The drug testing business Lou’s Clinical Lab noticed dual phenomena as the downturn set in: fewer people and thus, employers seeking such screens, but also — more people passing them.
The picture that emerges in this microcosm of a drop in oil prices during the past year suggests more people looking for different jobs, employers becoming choosier about their workforce and fewer prospective employees taking the risk losing a job by taking drugs.
“Now the wives are going back to work, I feel like,” said Stephen Linneman, president of the company and one of the children of founder Lou Linneman who co-owns the business today. “And the men who got laid off are going into different service industries. So we still are busy with pre-employment testing. Pre-employment becomes a much bigger chunk than random [testings].”
Anecdotes like that abound at Lou’s Clinical Lab, but economists also look to such businesses as a legitimate signal of changes to the workforce wrought by the downturn.
“Generally, drug testing patterns are a pretty good real-time indicator of what is going on,” said economist Ray Perryman of the Perryman Group. “The decline in screenings, the improved pass rate and the reduction in random tests are all indicative of what is now going on as the oil and gas sector readjusts. The pre-screenings seem to suggest hiring decisions, most likely in some of the retail-hospitality sectors.”
Linneman and COO Len Martin estimated a “slight decline” in business by up to 15 percent, largely a result of the slowdown in the oilfield and related trucking industries that make up about four-fifths of the company’s overall business. (By comparison, the drilling rig count considered an indicator of oil and gas activity fell by more than 50 percent during the past year).
The random, compliance-oriented tests, started to dip, but pre-employment screenings stayed about the same and at some times spiked, Linneman said.
The Midland lab, which until August had a bigger office with more services, saw a drop from about 200 tests a day to about 125. Odessa remained at about 125 tests a day.
But the failure rate on drug tests also fell from about 18 percent during boom times, including positive results from synthetic drugs such as K2, to about 5 percent today. The rate of failures stood out as among the highest in the country, Martin said.
“It always goes down when it’s tougher to find a job,” Martin said. “When people need a job, they are more likely to stay clean.”
The lab markets an array of testing. Most clients submit urine tests, which cost about $35 instead of about $175 for hair follicle tests that can detect drug use in a longer time period.
But during the downturn, the lab officials also see businesses becoming more selective about new candidates. Martin said “this is the prime time to get the perfect candidate, because there are lots of people looking for work.”
Martin said he believes some of the pre-employment screenings represent workers laid off from one job in the oilfield and seeking another.
But some oil companies such as Apache and Encana, also continue to hire additional employees, the Lou’s lab executives say, and that also means business from smaller companies that subcontract with them and must undergo screenings to the oil companies’ standards.
Clients of Lou’s Clinical Lab also include major employers outside the oilfield like Walmart, convenience store companies such as Kent Kwik and the Ector County School District, examples of the sort of diversification Linneman said helps the company weather oil and gas downturns.
To that end, Lou’s Clinical Lab also offers services like selling flu shots.
“Things are still good for us,” Linneman said. “As you can see, the traffic is still busy out here. People haven’t left like the 80s. It wasn’t mass exodus. People are still here. They are staying here and working. They are just shifting into different positions.”
The steady business represents a positive development considering that at this time last year, Martin says he looked at the drop in oil prices and figured layoffs lay ahead for Lou’s Clinical Lab.
As it turns out, the company reports the same number of employees, 63, among its six locations.
In August, the company’s Odessa flagship moved to a new bigger location on Grandview Avenue and Seventh Street. Rival drug testing companies expanded too during the past year, such as Clinical Pathology Laboratories, which moved from 415 N. Jackson Ave., into a new and larger location on Hancock Avenue.
For Lou’s Clinical Lab, the move allows the company to add bathrooms for drug test takers — a total seven instead of four — a bigger reception area, and space for services such as physicals and mask-fittings that the company already offered in Midland to incentivize customers to come by offering various tests they would need for work but in one place.
The new space is about 9,000 square-feet, which is about 3,000 square-feet larger than the previous headquarters at 706 Adams Ave., which the business closed on selling last week.
“When the boom was going on, you’d have like 30 people deep,” Martin said. “We could get like 20 people in the reception area maybe, but that’d be standing down the hallway and everything too. It gets like that sometimes here now … We know it’s going to increase over here when the price of oil goes back up.”
This article was written by Corey Paul from Odessa American, Texas and was legally licensed through the NewsCred publisher network.