Zachary Toliver | Shale Plays Media
It’s apparent that production of Bakken crude over the past several years has fashioned various changes on nearly every sector of the North Dakota economy. The oil boom certainly helped build an economic foundation for new jobs in the oil and gas sector but has also created a refurbished frontier for business establishments. New hotels, restaurants and various retailers layer a once barren land in order to find success among incoming oil workers and their families. A study conducted by North Dakota State University found that in 2011, the oil and gas industry contributed over $30.4 billion to North Dakota’s economy. The surge in monetary achievement has bled over to service industries, bringing new opportunities and challenges for these North Dakota businesses.
According to the National Restaurant Association and the North Dakota Hospitality Association (NDHA), over the next ten years restaurants in North Dakota are projected to experience over 12 percent job growth, adding nearly 5,000 new jobs. In 2014, restaurants account for 39,400 jobs in North Dakota, 8 percent of employment in the state. As the population continues to increase, especially in the younger demographics, even higher economic success could be found in this particular market niche.
“Business is going well. The economic boom has brought a lot of options for the consumer that you might not have seen otherwise,” stated Rudie Martinson, the Executive Director of the North Dakota Hospitality Association, an organization that has represented restaurants, bars and lodging establishments in North Dakota since 1955. “A friend of mine had dinner at a new Japanese restaurant. He told me, ‘Never in my life did I think I would be eating good Japanese cooking in Watford City.”
One restaurant owner in Tioga saw opportunity in the Bakken area two and a half years ago. Originally from Southern California, Susan Gordon opened WildcatZ Grill and is now known for the “Best burger in the Bakken.” Prior to her life in Tioga, Susan stated in an email interview that she “was a bookkeeper and worked part-time in a retail housewares store.”
Hundreds of millions of dollars from around the world are making their way into North Dakota for development in the Bakken. New expansions in various towns are expected to bring much needed residential and commercial infrastructure. While housing keeps a steady pace in attempts to catch up, less permanent lodging is progressively increasing to alleviate the pressures of limited living space. The Destination Marketing Association of North Dakota claims the state added 6,552 hotel rooms between 2010 and 2013. Much of that growth resides in the state’s oil patch. Even with all the enthusiasm, North Dakota has much more room for budding entrepreneurs and investors.
Challenges for the Trades
Above all, filling jobs is a prominent challenge for businesses like restaurants and retail outlets. With under a million registered citizens and an unemployment rate of 2.6 percent as of last April, there is a small pool of quality employees to choose from. In his profession, Martinson stated that “[Filling jobs] is the number one challenge I hear from the industry, especially out west.” North Dakota is expected to lead the nation again in fastest job growth for 2014. How to swiftly satisfy the need for new positions with prospects needed from an array of occupational backgrounds is an unprecedented battle the state of North Dakota is adapting to.
A primary example is seen in the new national advertising campaign that hopes to draw in blue collar and skilled workers across the nation. The campaign was announced by Lt. Gov. Drew Wrigley and the North Dakota Economic Development Foundation in early 2014. “Find the Good Life in North Dakota” will use directed promoting and event strategies to attract potential new residents to North Dakota. Launched in May 2014, the campaign’s goal is to bring in more than 20,000 people to fill positions ranging from truck drivers to receptionists and pretty much everything in between.
However, even with the push for jobs in Western North Dakota, wages are the next barrier for the service and retail industry. The average annual pay for employment from 2007 to 2011 in the Bakken/Three Forks region increased from $33,040 to $50,553 for a rise of 53.1 percent. Still, the largest increases in the same time period came from real estate, rental and leasing industry where average annual pay doubled from $35,940 to $72,355. Next in line was the professional and technical service sector which saw an 85 percent increase of $34,950 to $64,529.
This means occupations like food service and retail have needed to implement new tactics for attracting future staff. Restaurants like McDonalds implemented sign on bonuses and Walmart has nearly doubled their average hourly pay rate according to online job searches in the Bakken/Three Forks area. The minimum wage of $7.25 just doesn’t cut it for the industry any longer. “The economic boom has inflated the wage scale across the board,” Martinson stated. “In some areas it’s theorized you can’t pay someone less than $12 to $13 an hour to do any job.” This point was reiterated by restaurant owner, Susan Gordon in her email. “It is difficult for ‘mom & Pop’ businesses to compete against the wages offered by corporate retailers as well as oil field jobs. The housing expenses are extremely out of proportion for the income from basic jobs in retail.”
Another particular adjustment businesses in the Bakken have made is the adaptation to schedules of the customer. Sara noted that, “We close for major holidays because most oil field workers here go home… there has been an ebb and flow of oil field workers. We adjust as best we can.”
Some are weary about what comes after the boom ends. No one can answer if the population will stick around in 25 years once the production from the boom is no longer record breaking, headline news. But with so many commercial businesses calling North Dakota home, appealing communities many people would desire are in the midst. Chains like Trader Joes and Whole Foods are looking to North Dakota, something perhaps unthinkable ten years ago. If the infrastructure and endeavors for leisure, entertainment and activities can outlast the boom which created them, North Dakota may be safe from a drastic population decrease. Regardless, businesses have enough to balance in the current days of the boom to fret too much on what comes three decades from now.