Employment Gains in ND

So I am quoted in this story from the Grand Forks Herald about tax policy changes and employment changes in the state of North Dakota(Link). I thought I would extend my thoughts here. Of all the policies to attempt to heap credit upon for employment gains in the state the tax changes seem to me the least likely. What is more likely?

There were significant changes in regulations surrounding drilling and environmental guidance related to the oil industry. This was a significant source of the employment gains according to the data so if you are going to credit any administration policy I would start with this one.

Add to this the diplomatic and other policies that impacted oil markets this year. This also gave significant support to the industry in North Dakota. These would be another policy candidate more likely than tax policy changes.

This is not to say it did not matter to a few businesses. There are always a few for whom this mattered so it is not a zero effect. I just doubt it is the major impact. The specific reason for this is the persistent labor shortage in North Dakota. North Dakota has more job openings than unemployed people to fill the jobs. The persistence of this situation is well documented by groups like Job Service ND so I will not go into it here at this time.

Reducing taxes in this situation does not lead to more jobs. Why? There were not workers sitting on the sidelines because businesses could not afford to pay for them due to the taxes. Again, there are always going to be exceptions to this rule but not to the tune of the total employment gain. The tax change on its own is not going to bring in these jobs.

So the two big things arguing against tax changes being a big part of this employment change is the fact that North Dakota was already labor constrained and that there are more likely candidates in terms of policies.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.