Afterword: Unemployment Insurance Claims in the Mining Industry
by: G. Lee Saathoff, Economist and Gregg Detweiler, Senior Economist

Wyoming's monthly initial and continued Unemployment Insurance (UI) claims showed an unusual relationship compared to total covered employment levels in the Mining industry during 1998, especially the oil & gas extraction industry. For example, oil & gas extraction employment reported an average increase of 200 - 300 each month during 1998 compared to the same month in 1997 while monthly claim counts (the sum of the initial and continued claims) have shown an increase between 300 - 1,100 over the same time period. However, one would expect UI claims to decline as employment levels increase.

For the past few months, the Research & Planning Section has analyzed the possible causes of this relationship. The two underlying theories were that Wyoming employers in the oil & gas extraction industry rotated their labor supply based on a project-based environment and that employees used UI benefits to supplement income during down time. For example, ABC Drilling (a fictitious company) was awarded a project bid to drill ten gas wells in a six-month period. Normally, ABC Drilling uses four rigs in production, however, due to outside circumstances only two rigs were used with four rig crews to supply the labor. The assumptions inferred are that ABC Drilling rotated the labor between the crews and when the crews were not working (or worked less than they were accustomed to; i.e., two weeks on and two weeks off), they filed for UI benefits. In other words, such workers were employed and, at the same time, also collected unemployment insurance benefits during the quarter.

To perform our analysis, we utilized UI wage records, benefit claimants data (see initial and continued claims), total nonagricultural wage and salary employment and personal interviews with drilling companies reporting the highest number of unemployment claims. We examined second quarter 1998 UI claims data and then constructed a database by appending weeks 14 - 26 (i.e., April - June 1998) of UI claims information (summing initial claims filed and continued weeks claimed).

For purposes of comparison, the sum of initial and continued UI monthly claims for the oil & gas extraction industry (within Mining) were reported by Wyoming Labor Force Trends as follows for April, May and June 1998: 2,061, 1,259 and 1,098, respectively (refer to the June, July and August issues of Wyoming Labor Force Trends, respectively). It is important to note that these statistics do not directly indicate how many individuals claimed UI benefits or for how long. That is, from the numbers shown in the regular monthly UI pages in Wyoming Labor Force Trends, it is not possible to determine, for example, if a few individuals claimed the entire quarter or if a greater number of individuals claimed a lesser number of weeks during the quarter. In fact, our analysis indicated that within oil & gas extraction, the average number of weeks claimed during second quarter 1998 was 4.8 (out of 13 weeks in the quarter).

There were 864 unique Social Security Numbers (SSN's) in the second quarter UI monthly claims database for the oil & gas extraction industry. That is, there were 864 individuals who had filed with UI for at least one week during second quarter 1998. When these SSN's were matched with the second quarter wage record database, we found that of those 864 individuals, 723 reported wages during the same time period. This means that 83.7 percent of the 864 individuals who were claiming at least one week of UI during second quarter 1998 also earned some wages during this time; they were contributing to the count of UI claimants as well as to the total covered employment levels simultaneously. Furthermore, when we matched these 723 individuals to the third quarter wage record database, we discovered that 635 had collected wages during this time period also. So nearly three-quarters (73.5%) of our original 864 claimants were continuing the pattern in the next quarter as well.

Therefore, our assumptions that the oil & gas extraction industry rotated labor supply based on a special project environment and that employees used UI benefits to supplement their base income were strongly supported as being correct. These projects ended and the employment levels in the oil & gas extraction industry are now showing a correlation with the increased claims data (see initial and continued claims).

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