© Copyright 2007 by the Wyoming Department of Employment, Research & Planning
Vol. 44 No. 4
In recent years, Wyoming’s Natural Resources & Mining sector has grown rapidly. From 2005 to 2006, it added 3,900 jobs, giving it a growth rate of 17.2% (Bullard, 2007). The Natural Resources & Mining sector requires support from many other industry sectors, such as Construction, Wholesale Trade, Transportation & Warehousing, and repair & maintenance services. It is useful to understand which sectors are related to each other in order to predict employment change and associated human resource requirements. Previous articles have shown that oil & gas employment is a function of natural gas prices and drilling activity in the state (Bullard, 2002), and that construction employment is related to the number of building permits issued (Bullard, 2004). This article presents a regression model of employment in the merchant wholesalers, durable goods sector. The model shows that for each 100 jobs added in support activities for oil & gas, approximately 9 jobs are added in merchant wholesalers, durable goods. According to the Customized Staffing Patterns (Leonard, 2007), some of the common occupations in merchant wholesalers, durable goods are sales representatives, wholesale & manufacturing, and mobile heavy equipment mechanics.
We suggest that employment in merchant wholesalers, durable goods is partially a function of oil & gas activity in the state. As oil & gas activity increases, it seems natural that the firms that provide equipment and supplies used in the oilfield will add employees in order to keep up with increased demand for their services.
For employment series, the Current Employment Statistics (CES) data were used. The published data from this program were rounded to the nearest 100 employees. However, because the rounded data don’t show small month-to-month changes, we used the unpublished, unrounded series for this model. The data series begins in January 1990 and ends in December 2006.
The Figure shows employment in support activities for oil & gas and merchant wholesalers, durable goods from 1990 to 2006. Employment in support activities for oil & gas increased from about 3,000 jobs in 1990 to over 10,000 jobs in 2006. Merchant wholesalers, durable goods increased over the same time period, but not as dramatically. Its employment rose from around 2,400 jobs to almost 5,200 jobs. Both employment series exhibit seasonal patterns, although they are relatively small compared to the overall level. Closely inspecting the Figure reveals several employment peaks that appear correlated between the two series. For example, in 1999 and 2002, support activities for oil & gas rose sharply, and merchant wholesalers, durable goods increased noticeably.
Ordinary Least Squares (OLS) was used to estimate the effect of changes in support activities for oil & gas employment on changes in employment in merchant wholesalers, durable goods. Linear regression is a commonly used statistical technique in which researchers are able to estimate the effect of one independent variable on a dependent variable, while holding the other independent variables constant. The results of the regression model are shown in the Table. In this case, over-the-month change in Wyoming employment in merchant wholesalers, durable goods is the dependent variable that the model explains. The independent variables are over-the-month change in employment in support activities for oil & gas and a set of dummy variables representing seasonal factors.
The model explains over one-quarter of the variation in employment in merchant wholesalers, durable goods (R2=0.276). Each of the independent variables has the expected sign. We expect employment in merchant wholesalers, durable goods to be positively related to employment in support activities for oil & gas, and the model confirms this. The coefficient for employment in support activities for oil & gas is 0.091, suggesting that if employment in that sector increases by 100 jobs, employment in merchant wholesalers, durable goods will increase by 9.1 jobs.
The seasonal factors are consistent with most employment in the state. March, April, May, and June are all positive, suggesting that (holding other factors constant) employment increases in the spring and summer months.
It is often asserted that growth in Wyoming’s Natural Resources & Mining sector drives growth in related industry sectors. This analysis shows that employment growth in merchant wholesalers, durable goods is in fact positively correlated with employment growth in support activities for oil & gas. The regression model suggests that for each 100 jobs added in support activities in oil & gas, about 9 jobs are created in merchant wholesalers, durable goods. Given the rapid growth in oil & gas recently, the predicted growth in merchant wholesalers, durable goods, is not insubstantial.
Bullard. D. (2002). Forecasting oil & gas employment for the state of Wyoming. Wyoming Labor Force Trends 39(7). Retrieved April 3, 2007, from http://doe.state.wy.us/lmi/0702/a1.htm
Bullard. D. (2004). Forecasting employment in Wyoming’s construction industry. Wyoming Labor Force Trends 41(2). Retrieved April 3, 2007, from http://doe.state.wy.us/lmi/0204/a2.htm
Bullard. D. (2007). Current Employment Statistics: Monthly Estimates of Nonagricultural Wage and Salary Employment for Wyoming, Laramie County and Natrona County by Industry. Retrieved April 3, 2007, from http://doe.state.wy.us/lmi/CES/TOC.HTM
Leonard. D. (2007) Customized Staffing Patterns. Retrieved April 4, 2007, from http://doe.state.wy.us/lmi/cust_staff.htm