."

Oil industry jobs make up only about 5 percent of the state's total workforce, but they come with wages nearly three times the average Alaska wage, so they’re disproportionately important to the state. Sen. Mike Dunleavy, R-Wasilla, said the Senate Labor and Commerce Committee he chairs will take up the issue.

One hindrance to efforts to boost Alaska hire, however, is the U.S. Constitution, which has blocked states such as Alaska from requiring residents be hired first, legislators say. Nevertheless, Dunleavy said lawmakers will look for legal ways to promote Alaska hire. "If we can incentivize (Alaska hire) in some form or fashion that is constitutionally sound, I think there are several (legislators) that want to have that discussion," he said.

One thing Alaska has already done, said Sen. John Coghill, is spend years ensuring that students entering the workforce have been trained in high school and college to be ready for those jobs.

That's something that couldn't have been done in the industry's early days in Alaska.

"You can't mandate something that you can't deliver," he said.

In 2011, non-resident employment  statewide in the oil industry increased 0.5 percent to 31.1 percent, its highest level in a decade. There's variation within the industry, however, with two of the state's largest producers, ConocoPhillips and BP, having higher proportions of residents among their workforce. Companies that subcontract oilfield service work sometimes employ more non-residents.

In 2011, oil extraction companies in 2011 had 24.9 percent non-resident workers, while oilfield services companies had 32.7 non-residents.

In addition, there's also substantial variation among industry occupations.

The lowest paid workers, roustabouts, were the most likely to be residents, according to the department. In 2011, in fact, some 76 percent were Alaskans.

On the other end of the spectrum were electrical and electronic engineering technicians; just 33 percent of them were Alaskans.

About 43 percent of the managers and other top-earning employees were non-residents, too. Alaska-resident managers were paid an average of $208,000 while non-resident managers earned $341,000, the data showed.

Wielechowski said more could be done to encourage the hiring of Alaskans if state leaders made it a priority -- and if the big oil companies made it a priority for their contractors, too.

"You have contractors with 100 employees and zero percent Alaska hire, they bring in their entire group of people from Outside to work in Alaska," he said.

There are ways to push or Alaska hire without unconstitutional discrimination against non-residents, he said.

"Can you legally force them to do that? It's very difficult," he said. "Can they do that as a good neighbor and a good citizen? Certainly."

Contact Pat Forgey at pat(at)alaskadispatch.com